This has been a year to remember in all the wrong ways for the investing community. Since hitting their respective all-time closing highs between November and January, the timeless Dow Jones Industrial Average, broad-based S&P 500, and growth-dependent Nasdaq Composite (^IXIC 0.30%), have lost as much as 19%, 24%, and 34% of their value. This firmly entrenches the S&P 500 and Nasdaq in a bear market.
Although big-time declines in the major indexes can be scary and test the resolve of investors, decades of history show that bear markets are the perfect time for patient investors to go shopping. That's because every major drop in the major indexes, including the Nasdaq, has eventually been cleared away by a bull market.
Now is an especially smart time to consider putting your money to work in innovative growth stocks. Companies that have the capacity to change the world or disrupt their existing industries are the types of businesses that can make patient investors a lot richer over time.
What follows are five astounding growth stocks you'll regret not buying during this Nasdaq bear market dip.
The first remarkable growth stock you'll be kicking yourself for not buying during the Nasdaq bear market dip is cloud-based customer relationship management (CRM) software provider Salesforce (CRM -0.41%). Shares of the company have been nearly halved since hitting their all-time high in November.
Without getting overly technical, CRM software is used by consumer-facing businesses to enhance existing customer relationships and boost sales. While it's a no-brainer opportunity for service companies, CRM software is increasingly finding its way into unexpected sectors, such as industrials, finance, and healthcare.
What makes Salesforce so intriguing is its dominance of this sustained double-digit growth opportunity. According to a report from IDC, Salesforce has been the world's leading provider of CRM solutions for nine consecutive years, and has significantly grown its share of total CRM spend over the past five years. In 2021, Salesforce accounted for nearly 24% of worldwide CRM software spending, which is more than four times higher than its next-closest competitor.
Salesforce's long-term outperformance is also a reflection of co-CEO and co-founder Marc Benioff overseeing a number of earnings-accretive acquisitions. Buying companies like MuleSoft, Tableau Software, and Slack Technologies has broadened the Salesforce ecosystem and given the company ample grounds to cross-sell its highest-margin solutions.
A second astounding growth stock that you'd be wise to buy as the Nasdaq dips into bear market territory is data-mining specialist Palantir Technologies (PLTR -1.11%). Shares of Palantir have slipped 80% below their all-time intra-day high, which was set in early 2021.
The Palantir growth story essentially comes down to the company's two core operating platforms: Gotham and Foundry. Gotham is the company's artificial intelligence (AI)-driven platform catering to federal governments. It helps with mission planning and data aggregation. Meanwhile, Foundry is geared toward enterprise clients and helps them streamline their operations by making sense of large amounts of data.
The really intriguing thing about Palantir is there's simply no replacement for what the company can provide at scale. This lack of competition and software innovation should allow Palantir to continue to grow its top line by 25% to 30% annually.
Additionally, Palantir has an exceptionally long growth runway with regard to Foundry. Whereas Gotham's opportunities are limited by matters of national security (e.g., Palantir wouldn't offer its services to the Chinese government), Foundry is still just scratching the tip of the iceberg in terms of Fortune 500 companies that it can make more efficient.
Sometimes the most beaten-down companies offer the greatest opportunity for long-term investors. That looks to be the case with AI-based lending platform Upstart Holdings (UPST -2.16%), which has shed more than 90% of its value since hitting an all-time high last year.
For the time being, Wall Street is clearly concerned that higher interest rates will quell loan activity and increase loan delinquency rates. That's obviously not great news for a company whose entire premise is to use AI to vet loans for financial institutions. But things aren't quite as cut-and-dried as they might seem.
Prior to the recent increase in interest rates, Upstart's lending platform clearly demonstrated benefits to lenders. Approximately three-quarters of all loans were fully automated, which means time saved for applicants and money saved for lending institutions.
Equally important, leaning on AI as opposed to traditional loan-vetting metrics led to a wider swath of applicants being approved. Even though the aggregate of Upstart's loan approvals had a lower average credit score than the traditional loan-vetting process, the delinquency rate was similar. In other words, Upstart's lending platform was accurately predicting loan risk and broadening the potential pool of applicants for banks and credit unions.
With ample opportunity to expand its AI-lending platform to auto loans, mortgage originations, and small business loans, Upstart's growth looks to be in its very early innings.
Ping Identity Holdings
A fourth no-brainer growth stock that would be perfect to buy during the Nasdaq bear market dip is small-cap cybersecurity stock Ping Identity Holdings (PING). Shares of Ping are down by roughly 50% since early 2021.
The beauty of cybersecurity stocks is that they're providing a service that's evolved into a basic necessity. A recession or bear market won't stop hackers and robots from trying to steal consumer and enterprise data. This means demand for cybersecurity solutions is stronger than ever, especially in the wake of the pandemic.
As its name implies, Ping is primarily focused on identity verification. The company's PingOne Intelligent Cloud platform is designed to work with on-premises security solutions to continually assess, verify, and authorize users.
What makes Ping Identity such an exciting growth story is the company's shift away from term-based licensed subscriptions and toward a subscription-as-a-service (SaaS) software model. SaaS models typically lead to lower client churn and more predictable operating cash flow over time. As this shift to SaaS accelerates and annual recurring revenue heads higher, Ping should see its sales growth rapidly pick up.
A fifth and final astounding growth stock that you'll regret not buying on the Nasdaq bear market dip is e-commerce kingpin Amazon (AMZN 1.22%). Shares of Amazon are down almost 40% from their all-time intra-day high.
Most people are familiar with Amazon because of its leading online marketplace. A March report from eMarketer forecast that Amazon would bring in 39.5% of all U.S. online retail revenue in 2022. For comparison, the 14 next-closest competitors are expected to control 31% of U.S. online retail sales this year, on a combined basis.
However, it's not aggregate online retail revenue that's really driving Amazon's growth. For starters, the company's subscription services are playing a key role in its sales and profit expansion. The dominance of Amazon's online marketplace has led to more than 200 million people signing up for a Prime membership. The annual fees collected from Prime members allow Amazon to invest in its logistics network and to undercut brick-and-mortar retailers on price.
Even more important is cloud infrastructure service provider Amazon Web Services (AWS). Even though AWS has traditionally only accounted for around an eighth of the company's net sales, it's often Amazon's leading provider of operating income. That's because cloud operating margins trounce online retail operating margins. AWS, subscription services, and advertising are all Amazon's keys to potentially tripling its annual operating cash flow over the next five years.