2 SaaS Growth Stocks Worth Buying on the Dip

Long-term investors would be familiar with the wild ups and downs in the stock market. It doesn't rise in a straight line, and in fact corrections often occur every two years. Given enough time, history is proof the market always heads north eventually. 

Therefore when the market dips, it can be a great time to add to your stock portfolio with a multiyear time horizon. Right now, the Nasdaq 100 technology index has declined 10% year to date, but many individual stocks are sitting at much steeper discounts. 

These two software-as-a-service (SaaS) companies operate highly innovative business models with strong growth rates, so it might be a good idea to pick them up while they're on sale. 

Image source: Getty Images.

The case for Atlassian

Software technology companies that promote collaboration in organizations with remote employees have enjoyed a booming environment over the last two years. The pandemic triggered a shift to working from home, and hybrid work models still persist today even as society approaches a full reopening. 

Atlassian (TEAM -1.06%) is an advocate for teamwork -- in case you couldn't tell by its ticker code -- and it's not all about work. The company's Confluence platform, for example, acts like a digital office watercooler to connect staff on both a personal and professional level, allowing them to share information about themselves as well as their jobs.

But Atlassian's flagship tool is Jira, and it's a powerful addition to any software development team. It allows users to plan, track, and release products collaboratively. The company is also making investments in its Jira Service Management platform, including the use of artificial intelligence, to help Atlassian customers better serve their own customers.

One of Atlassian's missions of late is to migrate its on-premises customers into the cloud, which adds a new layer of utility to its platforms. The cloud now makes up over 50% of the company's total revenue, and in the recent fiscal second quarter the segment grew by 58%, crushing Atlassian's overall revenue growth of 37%.

Analysts expect fiscal 2022 full-year revenue to top $2.7 billion. In contrast to other software companies, Atlassian is also profitable, with $1.57 in earnings per share estimated for this year. Its stock has fallen 39% from its all-time high, presenting an opportunity to buy ahead of a future where remote teams are likely to feature across more organizations.

Image source: Getty Images.

The case for Intuit

Intuit (INTU -0.53%) is a small business specialist, with a suite of software tools designed to make bookkeeping and accounting simple and easy. Its QuickBooks platform is popular among millions of small enterprises worldwide for its affordable pricing, user-friendly navigation, and automated features, with the help of advanced technology like artificial intelligence.

But the company also has a thriving consumer-facing business headlined by TurboTax, a cyclical tool that helps individuals file their taxes each year without an accountant. And Intuit's 2020 acquisition of Credit Karma, which provides credit reports and introduces personal finance products to consumers, is now contributing record quarterly revenue, including $444 million in the most recent fiscal 2022 Q2. 

The company's business segment expanded in 2021 with the $12 billion purchase of MailChimp, a platform that helps small to mid-sized businesses engage with and market to their customers. Intuit is integrating MailChimp into QuickBooks, further growing the platform's capabilities beyond just accounting.

Together, the combination of Intuit's segments have delivered consistent, reliable growth over the last few years, as the table shows.

Data source: Intuit. CAGR = compound annual growth rate.

Intuit stock has dipped 36% since hitting its all-time high in November 2021, presenting investors with an enticing buying opportunity for the long haul. Betting on a company that shrinks the accounting and financial complexity for small business owners will likely be a winner for years to come, especially if the global economy experiences a strong rebound when we eventually exit the pandemic. Plus, Intuit's strong track record of profitability makes it a capable anchor for any stock portfolio during rough market conditions.