This year has been memorable in all the wrong ways for the investment community. Since hitting their respective closing highs between November and January, the timeless Dow Jones Industrial Averagewide seat S&P500and dependent on growth Nasdaq Compound (^IXIC -1.87%), lost up to 19%, 24% and 34% of their value. This firmly entrenches the S&P 500 and the Nasdaq in a bear market.
Although major index declines can be frightening and test investors’ resolve, decades of history show that bear markets are the perfect time for patient investors to shop. Indeed, every major decline in major indexes, including the Nasdaq, was eventually erased by a bull market.
This is a particularly good time to consider putting your money to work in innovative growth stocks. Companies that have the ability to change the world or disrupt their existing industries are the types of companies that can make patient investors much richer over time.
Below are five amazing growth stocks you’ll regret not buying during this Nasdaq bear market decline.
The first remarkable growth stock you’ll blame yourself for not buying during the Nasdaq bear market decline is the cloud-based customer relationship management (CRM) software provider. Selling power (RCMP -1.55%). The company’s shares have been cut nearly in half since hitting an all-time high in November.
Without getting too technical, CRM software is used by consumer-facing businesses to improve existing customer relationships and boost sales. While this is an obvious opportunity for service businesses, CRM software is increasingly finding its way into unexpected sectors, such as manufacturing, finance and healthcare.
What makes Salesforce so intriguing is its dominance of this opportunity for sustained double-digit growth. According to an IDC report, Salesforce has been the world’s leading provider of 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, more than four times as much as its nearest competitor.
Salesforce’s long-term outperformance is also a reflection of co-CEO and co-founder Marc Benioff overseeing a number of earnings-accelerating acquisitions. Buying companies like MuleSoft, Tableau Software, and Slack Technologies has expanded the Salesforce ecosystem and given the company plenty of reason to sell its highest-paying solutions.
A second amazing growth stock that would be wise to buy as the Nasdaq plunges into bear market territory is the mining specialist Palantir Technologies (PLT -6.20%). Shares of Palantir have slipped 80% below their all-time intraday high, which was set in early 2021.
Palantir’s growth story essentially boils down to the company’s two primary 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. Meanwhile, Foundry reaches out to enterprise customers and helps them streamline their operations by making sense of large amounts of data.
The really intriguing thing about Palantir is that there’s simply no replacement for what the company can deliver at scale. This lack of competition and software innovation should allow Palantir to continue to grow its revenue by 25-30% per year.
Additionally, Palantir has an exceptionally long growth track when it comes to Foundry. While Gotham’s opportunities are limited by national security issues (for example, Palantir would not offer its services to the Chinese government), Foundry is only tip of the iceberg in terms of Fortune 500 companies that it can make more effective.
Sometimes the most battered companies offer the best opportunities for long-term investors. Seems to be the case with the AI-based lending platform Assets received (UPST -8.51%)which has lost more than 90% of its value since hitting an all-time high last year.
For now, Wall Street is clearly concerned that higher interest rates will suppress lending activity and increase delinquency rates. This is obviously not good news for a company whose premise is to use AI to verify loans to financial institutions. But things are not as cut and dried as they might seem.
Prior to the recent interest rate hike, Upstart’s lending platform clearly demonstrated its benefits to lenders. About three-quarters of all loans were fully automated, saving time for applicants and money for lending institutions.
Equally important, relying on AI as opposed to traditional loan verification metrics has led to more applicants being approved. Although all of Upstart’s loan approvals had a lower average credit score than the traditional loan verification process, the delinquency rate was similar. In other words, Upstart’s lending platform accurately predicted lending risk and expanded the potential pool of candidates for banks and credit unions.
With plenty of opportunities to expand its AI lending platform to car loans, mortgages, and small business loans, Upstart’s growth appears to be in its infancy.
Ping Identity Holdings
A fourth obvious growth stock that would be perfect to buy during the Nasdaq bear market decline is the small-cap cyber security stock. Ping Identity Holdings (PING -1.28%). Ping shares are down about 50% since the start of 2021.
The beauty of cybersecurity actions is that they provide a service that has become a basic necessity. A recession or a bear market won’t stop hackers and bots from trying to steal consumer and business 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 from term-licensed subscriptions to a software subscription-as-a-service (SaaS) model. SaaS models typically result in lower customer churn and more predictable operating cash flow over time. As this shift to SaaS accelerates and annual recurring revenue grows, Ping should see sales growth accelerate rapidly.
A fifth and final stunning growth stock you’ll regret not buying during the Nasdaq bear market decline is the kingpin of e-commerce. Amazon (AMZN -1.77%). Amazon shares are down nearly 40% from their intraday record high.
Most people know Amazon because of its leading online marketplace. A March report from eMarketer predicted that Amazon would bring in 39.5% of all U.S. online retail revenue in 2022. For comparison, the 14 closest competitors are expected to control 31% of online retail sales in the United States this year, on a combined base.
However, it’s not overall online retail revenue that’s really driving Amazon’s growth. For starters, the company’s subscription services play a key role in expanding its sales and profits. Amazon’s online market dominance has led to over 200 million people signing up for a Prime membership. Annual fees collected from Prime members allow Amazon to invest in its logistics network and reduce prices from physical retailers.
Even bigger is cloud infrastructure service provider Amazon Web Services (AWS). Even though AWS traditionally accounts for only about one-eighth of the company’s net sales, it is often Amazon’s biggest provider of operating revenue. Indeed, cloud operating margins outpace online retail operating margins. AWS, subscription services and advertising are all key for Amazon to potentially triple its annual operating cash flow over the next five years.