The most recent bear market for the Nasdaq Composite Index lasted only a few days. However, the rebound appears to be similarly short-lived.
We're not far away from what could be part two of a broader Nasdaq bear market. The Nasdaq Composite Index only has to drop another 4% to again enter bear territory. Should investors worry? Nope. Here are three stocks to buy anyway.
Alphabet's (GOOG 5.34%) (GOOGL 5.32%) share price has held up better than many other Nasdaq stocks. However, the tech stock is still down 13% from its peak in late 2021. But if you're a long-term investor, I think that this pullback represents a great buying opportunity.
The company's business remains strong. Alphabet beat expectations with its fourth-quarter results. Revenue soared 32% year over year to $75.3 billion with Google and YouTube advertising driving most of that growth.
Alphabet should continue to enjoy robust growth. Google Search is still the go-to option for targeted advertising. YouTube is already the second-largest streaming service and could gain more momentum by disrupting the ad-supported video-on-demand market. Waymo has a huge growth opportunity if the adoption of self-driving cars reaches a tipping point.
A potential near-term catalyst is on the way with Alphabet's planned 20-for-1 stock split. There's also the important detail that Alphabet's valuation is attractive with a price-to-earnings-to-growth multiple below 1.0. The stock should be a winner over the long run regardless of whether or not another Nasdaq bear market is on the way.
2. Teladoc Health
The bears have run rampant over Teladoc Health (TDOC 1.27%) for a long time. Shares of the virtual care leader have been depressed since early last year. Teladoc stock is still down around 65% from its 52-week high.
What's stunning about Teladoc's plunge is that the stock is now below its level before the COVID-19 pandemic. But the company's opportunities are arguably much better now than they were back then.
The pandemic shook up the dynamics of the telehealth market. Virtual care, in general, is more widely accepted than it has ever been. Teladoc stands as the clear leader in the market. It boasts the largest customer base (including more than half of the Fortune 500) and the broadest array of services.
Teladoc estimates that it has a $75 billion growth opportunity without adding a single new client. That's how significant the potential for cross-selling within the company's existing member base. Teladoc is winning new clients, though, thanks in part to new products such as its Primary360 virtual primary care service.
The company's market cap stands at only around $12 billion. Its total addressable market tops $260 billion in the U.S. alone. I think now is a perfect time to buy Teladoc stock -- even if the Nasdaq continues to sink.
3. Vertex Pharmaceuticals
Unlike most Nasdaq stocks, Vertex Pharmaceuticals (VRTX 0.14%) is sizzling these days. The biotech stock has soared 28% year to date. And its momentum doesn't appear to be in danger of evaporating.
Vertex is best known for its cystic fibrosis (CF) franchise. The company's CF drugs generated nearly $7.6 billion last year, up 22% from 2020. Vertex believes that it can boost its revenue by more than 50% going forward by securing additional reimbursements and winning regulatory approvals for younger age groups for its existing CF therapies.
The company's fortunes probably won't be tied entirely to CF for much longer. Vertex and its partner, CRISPR Therapeutics, hope to file for regulatory approvals of gene-editing therapy CTX001 in treating (actually, curing) sickle cell disease and transfusion-dependent beta-thalassemia later this year. CTX001 could have megablockbuster potential.
Vertex also has two other promising programs either already in late-stage development or soon to advance into phase 3 testing. Its APOL1-mediated kidney disease drug could offer an even bigger market opportunity than CF. Vertex's VX-548 could be a safe and effective non-opioid therapy for relieving acute pain.
As if all of this wasn't enough, Vertex has an early stage program targeting type 1 diabetes that holds the potential to cure the disease. And the company has a hefty cash stockpile to use in further expanding its pipeline.
I've said before that investors might kick themselves later if they don't buy this stock right now. My view won't change one bit regardless of whether or not the Nasdaq bear market resumes.