It's understandable if you're wary of buying any (or even continuing to hold) stocks right now. The military conflict unfurling in Ukraine certainly feels like it could expand outside of that country's borders. Even if it doesn't, sanctions and other punitive actions against Russia are rattling the global economy.
As the old adage goes though, fortune favors the bold. If you're a true long-term investor, now's actually a great time to step into the best-of-the-best growth stocks. Here's a look at three such names to consider while they're down for a less-than-permanent reason.
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1. Amazon
It's such a predictable, standby pick that it's almost become cliche. Nevertheless, Amazon (AMZN 0.90%) is a compelling pick here, not just because its stock price is down more than 15% since the end of 2021, but because its current price is right around where it was trading in the middle of 2020. That's right -- the bulk of Amazon's pandemic-prompted gains have either been given up or never actually achieved in the throes of the pandemic, when one might have expected this stock to be soaring.
Whatever the reason, it's arguably a mistake. Not only is Amazon poised to continue growing its e-commerce business as more and more consumers turn to it as an alternative to brick-and-mortar shopping, the company's highly lucrative cloud computing arm is truly taking off now.
Think about this: Amazon Web Services (AWS) saw its revenue grow 37% to $62.2 billion last year, accounting for 13% of the company's total top line. AWS is so profitable, however, that this unit provided 75% of Amazon's 2021 operating income.
Now consider that one technology market research outfit anticipates the cloud computing market will grow at an annualized pace of 17% through 2025. Amazon's most profitable business -- by far -- is still catching a major tailwind. Add in the fact that the company is also just now starting to get serious about selling space to advertisers using the web to promote products at the same time it's backing away from its distracting brick-and-mortar ventures, and what you're left with is a highly focused growth machine.
2. Upstart Holdings
While Amazon is a household name, Upstart Holdings (UPST 5.03%) isn't. However, there's a good chance you or someone else living in your household has benefited from its service. Upstart is an alternative credit rating bureau, although it's so different from the likes of Equifax, Experian, and TransUnion that the description is almost a little misleading.
In the simplest terms, Upstart determines an individual's creditworthiness by using an artificial intelligence-powered algorithm. While factors such as income and current debt load are likely considered (as traditional credit bureaus do), Upstart also uses information like educational history and other, less traditional inputs.
Whatever the specific approach is, it works better for everyone involved. The company reports its approval process results in 75% fewer loan defaults than the nation's biggest banks experience in extending comparable loans. Yet it also helps 26% more borrowers get loans that likely would have been denied by a lender.
It's still a novel idea within the lending world, but that's changing. Upstart Holdings reports as of the end of 2021 that 42 banks and over 150 institutional lenders now rely on Upstart's credit-scoring platform. More are on the way too, which is why the analyst community believes the company will see top-line growth of 65% this year and nearly 35% again next year. Yet you can buy this stock right now at 70% less than October's peak price.
3. Datadog
Finally, add Datadog (DDOG 3.76%) to your list of price-discounted growth stocks to buy this March. It's peeled back more than 30% from its November's highs, which -- given its backstory -- makes it a name worth a shot at its present price.
It would be surprising if you'd heard of it; most investors haven't. Don't let its lack of notoriety fool you, though. This $40 billion software outfit's been around since 2010, quietly racking up major revenue growth the whole time. Last year's sales improved 2020's tally to the tune of 70% following 2020's pandemic-defying 66% growth, pushing the company out of the red and into the black (on an unadjusted operating basis). Analysts are modeling comparable growth this year, suggesting Datadog's adjusted bottom line will swell from last year's per-share profit of $0.48 to $0.51 this time around, en route to $0.84 per share next year.
The secret of Datadog's success isn't exactly a secret. The company offers custom-built, industry-specific software that allows its users to monitor its cloud and computer networks.
While cybersecurity threats are certainly part of the mix of information being tracked, that's hardly all Datadog delivers. Its platforms also allow client companies to keep tabs on data processing loads, log network errors, and display all of this information in an easy-to-understand user interface. As the world becomes increasingly digitized, these are the sorts of solutions large organizations want and need.
