It has not been an easy time for growth investors. The NASDAQ Composite Index has declined by close to 32% year-to-date to enter its second bear market in less than three years. Although stock prices have come down significantly for a wide swath of businesses, you should not feel disheartened. Many companies are still growing at healthy rates and possess catalysts that could take their businesses to the next level.
This sharp correction opens up opportunities to scoop up shares of well-run companies at attractive valuations. These businesses should go on to do well in the long term, and their share prices should eventually reflect this growth in their top and bottom lines. Attributes to look for include strong brand names, competitive moats, strategic plans to grow, and competent management teams.
Here are three stocks you can consider buying during this bear market in technology stocks.
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Zoom Video
Zoom Video (ZM +2.02%) is known as the quintessential pandemic stock, having risen to prominence after lockdowns and movement restrictions were imposed around the glove, pushing millions to use its videoconferencing tools to work and communicate. Some of that luster has faded as the pandemic has receded, causing the company's share price to slump by nearly 71% in the past year.
NASDAQ: ZM
Key Data Points
Zoom, however, has continued to power on with a strong set of financial numbers and plans for the future of hybrid work. Revenue for its fiscal 2022 ended Jan 31 stood at $4.1 billion, up 54.6% year-over-year, while net income more than doubled year-over-year to $1.38 billion. The company continued to post healthy growth for the first quarter of fiscal 2023, with revenue up 12% year-over-year, demonstrating its ability to continue growing in the post-pandemic landscape.
Zoom isn't sitting still, either, and recently acquired Solvvy to boost its contact center offering. This acquisition opens a window for Zoom to enter the conversational artificial intelligence market, which is projected to hit $18.4 billion by 2026. The company also launched a new digital canvas service, Zoom Whiteboard, to allow for more efficient collaboration among team members who are physically separated. Zoom also partnered with Genesys, a customer experience expert, to offer better solutions to solve customer needs.
Meta Platforms
Meta Platforms (META 0.82%), previously known as Facebook, has also been a beneficiary of the pandemic as more people took to social media to stay in touch with friends and family. The company reported a strong performance for 2021 and grew revenue and net income by 37% and 35% year-over-year, respectively. Its 2022 first-quarter earnings saw revenue growth slow to 7% year-over-year, while net income dived by 21% year-over-year to $7.5 billion. Investors have also turned bearish on Meta, causing its share price to halve in the last year.
NASDAQ: META
Key Data Points
CFO Dave Wehner explained in the company's latest earnings call that marketing expenses rose 16% year-over-year due to higher marketing spending, while more than 5,800 new employees were added to its payroll during the quarter, up 28% over the prior year. Meta Platforms is also spending more to promote its short-form video format Reels as an alternative to the dominant Tik Tok. A new "Challenges" option for Facebook Reels now allows content creators to unlock a set of challenges in sequential order to achieve a big payout at the end of each month. New updates such as sound sync and support for longer Instagram Reels for up to 90 seconds also kicked in, showcasing the company's commitment to improving its product to compete more effectively.
And let's not forget why Meta changed its name in the first place. The company continues to spend money and resources on building up its version of the metaverse, a virtual arena where friends and colleagues can hang out together. Meta has rolled out Horizon Homes, where you can use virtual reality to visit a friend's virtual home or invite them to yours. In Hong Kong, the company is working closely with cafes, schools and institutions to provide metaverse experiences and explore their use in daily life. These initiatives will surely suck up more cash in the near term and negatively impact profitability, but are great for building the company's moat over the long term.
Mercadolibre
A third trend that has been booming since the onset of the pandemic is e-commerce, and Mercadolibre (MELI 0.28%) is the top dog in the Latin American region. With the reopening of borders, investors are worried that the company's growth may slow, sending its shares down 57% year-to-date. Mercadolibre's 2021 earnings saw revenue and operating income jump by 78% and 245% respectively year-over-year as the number of users using its e-commerce and online payment services surged.
NASDAQ: MELI
Key Data Points
Its momentum doesn't seem to have slowed -- the first quarter of 2022 saw revenue jump 63% year-over-year to $2.2 billion, while operating income rose 52.7% year-over-year to $139 million. Both gross merchandise volume and total payment volume continued their ascent, climbing by 26.5% and 72% year-over-year, respectively. Unique active users on Mercadolibre's platform increased by 15.7% year-over-year to 81 million, resulting in a 73.2% year-over-year jump in total payment transactions to nearly 1.1 billion.
Mercadolibre has big plans for this year, and will develop more products and roll them out more quickly. The e-commerce outfit also intends to hire almost 14,000 new employees this year, and is actively pushing out its digital wallet to allow customers to buy and sell cryptocurrencies. The company has also partnered with payments giant Mastercard (MA +0.41%) to strengthen the security of its digital wallet to increase confidence for its customers to transact securely. With these initiatives in place, Mercadolibre can maintain its lead as Latin America's largest e-commerce company and continue to attract more users to its platform.
