Bear markets don't last forever. Sure, they can sometimes go on for quite a while. But the bulls will take over sooner or later.
The current Nasdaq Composite Index bear market presents some great opportunities for long-term investors. If you have enough patience to wait, buying shares of well-run companies with strong underlying businesses should pay off nicely. Here are three beaten-down stocks you'll regret not buying on the dip.
1. Alphabet
Alphabet (GOOG 0.96%) (GOOGL 1.04%) stock has fallen more than 30% in 2022. However, this decline has given the tech giant its most attractive valuation in years.
Most importantly, Alphabet's businesses remain strong even with high inflation, interest rate hikes, foreign exchange headwinds, and overall economic uncertainty. The company delivered solid 13% year-over-year revenue growth in the second quarter of 2022, with tough comparisons from the prior year.
Alphabet continues to maintain an exceptionally strong moat with Google Search. No other search engine comes close to capturing as much market share. The company is also gaining momentum with its Google Cloud unit.
I think there are a couple of Alphabet's businesses to watch closely going forward. YouTube Shorts has the potential to become a major growth engine. Waymo, the company's self-driving car technology unit, recently opened a new facility to support its autonomous heavy-duty trucking solution in the Southwest U.S. region. It's possible that Waymo could be a game-changer for Alphabet in the not-too-distant future.
2. Intuitive Surgical
Intuitive Surgical (ISRG 1.48%) has experienced an even steeper decline than Alphabet. Shares of the robotic surgical systems maker are down nearly 50% year to date.
COVID-19 lockdowns in China hurt Intuitive's growth in Q2. Supply chain issues affected the company as well. System placements fell 15% year over year, in large part due to hospitals trying to stretch their capital spending.
None of these challenges, though, undercut the long-term prospects for Intuitive's robotic systems. There are still many more procedures performed each year that could benefit from robotic assistance. Intuitive Surgical also continues to invest in research and development to expand the types of procedures for which its systems can be used.
To be sure, this stock isn't cheap. Shares trade at 36 times expected earnings even after the sell-off so far this year. However, I think Intuitive Surgical is still an unstoppable growth stock to buy for long-term investors.
3. MercadoLibre
E-commerce stocks and fintech stocks have taken a beating this year. MercadoLibre (MELI 2.03%) fits into both categories. Unsurprisingly, its shares have plummeted around 35% year to date.
MercadoLibre dominates the Latin American e-commerce market. Some of the economies in the region are somewhat rocky right now. For example, Bank of America (BAC 1.25%) predicts that the Mexican economy will stall in 2023. However, Brazil, the largest country in Latin America, emerged from a recession in the late part of 2021 and is performing better than expected this year.
Even if MercadoLibre faces greater obstacles in the near term, its future looks bright. Morgan Stanley (MS 0.77%) projects that the Latin American e-commerce market penetration will rise from 11% this year to 16% in 2025. MercadoLibre is poised to be one of the biggest winners from this growth. Many people in Latin America also don't have full access to traditional financial services. This presents a big opportunity for MercadoLibre's fintech segment.
Wall Street's consensus 12-month price target for MercadoLibre reflects an upside potential of around 50%. I think this stock should soar a lot higher than that over the coming years.
