It’s been a tumultuous start to the year for Wall Street and the investment community. Since hitting their respective closing highs between mid-November and the first week of January, the iconic Dow Jones Industrial Averagewide seat S&P500and technology driven Nasdaq Compound (^IXIC 3.34%) fell by 19%, 24% and 34%. This officially places the S&P 500 and the Nasdaq in a bear market.
While there’s no doubt that bear market declines can be frightening given the speed and unpredictability of declines, the story is pretty clear that these declines are a once-in-a-lifetime buying opportunity for patient investors. .
While it may take time to recoup the downside associated with a bear market, every notable decline throughout history, including in the Nasdaq Composite, has ultimately been erased by a bull market.
The latest widespread decline uncovered a slew of incredible trades among growth stocks. Below are four gorgeous growth stocks you’ll regret not buying during this Nasdaq bear market decline.
The first phenomenal growth stock that stands out among its peers is the end-user cybersecurity company CrowdStrike Holdings (CRWD 5.77%). Although its price-to-sales ratio is still high compared to other cybersecurity stocks, CrowdStrike’s platform and customer engagement metrics suggest its premium is well deserved.
What makes CrowdStrike so special is the company’s cloud-native Falcon security platform. Being built in the cloud and powered by artificial intelligence (AI) allows Falcon to become more efficient at assessing and responding to threats over time. In a typical day, Falcon monitors approximately 1 trillion events. While CrowdStrike isn’t the cheapest option available for end-user security, a gross retention rate of over 97.3% for nearly four consecutive years suggests it’s the most cost-effective option. efficient.
CrowdStrike also has a knack for enticing existing customers to spend more. Despite a compound annual subscriber growth rate of nearly 100% over the past five years, the most impressive growth statistic is the percentage of users with four or more cloud module subscriptions.
In the company’s last quarter, 71% of subscribers purchased at least four cloud module subscriptions. Just over five years ago, that number was in the high single digits. Getting existing customers to purchase additional services is CrowdStrike’s golden ticket for adjusted gross margins to eventually reach 80% or more.
Innovative industrial properties
Cannabis-Focused Real Estate Investment Trust (REIT) Innovative industrial properties (IIPR 4.94%) is a second stellar growth stock that you will kick yourself if you don’t buy it during the Nasdaq bear market decline.
As of June 15, IIP, as the company is more commonly known, had 111 cannabis cultivation or processing facilities covering 8.4 million square feet of rental space in 19 states. The beauty of buying properties and leasing those assets for long periods of time is the transparency and predictability of operating cash flow that comes with this operating model.
Although IIP stopped reporting some of its metrics after announcing new deals, it has previously said that all of its rental space is leased, with a weighted average lease term of more than 16 years. That’s a long trail of predictable rental income. In addition, the company is able to pass on annual inflationary rent increases to its tenants.
Innovative Industrial Properties also benefits from a lack of cannabis reform on Capitol Hill. The company’s sale-leaseback program buys properties for cash from companies with limited access to traditional financing. In return, he leases the property to sellers, thereby gaining a long-term tenant.
A third magnificent growth stock that you’ll regret not recovering from the Nasdaq bear market decline is the mining company Palantir Technologies (PLT 7.72%). Similar to CrowdStrike, Palantir’s price/sell multiple is not so acceptable during a bear market. But it is a company with clear competitive advantages that deserves a higher valuation.
Palantir is actually two key platforms under one umbrella. The Gotham platform provides data collection and exploration, and aids in mission planning for federal governments. Meanwhile, the Foundry Platform helps companies better understand large amounts of data to streamline their operations. There isn’t a company on the scale of Palantir doing what it does, which is what makes it so unique.
For years, government contracts have been the primary driver of Palantir’s growth. Securing multi-year contracts with the US government helped propel annual sales growth of approximately 40%. But there’s also a ceiling when it comes to Gotham’s addressable market. The AI-based technology that Palantir uses will simply not be offered to government entities deemed to be potential threats to the United States.
Over the long term, Palantir has only scratched the surface with its biggest growth engine, Foundry. The company’s number of business customers more than tripled at the end of the first quarter. However, this “tripling” is only equivalent to Palantir ending the quarter with 184 commercial customers. The range of opportunities for Foundry is seemingly limitless.
A gorgeous fourth growth stock you’ll almost certainly regret not buying as the Nasdaq plunges is a cloud-based lending platform Assets received (UPST 5.71%). Despite obvious concerns about rapidly rising interest rates on lending platforms, Upstart has the tools and intangibles to thrive.
The theme of this list is the uniqueness of the product or service being offered, and Upstart is no different. This company’s lending platform is AI-driven. Instead of relying on a traditional loan verification process that can take weeks, Upstart’s lending platform, which partners with lending institutions, can offer on-the-spot approvals. Nearly three-quarters of all loans processed through Upstart are instantly approved and automated. This saves lending institutions money.
But it’s not just about saving money. Upstart’s AI lending platform enabled people with lower average credit scores to be approved for personal loans. While these people may not have been approved through traditional means, they do have a chance with Upstart. Interestingly, Upstart’s approval delinquency rate mirrored the traditional loan verification process, although Upstart’s applicants had a lower average credit score.
Even as lending rates rise, Upstart’s platform has demonstrated its value to financial institutions. Add to that Upstart’s push into the auto loan origination market, and you have a strong case for double-digit sales and sustained long-term earnings growth.