It's been quite the year for Wall Street and the investing community. The widely followed S&P 500 produced its worst half-year return in over 50 years. Meanwhile, the iconic Dow Jones Industrial Average, S&P 500, and tech-dependent Nasdaq Composite (^IXIC -1.79%) have all plunged into a bear market. The Nasdaq has fared worst of all, with a peak-to-trough decline of 34%.
Although there's no denying that bear markets can be unnerving and test the resolve of tenured and new investors alike, history also shows them to be ideal buying opportunities. Over time, every double-digit percentage decline in the major indexes, including the Nasdaq, has eventually been cleared away by a bull market rally.
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In other words, it's the perfect time for long-term investors to go shopping -- and what better category to focus on than innovative growth stocks? Even though it feels as if growth stocks have been beaten to a pulp during this bear market, faster-growing companies have historically outperformed during periods of economic weakness.
What follows are three surefire growth stocks you can buy during the Nasdaq bear market that have a real chance to double your money by 2026.
Upstart Holdings
The first supercharged growth stock with the ability to double your money by 2026 is cloud-based lending platform provider Upstart Holdings (UPST -7.89%).
There's little question that the next couple of quarters are going to be challenging for a lending solutions specialist that hasn't been through a true economic downturn before. As interest rates rise, the number of loans processed should decline. But there's plenty to like about what we've seen from Upstart over the past couple of years.
Before diving into company specifics, consider this: The average economic contraction only lasts for a couple of quarters. By comparison, periods of expansion are almost always measured in years. A company focused on lending solutions like Upstart will spend a disproportionate amount of time benefiting from expansion versus navigating through a challenging environment.
As for what makes this company so special, look no further than its artificial intelligence-driven lending platform. Instead of using the same credit-score-focused vetting process that the banking industry has relied on for decades, Upstart uses machine-learning technology to screen applications. Nearly three-quarters of all loans processed through Upstart are approved and entirely automated.
In addition to saving banks and credit unions time and money, Upstart is helping by broadening the lending pool. The average credit score for Upstart-approved loans is lower than those on loans approved via the the traditional vetting process. However, the delinquency rate between the two processes has been similar. This means Upstart can offer more clients to banks and credit unions without worsening their credit-risk profile.
The other thing to like about Upstart is that its addressable market is ballooning. For years, the company primarily focused its efforts on personal loans. But following the acquisition of Prodigy Software in 2021, it's now moved into auto loan originations. On a combined basis, the auto loan and small business loan origination markets are 10 times the size of the personal loan space.
Planet 13 Holdings
A second surefire growth stock that has all the tools and intangibles needed to double your money over the next four years is U.S. marijuana stock Planet 13 Holdings (PLNH.F -2.94%).
When President Joe Biden took office in January 2021, there probably wasn't a hotter industry than cannabis. But that buzz quickly faded after multiple attempts to pass cannabis reform measures fell flat in the U.S. Senate. Although Biden has requested a review of marijuana's Schedule I classification under the Controlled Substances Act, no guarantees of legalization are in the cards.
The good news for Planet 13 and other multi-state operators (MSOs) is that legalization isn't a necessity for success. With approximately three-quarters of all states giving cannabis the green light in some capacity, Planet 13 has plenty of high-dollar markets to choose from.
The standout differentiator for Planet 13 is its approach to expansion. Whereas most publicly traded MSOs have opened retail locations in 10 or more states, Planet 13 has just three operating dispensaries. But these aren't your average dispensaries. The Las Vegas SuperStore spans 112,000 square feet and features a café and events center. Meanwhile, the Orange County SuperStore, which is about 15 minutes from Disneyland in California, has a whopping 16,500 square feet of selling space. These stores provide nostalgia and an experience that traditional pot shops can't match.
The future for Planet 13 involves a SuperStore-styled location in Chicago, Illinois, as well as multiple community-based stores, each spanning roughly 4,750 square feet, in Florida. Only a small number of MSOs are licensed to open dispensaries in medical marijuana-legal Florida. But once licensed in the Sunshine State, MSOs can open as many stores as they'd like. By 2024, Florida is expected to be the No. 3 cannabis market in the U.S. by annual sales.
Planet 13 maintains a unique operating model in the cannabis space and looks to be on the verge of recurring profitability. That gives it a good chance to deliver triple-digit returns for patient shareholders.
Image source: Pinterest.
The third surefire stock to buy during the Nasdaq bear market that can double your money by 2026 is social media specialist Pinterest (PINS -2.86%).
Pinterest was a hot company to own during the initial stages of the COVID-19 pandemic. But as vaccination rates have ticked up and life has returned to some semblance of normal, Pinterest's monthly active user (MAU) count has fallen from its peak of 478 million. Investors typically aren't happy when a social media company has a shrinking user count.
However, declining MAUs over the past year fail to tell the full story. For instance, examining Pinterest's MAUs over a five-year period would show a relatively steady uptrend.
But what's even more important than the aggregate number of monthly active users on Pinterest's platform is the company's ability to monetize those users. Even with a 21 million MAU decline in the June-ended quarter versus the prior-year period, global average revenue per user (ARPU) rose 17%, with ARPU growth especially strong in international markets. Pinterest's operating results demonstrate that advertisers are willing to pay a premium to reach its 433 million MAUs.
Something else special about Pinterest is the company's operating model. Whereas most ad-driven businesses are reliant on data-tracking software or other tools to help advertisers target users, Pinterest's entire platform is designed around its users freely and willingly sharing what interests them. These interests can be presented to merchants on a silver platter. It's this subtle differentiation that could help Pinterest become a serious e-commerce player by mid-decade.
Lastly, Pinterest's balance sheet is a game changer. The company ended June with $2.66 billion in cash, cash equivalents, and marketable securities, which is more than enough capital to reinvest in its business and sustain double-digit growth.
