2 Best Growth Stocks to Buy Without Hesitation in a Bear Market

High inflation and rising interest rates have hit the stock market hard through the first half of the year. The Nasdaq Composite has fallen 29% from its high, putting the index in bear market territory, but many individual stocks have fallen even farther. CrowdStrike (CRWD 0.69%) and Salesforce (CRM 1.27%) stock prices are down 36% and 44%, respectively.

Those losses certainly hurt in the short term, but they also create a buying opportunity for patient investors. The services that CrowdStrike and Salesforce provide are critical in any economic environment, meaning both businesses should continue to churn out solid financial results through the current downturn. That should translate into a strong rebound when the next bull market rolls around.

Here's what you should know about these two growth stocks.

1. CrowdStrike

Cybercrime is becoming more common and more costly. Ransomware attacks increased 105% last year as hackers hit a wide range of targets, from tech and energy companies to hospitals and chemical distributors. At the same time, the cost of the average breach surpassed $4 million, according to IBM. That makes effective cybersecurity indispensable, and CrowdStrike is an industry leader.

Last year, CrowdStrike captured a 14.2% market share in endpoint (device) security, up four percentage points from the prior year. Management believes that scale makes its artificial intelligence (AI) engine uniquely effective in identifying cyberattacks simply because more data means better AI. That competitive edge helped CrowdStrike grow its customer base 57% to 17,945 over the past year, and each customer brings more data, reinforcing its best-in-class AI.

Additionally, CrowdStrike offers 22 different software modules, each addressing a different vertical in the cybersecurity industry. All of those products are delivered through a single agent, which can be installed without rebooting the endpoint. That differentiates CrowdStrike from other vendors, simplifying adoption for customers. Not surprisingly, the company has consistently delivered strong financial results. Revenue soared 64% to $1.6 billion over the past year, and free cash flow climbed 49% to $481 million.

Turning to the future, the company puts its addressable market at $58 billion this year, but management believes that figure could reach $126 billion by 2026. Trends like the growing number of connected devices (e.g., Internet of Things sensors), the adoption of remote and hybrid work, and the shift to cloud computing all have something in common: They create new vulnerabilities that hackers can exploit. For that reason, each of those trends should be a tailwind for CrowdStrike.

Currently, the stock trades at 26.2 times sales. That may not be cheap, but it's a bargain compared to the three-year average of 38.1 times sales. More importantly, CrowdStrike is growing like wildfire, and despite the difficult macroeconomic environment, organizations are unlikely to defund their security departments. That's why you can buy this growth stock without hesitation.

2. Salesforce

Salesforce helped pioneer the modern customer relationship management (CRM) industry. Its platform includes productivity software for sales, customer service, marketing, and commerce, as well as tools for data integration and analytics. Salesforce has also infused its software with artificial intelligence, which makes it possible for clients to surface insights, predict outcomes, and automate workflows. Those tools help organizations engage leads and turn those leads into customers.

Thanks to its first-mover status and broad portfolio, Salesforce is the gold standard in CRM. The company holds a 23.8% market share, according to the International Data Corp., while the next-closest competitor is SAP, with a 5.4% market share. In fact, Salesforce has led the industry for nine consecutive years, and that dominance has translated into consistently strong top-line growth. Revenue rose 25% to $27.9 billion in the past year.

On the bottom line, free cash flow climbed just 2% to $5.7 billion. That may concern some investors, but the cause is an uptick in operating expenses due in part to the Slack acquisition. But that deal is already paying off. The number of customers spending at least $100,000 on Slack has grown 40% or more in each of the last four quarters. Additionally, Salesforce is investing aggressively to capitalize on its massive market opportunity, which management puts at $284 billion by 2026.

Going forward, investors should look for free cash flow growth to accelerate as Salesforce continues to digest the Slack acquisition. More broadly, CRM software helps organizations maintain customer loyalty. That value proposition is critical to almost any business in any industry, and if anything, macroeconomic headwinds like high inflation only make CRM software more important.

Currently, Salesforce trades at a reasonable 6.1 times sales, far cheaper than its three-year average of 9.2 times sales. That's why this growth stock is worth buying right now.