It's over. Sure, you might still see some mentions of a Nasdaq bear market here and there. However, both the Nasdaq Composite Index and the Nasdaq 100 Index have clearly emerged from a brief bear market.
Could the rebound only be temporary? Maybe. However, the strength of the Nasdaq indices' upward momentum looks impressive. Here are three stocks to buy on the big bounce.
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1. Block
Fintech stocks were hit especially hard in the big Nasdaq sell-off in recent months. Block's (SQ -1.68%) shares plunged nearly 70% from their peak at one point. The stock is still down close to 50% even after mounting a comeback. I think investors remain overly pessimistic about the company's prospects.
You wouldn't think the stock would be struggling based on Block's underlying business. The company's Square ecosystem generated gross payment volume (GPV) of $42.6 billion in the fourth quarter of 2021, up 45% year over year. Square's revenue jumped 49% to $1.47 billion. More sellers are using multiple products in Square's growing lineup than ever before.
Block's Cash App delivered revenue of $2.55 billion in Q4, an 18% year-over-year increase. Granted, $1.96 billion of the total stemmed from Bitcoin transactions. But don't let that fool you. Cash App performed exceptionally well even without the cryptocurrency, with revenue from subscription and services soaring 41% year over year to $487 million.
There are three key key reasons to be bullish about Block's prospects going forward. Most importantly, both businesses and consumers continue to shift from cash to digital payments. In addition, the COVID-19 headwinds that have held back growth should be less of an issue in the future. Also, Block's acquisition of Afterpay should boost its "buy now pay later" business.
2. MercadoLibre
Shares of MercadoLibre (MELI -0.45%) were briefly down nearly 55% from the high set in September 2021. A solid rebound appears to be underway now, though.
MercadoLibre is best known for its e-commerce platform targeting the Latin American market. This e-commerce business continues to roar, with revenue vaulting nearly 56% higher in the fourth quarter of 2021 to $1.36 billion.
However, the company's biggest growth driver these days is fintech. In Q4, MercadoLibre's fintech platform generated revenue of $773 million, up more than 70% year over year. The company had 34.5 million active fintech users at year-end. Its Mercado Pago digital payments business is especially growing robustly outside of its e-commerce platform.
MercadoLibre has tremendous growth prospects on both fronts. E-commerce market penetration in Latin America remains low. The number of Latin Americans with limited access to financial services remains high. Both translate to opportunities for the company. My view is that this stock just might be able to deliver a 10x return over the next decade.
3. Teladoc Health
To borrow a line from Winston Churchill, Teladoc Health's (TDOC -2.91%) steep and sustained decline is "a riddle, wrapped in a mystery, inside an enigma." Shares of the virtual care provider plummeted more than 80% from the peak set in early 2021. So far, Teladoc has experienced only a modest bounce.
Yet business is booming. Teladoc's Q4 revenue jumped 45% year over year to $554.2 million. Total visits increased 41% to 4.4 million. The company projects 2022 revenue of between $2.55 billion and $2.65 billion, reflecting nearly 28% growth at the midpoint of the range.
Meanwhile, investors seem to be valuing the stock as if there's little growth potential whatsoever. Teladoc's market cap is actually at a level not seen since the early days of the COVID-19 pandemic.
Teladoc continues to innovate, launching its Primary360 virtual primary care service and integration with Amazon's Alexa virtual assistant. I think these are important steps in the company's goal to capture a significant chunk of its $260-billion-plus addressable market in the U.S. Teladoc's share price malaise doesn't make a lot of sense, but that presents a great opportunity for long-term investors.
