A decline of 38% on the Nasdaq Composite is the perfect time to buy these growth stocks that are priced at a discount.
If you’re not a short-seller, or were heavily invested into energy companies, the year 2022 could have been an investment nightmare from a viewpoint. The timeless Dow Jones Industrial Average, the benchmark S&P 500 as well as the the growth-dependent Nasdaq Composite (^IXIC) all fell in to the realm of bearish markets.
A decline from peak to peak of 38% for the Nasdaq from November 2021 wasn’t something investors expected or expected, it’s an opportunity to get your hands on top-quality stocks for less costs. Since every decline of a double-digit percentage across the main indexes, like the Nasdaq has been erased by a rally in the bull market.
Particularly, the performance decline in the Nasdaq Composite puts growth stocks in the spotlight as incredible bargains as we approach this new calendar year. Here are five exceptional growth stocks that you’ll regret not buying during this dip in the Nasdaq bear market downturn.
Amazon
The most exciting growth stock you shouldn’t add to your portfolio during the Nasdaq bear market is e-commerce’s kingpin Amazon (AMZN 2.34 percent). Despite the economic downturn and increasing interest rates that threaten its main revenue segment (online retail sales) Amazon’s much higher margin operating segments are exploding with all the vigor.
Although Amazon could be responsible for about 40% of U.S. online retail sales in 2022, as per an April report by eMarketer E-commerce is an operating segment with a low margin. The most important thing in the case of Amazon is the constant double-digit growth in sales it’s netting through subscription services, advertising services as well as Amazon Web Services (AWS) — which makes up the majority part of its operating earnings and its cash flow.
In April 2021, Amazon has more than 200 millions worldwide Prime customers. This number is likely to be more than it is now, particularly since the company holds the sole rights for Thursday Night Football. Based on the third quarter revenue from subscription services of $8.9 billion and a total of $35.6 billion in high margin and predictable annual run rate sales from this sector.
A recent report by Canalys estimates that AWS represented 32% of all cloud infrastructure expenditure in the 3rd quarter. AWS is currently generating more than $82 billion of annual run rate revenue and its hefty margins provide Amazon the chance to double its cash flow in 2025. The soaring operating cash flow of Amazon is what makes the company an amazing bargain.
Lovesac
If you’re looking for something that is a little more obscure, small-cap furniture stocks Lovesac (LOVE 6.69 percent) is one to regret not buying at the time of this Nasdaq bear market crash. In spite of the increasing levels of inventory, Lovesac is well-positioned to keep squeezing out a stagnant industry.
One of the most distinctive features of Lovesac in its product line is the furniture. While most brick-and-mortar stores rely on the same small number of wholesalers Lovesac has been able to generate around eighty percent of their total sales from sactionals – modular sofas that can be set up numerous ways to accommodate all living areas. Sactionals offer more than 200 options for covers and the fabric used to make these covers is made from recycled water bottles. The key product of Lovesac offers function and flexibility, as well as featuring environmental, social and corporate (ESG) connections.
Furthermore, Lovesac has navigated the tough economic times by utilizing the ability to quickly and efficiently sell its products. Its omnichannel strategy allows the company to be adapted towards online sales, pop-up showrooms and partnerships to help increase sales in addition to the more traditional 189 stores in 40 states. The omnichannel platform can help keep costs down and the margins are higher.
The company also reached full-year profit years before Wall Street’s predictions. With a forward-year earnings ratio of around 8 profits, Lovesac is about as cheap a growth stock as you’ll ever find.
