It's been nothing short of a terrible year for the investing community. Historically high inflation, an exceptionally hawkish Federal Reserve, and persistent supply chain issues have wreaked havoc on Wall Street and sent all three of the major indexes into a bear market.
However, it's been a particularly rough road for the growth-stock-dependent Nasdaq Composite (^IXIC -0.12%). It's shed as much as 34% from its mid-November all-time high, with growth stocks leading the charge lower.
Image source: Getty Images.
While it's not uncommon for heightened periods of volatility to weigh heavily on innovative stocks that were awarded hefty premiums, history shows that these periods of weakness don't last very long. Eventually, every crash or correction throughout history has been wiped away by a bull market rally -- and that'll be the case with the recent decline in the Nasdaq Composite.
The best part about putting money to work in the stock market is that you don't need Warren Buffett's checkbook to build wealth. Since most online brokerages have done away with commission fees and minimum deposit requirements, any amount of money -- even $300 -- can be the perfect amount to put to work right now.
If you have $300 ready to invest that won't be needed to cover bills or emergencies, buying the following three remarkable stocks would be the ideal way to take advantage of the growth-stock crash.
Intuitive Surgical
The first phenomenal growth stock that's been steamrolled of late is robotic-assisted surgical-system developer Intuitive Surgical (ISRG 0.32%). Some patients have postponed their optional surgical procedures due to COVID-19 and other economic uncertainties, causing the company's shares to plunge 47% from late last year.
However, there are three reasons this growth stock makes for a no-brainer buy. To begin with, on a macro basis, healthcare stocks tend to be highly defensive. Since we can't control when we get sick or what ailment(s) we develop, there's always demand for prescription drugs, medical devices, and healthcare services. Even though some optional procedures have been pushed back, many of the surgical procedures utilizing Intuitive's systems are still being completed.
Secondly, Intuitive Surgical has a pretty much insurmountable market-share advantage in the surgically assisted robotics arena. As of the end of June, the company had 7,135 of its da Vinci systems installed worldwide in hospitals and surgical centers.
There isn't a competitor remotely close to this figure. Plus, the cost of these systems ($0.5 million-$2.5 million), coupled with the time involved in training surgeons to use them, makes it highly unlikely that existing clients will ever switch to a competing platform.
But the best thing about Intuitive Surgical is its razor-and-blades operating model. Despite being pricey, the company's da Vinci systems (i.e., the "razor") are intricate to build and yield only mediocre margins. What's far more important is that Intuitive Surgical is generating instrument sales from each procedure and service revenue on its systems (i.e., the "blades"). These operating segments produce considerably higher margins, which should allow the company's profits to expand faster than its sales as the installed base of da Vinci systems grows.
Image source: Getty Images.
Fiverr International
Another stellar growth stock that's absolutely crashed back to Earth following an incredible COVID-19-driven run-up is online-services marketplace Fiverr International (FVRR 1.84%). Following back-to-back quarters of gross domestic product declines for the U.S. economy, it's pretty evident that Wall Street is concerned about growth prospects for the labor market. Thankfully, Fiverr has a few tricks up its proverbial sleeve.
The first thing to note about Fiverr is that it has a number advantage working in its favor. Even though recessions are an inevitable part of the economic cycle, they don't last very long. Comparatively, periods of expansion are almost always measured in years. This means a patient investor putting $300 to work in Fiverr should be able to take advantage of the natural expansion of the U.S. and global economy.
On a more company-specific basis, Fiverr's online-service marketplace provides a key distinction from its competitors that buyers clearly love. Whereas freelancers on other marketplace platforms price their services on an hourly basis, Fiverr's marketplace presents freelancers' work as a packaged deal. This method leads to far greater price transparency for buyers, which has been paramount to increasing spending per buyer.
Yet it's the company's take-rate that's easily its most impressive attribute. The "take-rate" describes the amount of revenue Fiverr gets to keep of the deals negotiated on its marketplace. The company's competitors are typically keeping between 10% and 15% of what's orchestrated on their platforms. Fiverr's take-rate has been climbing at a precipitous pace and stood at just shy of 30% at the end of June.
The third remarkable growth stock that's been taken for quite the ride is social media stock Pinterest (PINS 0.37%), which has lost 73% of its value since hitting an all-time high last year. Wall Street continues to be concerned with Pinterest's monthly active user (MAU) decline and the expectation that weaker domestic/global growth will adversely impact ad spending. While these concerns can't be swept under the rug in the short run, they're of no concern when you factor in this-company's competitive advantages.
For example, even though Pinterest's MAUs have declined from a peak of 478 million, this drop has more to do with COVID-19 vaccination rates ticking up and life returning to some semblance of normal than anything negative regarding Pinterest's platform. If you were to examine Pinterest's MAUs over a five-year period, you'd see a steady incline in active users.
What's far more important here is that Pinterest has had no issue monetizing the users it does have. When the June quarter came to a close, the company lost 21 million MAUs from the prior-year period. However, average revenue per user (ARPU) rose by 17% globally, with the highest ARPU growth seen in international/emerging markets. This is a clear signal that advertisers are willing to pay a premium to reach Pinterest's 433 million MAUs.
Additionally, Pinterest is well-insulated from the data-tracking software changes being implemented by Apple. While most ad-driven companies very much rely on data-tracking tools to help advertisers get their messages in front of the right users, Pinterest's platform is designed to have users freely and willingly share the things, places, and services they like on pinned boards. There's no guesswork involved here.
Users are serving up critical data on a silver platter that Pinterest can use to support its strong ad-pricing power and potentially pivot to become a major e-commerce player. This makes it an excellent stock to buy with $300 during the growth-stock crash.
