The bear market has been mostly a downer for investors.
After all, no one likes to lose money, but long-term investors know there's a silver lining to bear markets. That's because when stocks are cheaper you buy more of them, so if you're a net buyer of stocks, you should want prices to languish, at least in the short term.
The market sell-off has set up plenty of bargain buying opportunities for investors. Keep reading to see why JD.com (JD 1.13%) and Perion Network (PERI -0.25%) fit the bill if you're looking for stocks that are ready for a bull run.
1. JD.com: A Chinese stock worth the risk
Chinese stocks faced a bad rap lately and it's easy to see why. The stocks were slammed as Beijing tightened oversight on China's tech companies, slapping fines and restrictions on giants like Alibaba Group Holding, and, at the same time, the U.S. government threatened to delist a number of Chinese companies for not allowing U.S. auditors to examine their books.
JD.com, China's biggest direct online retailer, was swept up in the malaise. The stock is down roughly 50% from its peak in early 2021; however, JD escaped much of the scrutiny that peers like Alibaba faced. Meanwhile, the company's financial performance remains solid.
Lockdowns imposed in response to COVID-19 weigh on the Chinese economy and slowed JD's growth, with revenue increasing just 5.4% in the second quarter. However, in a quarter when China's retail sales fell 4.6%, JD actually delivered considerable market share gains.
The company also posted strong growth in its key strategic initiatives. For example, logistics and other service revenue increased 29% to $3.1 billion. That's important because service businesses tend to see higher margins, and JD has an extensive logistics network in China with more than 1,400 warehouses, giving it a competitive advantage over rivals like Alibaba. The company is also at the forefront of logistics technology, experimenting with autonomous delivery vehicles and delivery drones. It also operates an automated warehouse in Shanghai with just four employees.
Unlike a number of tech stocks, JD is profitable, and the stock is cheap at a price-to-earnings ratio of 31. U.S. and Chinese regulators also recently reached an audit agreement, diminishing the delisting risk for JD. China will eventually emerge from its slumber, and when it does, JD's growth should reaccelerate, driving a rebound in the stock.
2. Perion Network: An overlooked adtech company
If you like growth stocks, the advertising technology sector is a great place to look. Many of these companies aren't just growing fast; they're also highly profitable.
Perion Network offers one example. The small-cap stock operates primarily through its Intelligent Hub, which connects ad buyers and sellers, optimizing pricing and making the buying process more efficient. The company has innovated new ad concepts like a connected cart, allowing connected-TV viewers to scan a QR code in an ad to immediately purchase an item, or in-game video ads allowing brand to advertise during a live event like a sports game.
Revenue rose 34% in the company's second quarter, reaching $146.7 million, a strong pace at a time when digital advertising companies have posted sluggish growth. That includes a 90% jump in connected TV, driven in part by its recent acquisition of Vidazoo, a video monetization platform.
On the bottom line, Perion delivered strong growth as well, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) doubling to $28.5 million. In preparation for the end of third-party cookies, Perion introduced its own cookie-less technology, SORT, which it provides for free to build customer loyalty.
Based on its trailing earnings per share of $1.46 under generally accepted accounting principles (GAAP), the stock trades at a price-to-earnings ratio of less than 15, making it an undeniable bargain for a company growing this fast. Investors seem to think its pandemic boom will fade away, but Perion's 2022 guidance calls for 32% revenue growth, and the company has demonstrated the ability to grow both organically and through acquisitions.
As the Intelligent Hub attracts a broader customer base, Perion should continue to deliver strong growth, making the stock a good bet at its current price.
