Did you know that things can change a lot on Wall Street in a short time? In 2021, the stock market was doing really well and reaching new record highs. But just a year later, things went bad, and the major stock indexes dropped a lot. The Nasdaq Composite, which is an important index, lost a huge 33% of its value.
When big drops like this happen, it’s normal for investors to feel worried and unsure. But if you can be patient, it can actually be good for you in the long term. Except for the bear market in 2022, every time the major indexes, including the Nasdaq Composite, have fallen by a lot, they have always gone back up with a strong rally called a bull market. Buying good-quality stocks during these drops has been a smart strategy over time.
Even though the Nasdaq Composite has recovered a bit from its lowest point in 2022, it’s still about 20% lower than its highest point ever, which was in November 2021. This means there are still chances to find great deals on growth stocks.
Now, let’s talk about three specific growth stocks that you may be sorry for not buying after the Nasdaq bear market drop. These stocks have special qualities that make them really stand out. Don’t miss the opportunity to invest in them!
The first fantastic stock that you’ll be sorry for not buying during the Nasdaq bear market It’s a furniture company called Lovesac (NASDAQ: LOVE). While furniture companies usually grow slowly, Lovesac is making waves in the industry.
Lovesac stands out from other furniture retailers because of its unique furniture options. They used to be known for their beanbag-style chairs called sacs, but now their modular couches, called “sactionals,” make up almost 90% of their sales. Sactionals are super versatile and come in over 200 different cover choices, so you can find one that matches your living space perfectly. What’s even cooler is that the yarn used in sactionals is made entirely from recycled plastic water bottles. So they’re not just functional but also eco-friendly.
Now, sactionals may cost more than regular sectional couches, but that’s actually a good thing. By targeting wealthier customers, Lovesac is better prepared for inflation and small economic downturns. People with higher incomes are less likely to change their spending habits during these times.
Another reason why investing in Lovesac is a smart move is their omnichannel sales approach. While most furniture stores mainly rely on physical stores and walk-in customers, Lovesac has successfully expanded their online sales. They also have temporary showrooms and partnerships with popular retailers like Costco Wholesale and Best Buy.
Considering all these factors, Lovesac’s forward-earnings multiple, which is below 9, is really affordable. This means you’re getting a company that consistently grows its sales at a fast pace and at a great price.
Another great growth stock that you’ll kick yourself for not buying during the Nasdaq bear market decline It’s a company called PubMatic (NASDAQ: PUBM) that specializes in advertising technology, also known as adtech.
PubMatic is doing well despite a decrease in ad spending caused by higher interest rates and concerns about a possible U.S. recession. It offers many advantages for people who invest in it for the long term.
In the advertising industry, PubMatic plays a crucial role in a big growth trend. It operates as a sell-side platform (SSP) in the digital advertising space. SSPs help publishers sell their display space. Recently, there have been fewer trusted and fast-growing companies in this market, and PubMatic is one of them. By late March 2023, it had captured a market share of around 4% to 4.5% in the sell-side industry.
While experts predict that global ad spending will grow by an average of 10% each year until 2025, PubMatic has been growing even faster than that. It focuses on connected TV (CTV) and video advertising, which involve streaming video content on smart televisions. The popularity of CTV is expected to grow even more in the coming years.
Another reason to consider investing in PubMatic is the smart decision they made to develop their own cloud-based programmatic ad infrastructure. Instead of relying on other companies’ services, they built their own platform. This helps them expand their business and reduce costs compared to their competitors. In simpler terms, it means PubMatic has the potential to make more money from their operations.
PubMatic has also been generating positive cash flow for nine consecutive years. This means they have been making more money than they spend on their day-to-day operations. So, this small-cap adtech stock has a lot of potential and is waiting for smart investors to take advantage of it.
Last on our list is an amazing growth stock that you shouldn’t miss out on, especially since the Nasdaq is still far from its highest point. It’s a cybersecurity company called CrowdStrike Holdings (NASDAQ: CRWD). Despite concerns about a possible U.S. recession affecting high-growth stocks like CrowdStrike, the company is performing exceptionally well.
Cybersecurity has become essential in today’s world because hackers and advanced robots are always trying to steal important information, no matter how the U.S. economy or Wall Street are doing. CrowdStrike and similar companies play a crucial role in keeping data safe as businesses store more information online and in the cloud.
What makes CrowdStrike special is its artificial intelligence (AI)-driven platform called Falcon. Falcon analyzes trillions of events every week and uses machine learning to become better at detecting and responding to threats over time.
It’s interesting to note that CrowdStrike’s solution is among the more expensive options available. However, customers remain loyal to the company despite the higher cost. Over the past six fiscal years, the company’s gross retention rate has increased by more than 400 basis points to 98%.
Additionally, CrowdStrike’s existing customers continue to expand their purchases. While only a small percentage of customers bought multiple cloud-module subscriptions six years ago, now 62% of clients have purchased at least five cloud-module subscriptions in the most recent quarter. These additional sales are important for generating cash flow and growing the company’s operating margin.