The data doesn’t lie: this has been one of the worst starts to a year for the stock market in about 50 years. Since reaching their respective records, the famous Dow Jones Industrial Averagereference S&P500and growth oriented Nasdaq Compound (^IXIC 0.90%), fell by 19%, 24% and 34% respectively. The magnitude of these declines places the S&P 500 and the Nasdaq firmly in a bear market.
Although the speed and unpredictability of bearish moves during bear markets can test investors’ resolve, one thing that is To be sure, every notable decline in history – including in the Nasdaq Composite – was eventually erased by a bull market. In other words, every crash, correction and bear market has represented the perfect time for opportunistic investors to shop.
The current Nasdaq bear market has unearthed a number of incredible deals from high-growth, innovative companies. Below are five great growth stocks you’ll regret not buying during this downturn in the bear market.
The first noteworthy growth stock just begging to be bought as the Nasdaq falls into a bear market is the cloud-based lending platform Assets received (UPST 3.79%). While clear concerns exist about demand for loans with rising interest rates, Upstart has demonstrated that it has the tools to succeed in virtually any economic environment.
Rather than relying on the decade-old loan verification method, Upstart’s platform relies on artificial intelligence (AI). In the first quarter, just under three-quarters of all loans were fully automated, saving applicants time and money for institutional lenders.
More importantly, Upstart’s loan platform has opened the door to applicants who might not otherwise be approved with the traditional loan verification process. The average credit score of applicants to the Upstart platform is lower than the average credit score of traditionally screened applicants, but the delinquency rate for the two groups is similar. In other words, Upstart’s AI-powered process expands the candidate pool for banks and credit unions without increasing risk.
Upstart has also begun to enter the auto loan origination market, which represents a significantly larger opportunity, in terms of existing outstanding loan value, than personal loans.
A second magnificent growth stock you’ll be jumping on if you don’t buy it during the Nasdaq bear market decline is the telehealth company. Teladoc Health (TDOC 4.88%). Despite overpaying for applied health signals company Livongo Health in 2020, Teladoc is on its way to becoming an indispensable player in the health space.
While skeptics have viewed virtual tours as nothing more than a beneficiary of COVID-19, Teladoc’s sales growth suggests otherwise. In the six years before the pandemic, it grew its revenue by an average of 74% per year.
The reason Teladoc has been able to generate such phenomenal sales growth is that it completely changes the way care is delivered. Telehealth offers benefits all along the treatment chain. It is more convenient for patients, can give doctors easier access to patients with chronic conditions, and is generally less expensive than in-person visits, making it an attractive option for health insurers.
Although the Livongo deal was too expensive, the combination of Teladoc and Livongo will allow for plenty of cross-selling opportunities and boost the company’s chances of gaining chronic care subscribers.
Just because a company has a megacap valuation doesn’t mean it can’t deliver great returns to investors. That’s why you’ll regret it if you don’t buy shares of Alphabet (GOOGL -0.21%) (GOOG -0.27%) on this Nasdaq bear market decline. Alphabet is the parent company of the Internet search engine Google and the YouTube streaming platform.
The big concern for Alphabet skeptics is that ad revenue could plummet as the risk of an economic downturn or recession increases. However, this objection overlooks the simple fact that recessions are often short-lived, whereas economic expansions typically last for years. Since advertising revenue is cyclical, Alphabet is in excellent shape to take advantage of the expanding US and global economy.
When it comes to Internet search engines, Google is a veritable monopoly. Over the past two years, it has controlled no less than 91% of the global Internet search market share, according to GlobalStats. This makes it the go-to choice for advertisers and gives Google exceptional advertising pricing power.
But Alphabet’s ancillary operating segments are perhaps even more exciting. YouTube is the second most visited social media website on the planet (2.56 billion monthly active users) and Google Cloud is the world’s #3 cloud infrastructure spender. Google Cloud has the potential to help Alphabet double its operating cash flow by mid-decade.
Green Thumb Industries
USA Marijuana Stock Green Thumb Industries (GTBIF -0.38%) is another incredible growth stock you’ll regret not recovering as the Nasdaq plunges. Even if Congress has failed to pass cannabis reform measures, there is more than enough opportunity among three-quarters of all states to have legalized weed for multi-state operators like Green Thumb thrive.
By early May, Green Thumb had 77 operating clinics in 15 states. Although it has a presence in a number of high-dollar markets, Green Thumb has focused on entering limited license markets. By operating in markets where global dispensary licensing is limited, Green Thumb has ensured that it will have a chance to grow its brand and build loyalty.
However, what really makes Green Thumb special is the company’s product line. More than half of its income comes from derivative products. These are alternative cannabis products, such as drinks, vapes, oils, etc. Derivatives have a higher price and juicier margins than traditional dried cannabis flower.
If you need another good reason to believe the buzz around Green Thumb Industries, consider that, unlike many of its peers, it’s been profitable for seven straight quarters.
A fifth superb growth stock you’ll regret not buying during the Nasdaq bear market decline is the payment processor Visa (V 1.16%). Although Visa is cyclical and therefore likely to experience weak spending if a recession materializes, the long-term growth prospects for this payments processing powerhouse have not waned.
As I alluded to when I talked about Alphabet, the advantage of cyclical companies is that they spend a lot more time in the sun than under gray clouds. The natural expansion of global economies, along with ever-increasing consumer and business spending, is what keeps Visa’s needle pointing ever higher.
Visa’s fiscal prudence is another reason for its success. Although the company has little trouble generating fees and interest income as a lender, it avoids lending and sticks strictly to payment processing. It’s a business decision that shareholders have come to appreciate during economic contractions. Since it does not lend, Visa does not have to set aside capital for loan losses.
There is also a long avenue for expanding the payment infrastructure. Most global transactions are still conducted in cash, so Visa has ample opportunity to enter emerging/underbanked markets organically or acquisitively.