Regardless of whether you're a new or longtime investor, this year has proved challenging. Since reaching their all-time highs, the benchmark S&P 500, iconic Dow Jones Industrial Average, and tech-driven Nasdaq Composite, are respectively lower by 14%, 11%, and 24%. The greater than 20% decline in the Nasdaq places the index firmly in bear market territory.
And it's not just the magnitude of the aggregate declines that are worrying investors. Last Thursday, May 5, we witnessed what can accurately be described as a stock market plunge. The Nasdaq Composite registered its third-largest single-session point decline on record, and at one point was lower by 6% on an intra-day basis. The nominal point declines for the S&P 500 and Dow were also among their 10 largest in history.
While stock market crashes and steep corrections can be scary, history has also shown they're the perfect time to go shopping. That's because every crash and correction throughout history has eventually been erased by a bull market rally. If you buy and hold game-changing companies, you'll have a high probability of growing your wealth.
What follows are five discounted growth stocks ripe for the picking that you'll never have to sell.
Despite its stock being taken to the woodshed since the year began, Meta ended March with 3.64 billion monthly active users (MAUs), which was 6% more than in the comparable quarter a year ago. Put another way, more than half of the world's adult population visits a Meta-owned asset (Facebook, Instagram, and WhatsApp) each month. Advertisers understand there's no social media platform that offers access to a broader audience, which is why Meta typically possesses exceptional ad-pricing power.
Something else to consider about Meta is the company's leading position in metaverse investments. The metaverse being the next iteration of the internet which'll allow connected users to interact with each other and their environment in 3D virtual worlds. Although metaverse expenses have weighed down Meta's near-term profits, these investments should be well worth the cost if the metaverse makes good on its multitrillion-dollar potential.
Investors can also confidently scoop up shares of robotic surgical system developer Intuitive Surgical (ISRG -1.28%) and never sell. Shares of the company have declined nearly 39% in under five months.
The beauty of Intuitive Surgical's operating model is twofold. To begin with, the company has operated as the unquestioned leader in soft tissue surgeries for the past two decades. It had 6,920 of its da Vinci surgical systems installed worldwide, as of March 31, 2022, which is far more than its competition. Because these machines are pricey and training surgeons takes time, Intuitive Surgical tends to lock in its customers for a long time.
The other key to Intuitive Surgical's success is that its operating margins are designed to grow over time. In the 2000s, most of the company's revenue was generated from selling its da Vinci systems. Unfortunately, these are intricate systems, meaning the margins associated with their sale were mediocre, at best. Over time, instrument and accessory sales with each procedure, along with servicing revenue, have become the lion's share of total sales. These are higher margin segments that set this company up to be a long-term winner.
Following a 72% tumble, online specialty retailer Etsy (ETSY 1.78%) checks all the appropriate boxes as a discounted growth stock to buy now and hold forever. Shares are currently trading at 21 times Wall Street's forward-year earnings estimate, which is an all-time low for Etsy.
Like most online retailers, Etsy is contending with supply chain issues and inflationary headwinds that are hampering its year-over-year comparisons. But unlike other online retailers, Etsy's platform has a unique competitive advantage. Whereas most retailers are impersonal and strive for volume, Etsy's merchants are predominantly small businesses that thrive on personalization and engagement. There simply isn't another retail platform that can scale and engage with consumers quite like Etsy.
Furthermore, Etsy has done an incredible job turning casual shoppers into "habitual buyers" -- a term the company uses to describe people who spend at least $200, in aggregate, over the trailing-12-month period and make six or more purchases. Continuing to grow the number of habitual buyers is Etsy's ticket to generating higher revenue from the merchants on its platform.
Another deeply discounted growth stock that's begging to be bought during this stock market sell-off is biotech stock Novavax (NVAX 4.95%). Shares of the company are more than 80% below their COVID-19 pandemic high despite a forecast price-to-earnings ratio of less than 3 in 2022.
The biggest near-term driver for Novavax is NVX-CoV2373, the company's COVID-19 vaccine. Two clinical trials for adults demonstrated respective vaccines efficacies of 89.7% and 90.4%. Earlier this year, it also produced an 80% vaccine efficacy in a trial for adolescents. The key point being that Novavax is one of only a select few vaccine developers to hit the 90% efficacy mark in clinical trials, which gives NVX-CoV2373 a real shot at becoming a key global player during the pandemic.
Looking further out, Novavax has the potential to be a leader in developing combination vaccines. Whereas the company is entering the COVID-19 vaccine arena after other Big Pharma players, it has the chance to be a leader in bringing an influenza/COVID-19 combination shot to market. With a proven development platform, Wall Street has only seen the tip of the iceberg with regard to Novavax's long-term potential.
Although it doesn't scream "value" quite like Novavax, payment-processing kingpin Visa (V -0.47%) is yet another growth stock that hasn't been this inexpensive in years, based on Wall Street's forward-year earnings multiple. Shares are priced at roughly 24 times next years' earnings for a company that consistently grows by a double-digit percentage.
The best thing about Visa is its cyclical ties. Some investors might not feel that way given the growing likelihood of a recession caused by historically high inflation and the Federal Reserve hiking rates. However, it's important to note that periods of economic expansion last disproportionately longer than recessions and contractions. To boot, Visa is perfectly positioned to benefit from high inflation as consumers and businesses spend more for the same amount of goods and services.
Investors should also appreciate Visa's focus on payment processing. Even though Visa seemingly has the option of becoming a lender and generating interest income, it chooses not to. Because the company doesn't lend, it's not required to set aside capital for loan losses during recessions and economic contractions. This explains Visa's greater than 50% profit margin, and is why investors will never have to sell.