This was a year to be remembered in the wrong way by the investment community. They’ve been timeless since hitting their respective all-time closing highs between November and January Dow Jones industry averagebroad based S&P500and growth dependent Nasdaq Composite (^IXIC -1.87%), have lost up to 19%, 24% and 34% of their value. This firmly anchors the S&P 500 and Nasdaq in a bear market.
Although large falls in major indices can be scary and test investor resolve, decades of history show that bear markets are the perfect time for patient investors to buy. That’s because every major decline in major indexes, including the Nasdaq, was eventually cleared away by a bull market.
Now is an especially wise time to consider investing your money in innovative growth stocks. Companies that have the ability to transform the world or disrupt their existing industries are the kind of companies that can make patient investors a lot richer over time.
What follows are five amazing growth stocks you’ll regret not buying during this bear market on the Nasdaq.
The first notable growth stock that will have you kicking your ass for not buying during the Nasdaq bear market plunge is a cloud-based customer relationship management (CRM) software provider. Foreclosure (CRM -1.55%). The company’s shares have nearly halved since hitting their all-time high in November.
Without getting overly technical, CRM software is used by consumer-facing businesses to improve existing customer relationships and increase sales. While it’s an easy opportunity for service companies, CRM software is increasingly finding its way into unexpected sectors like industrial, finance, and healthcare.
What makes Salesforce so compelling is its dominance of this sustained double-digit growth opportunity. According to a report by IDC, Salesforce has been the global leader in CRM solutions for nine consecutive years and has significantly increased its share of total CRM spend over the past five years. In 2021, Salesforce accounted for nearly 24% of global CRM software spending, which is more than four times that of its closest competitor.
Salesforce’s long-term outperformance also reflects co-CEO and co-founder Marc Benioff, who has overseen a series of revenue-enhancing acquisitions. Acquisitions of companies like MuleSoft, Tableau Software, and Slack Technologies have expanded the Salesforce ecosystem and given the company ample reasons to cross-sell its highest-margin solutions.
A second amazing growth stock to buy as the Nasdaq dips into the bear market is the data-mining specialist Palantir Technologies (PLTR -6.20%). Palantir shares are down 80% from their all-time intraday high set in early 2021.
Palantir’s growth story is fundamentally based on the company’s two core operating platforms: Gotham and Foundry. Gotham is the company’s artificial intelligence (AI)-based platform for federal governments. It helps with mission planning and data aggregation. Today, Foundry caters to enterprise customers, helping them streamline their operations by making good use of big data.
What’s really fascinating about Palantir is that there’s simply no substitute for what the company can offer at scale. That lack of competition and software innovation should allow Palantir to grow its revenue by 25% to 30% annually.
In addition, Palantir has an exceptionally long growth trajectory in terms of foundry. While Gotham’s options are limited by national security issues (e.g., Palantir wouldn’t offer its services to the Chinese government), Foundry is still only scratching the tip of the iceberg in terms of Fortune 500 companies it could make more efficient .
Sometimes the most troubled companies offer the greatest opportunities for long-term investors. That seems to be the case with the AI-based lending platform Ordinary Holdings (UPST -8.51%)which has lost more than 90% of its value since hitting an all-time high last year.
Right now, Wall Street is clearly concerned that higher interest rates will suppress lending activity and increase loan default rates. That’s obviously not good news for a company whose entire premise is to use AI to screen loans for financial institutions. But things aren’t quite as polished as they might seem.
Prior to the recent rise in interest rates, Upstart’s lending platform has shown clear benefits to lenders. Around three quarters of all loans were processed fully automatically, which means time savings for applicants and money savings for banks.
Equally important, relying on AI, as opposed to traditional credit screening metrics, resulted in a wider range of applicants being approved. Although Upstart’s aggregate credit approvals showed a lower average credit score than the traditional credit review process, the default rate was similar. In other words, Upstart’s lending platform accurately predicted credit risk and expanded the potential pool of applicants for banks and credit unions.
With ample opportunity to expand its AI lending platform to auto loans, mortgage origination, and small business lending, Upstart’s growth appears to be in its infancy.
ping identity assets
A fourth logical growth stock that would be perfect to buy during the Nasdaq bear market plunge is small-cap cybersecurity stocks ping identity assets (RING -1.28%). Ping’s shares are down around 50% since the beginning of 2021.
The beauty of cybersecurity stocks is that they offer a service that has become a staple. A recession or bear market will not stop hackers and robots from stealing consumer and corporate data. This means that the demand for cybersecurity solutions is stronger than ever, especially in the wake of the pandemic.
As the name suggests, ping mainly focuses on identity verification. The company’s PingOne Intelligent Cloud platform is designed to work with on-premises security solutions to continuously assess, verify, and authorize users.
What makes Ping Identity such an exciting growth story is the company’s shift away from term-based licensed subscriptions and toward a subscription-as-a-service (SaaS) software model. SaaS models typically result in lower customer churn and more predictable operational cash flow over time. As this shift to SaaS accelerates and annual recurring revenue increases, Ping should see rapid revenue growth.
A fifth and final amazing growth stock that you’ll regret if you didn’t buy during the Nasdaq bear market slump is the e-commerce kingpin Amazon (AMZN -1.77%). Amazon’s shares are down almost 40% from their all-time high on the day.
Most people know Amazon for its leading online marketplace. A March report by eMarketer predicts that Amazon will account for 39.5% of all US online retail sales by 2022. For comparison, the 14 closest competitors are expected to control 31% of US online retail sales this year combined Base.
However, it’s not overall online retail sales that are really driving Amazon’s growth. First of all, the company’s subscription services play a key role in increasing sales and profits. Amazon’s online marketplace dominance has resulted in more than 200 million people signing up for a Prime membership. Annual fees charged by Prime members allow Amazon to invest in its logistics network and under-price brick-and-mortar retailers.
Even more important is cloud infrastructure services provider Amazon Web Services (AWS). Though AWS traditionally accounts for only about one-eighth of the company’s net sales, it’s often Amazon’s top operating revenue provider. That’s because cloud operating margins exceed online retail operating margins. AWS, subscription services, and advertising are Amazon’s keys to potentially tripling annual operating cash flow over the next five years.