This year hasn't been an easy time for growth investors. The Nasdaq Composite Index fell by 20% back in March to enter a bear market and has since rebounded by 6%. It's still down around 15.7% year to date. However, amid the carnage, let's not forget that many businesses are still posting healthy business growth. The decline was mainly due to worries over rising interest rates as the U.S. saw its inflation rate hit the highest level since 1981.
While such share price drops may feel distressing, they also open up windows of opportunity to accumulate strong and well-run companies on the cheap. Investors should look at businesses that enjoy a sturdy competitive moat and tailwinds that can boost their growth over the long term. Remember that the stock market is subject to emotions such as fear in the short term but it will ultimately reward companies that can grow their top and bottom lines in the longer term.
With this in mind, here are two growth stocks with catalysts that could enable them to double this year.
Fiverr International (FVRR 1.85%) runs a platform that matches freelancers with the companies that are scouting for their skills and talents. The pandemic had supercharged the use of the company's platform as more people turned to gigs to tide themselves over during lockdowns and retrenchments. As countries reopened and economies began recovering, investors became worried that Fiverr's growth may slow down, sending its shares into a sharp 70% plunge over the past year.
Fiverr's financials, however, have remained solid. Revenue for its fiscal 2021 climbed by 57.1% year over year to $297.7 million and annual gross merchandise value (GMV) hit $1 billion for the first time in its history. The company's free cash flow more than doubled year over year from $13.1 million to $35.4 million. Operating metrics were also encouraging, with the number of active buyers increasing by 23% year over year to 4.2 million and spending per buyer up 18% year over year to $242.
The freelancing platform is also working on tools and new features to increase customer loyalty. Last November, it introduced Fiverr Workspace, a suite of back-office tools to help both freelancers and small business owners to better manage their payments and taxes. And in February this year, the company launched Fiverr Inspire, an enhanced browsing tool to help buyers of services locate freelancers based on their past projects and assignments. The company is not forgetting about larger businesses, though, and its acquisition of Stoke Talent for $95 million last year was aimed at providing tools to help such businesses to onboard freelance talent and track their budgets.
Another casualty of the reopening theme is videoconferencing software company Zoom Video (ZM 0.79%). The cloud-based software provider saw its stock lose two-thirds of its value in the past year amid concerns that growth may be slowing. However, more people now understand the convenience and efficiency of using Zoom's software, and many businesses now incorporate some form of hybrid work even as countries are opening up.
Zoom has reported a healthy set of numbers for its fiscal year 2022 ended Jan. 31, with revenue jumping 54.6% year over year to $4.1 billion. Operating income surged by 61.2% year over year, while net income more than doubled year over year to $1.38 billion. Free cash flow remained strong, inching up 5.4% year over year to $1.46 billion. The company has guided for revenue of $4.54 billion for fiscal 2023, up 10.7% year over year.
Encouragingly, Zoom's enterprise customers are also growing, jumping 35% year over year to 191,000. This is an important metric that showcases the increasing adoption of the company's cloud solutions by larger customers, who are more likely to be sticky. Like Fiverr, Zoom is also introducing enhancements to its platform and services in order to keep customers loyal and attract new clients.
In February, the company announced an omnichannel contact center service that is optimized for video and can support customer use cases using video, voice, SMS, and Web chat. And just this month, Zoom IQ for Sales was unveiled, an intelligence solution tailored for sales professionals to improve the way they work and connect.
It's clear that Zoom is working hard to boost its platform with value-added services, and with the stock's sharp plunge, it's starting to look like an enticing bargain for investors.