Has the market's dramatic collapse in 2022 made you uncomfortable about buying stocks right now? If so, you're hardly alone. The Nasdaq Composite index, which is loaded with growth and tech stocks, has lost 31% of its value this year. A decline that steep is enough to make all but the most confident investors look for less volatile places to put their money.
Bear markets can feel painful, but it's important to recognize that this one can be largely pinned on some specific issues -- among them, high inflation, rising interest rates meant to combat inflation, the war in Ukraine, a host of global supply and demand imbalances, and fears of a recession. And one thing these factors have in common is that they're all temporary.
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Unfavorable macroeconomic factors might put some speed bumps in front of these three stocks, but their underlying businesses have what they need to keep growing. With this in mind, the Wall Street analysts who follow these stocks expect them to soar in the near term.
Amazon
Amazon's (AMZN 1.49%) share price has been under a lot of pressure this year because the company built and staffed heaps of new warehouses in response to the pandemic-related surge in e-commerce demand. Investors upset by the operating losses it reported in 2022 -- contrasting sharply with its enormous 2021 profits -- have pushed the stock down by around 30% year to date.
The analysts on Wall Street who follow Amazon expect a strong rebound. The consensus price target on the stock right now is 40.3% above its recent closing price.
It's just a matter of time before consumer demand catches up with the excess capacity Amazon's e-commerce infrastructure now sports. In the meantime, analysts are extremely bullish about the company's other segments. Second-quarter operating income from Amazon Web Services (AWS), its cloud services business, soared 36% year over year to a whopping $5.7 billion. With no end in sight to soaring demand for subscription-based cloud services, the long-term prospects for AWS remain strong.
Pubmatic
Pubmatic (PUBM 2.59%) is a relatively small company carving out a share of the enormous market for digital advertising. Because investors are afraid a recession will cause advertisers to tighten their belts, the stock has tanked by around 47% so far this year.
However, the Wall Street analysts who follow the company think the pessimism regarding the digital advertising space is overblown. The consensus price target on Pubmatic right now suggests it will rise by 53% in the next 12 months.
The most important thing to understand about this stock is that the giants of the digital ad industry, Meta Platforms and Alphabet, can't compete with Pubmatic's independent platform. That's because they operate on both the supply side and the demand side of the advertising equation.
Alphabet and Facebook will probably continue to dominate the ad market when it comes to search and social media, respectively. Pubmatic's a buy because it's a major player in the up-and-coming market for premium connected television (CTV) ads.
Since no single business dominates the CTV space, it's relatively fair and competitive in a way that marketers appreciate. Pubmatic's the most popular sell-side platform in CTV ads, and its second-quarter CTV revenue jumped by more than 150% year over year. Given its solid lead in the CTV space, this stock has a great chance to outperform over time.
Fiverr
Fiverr's (FVRR -1.17%) tech platform connects businesses seeking services with freelancers who can provide them. Its popularity and its stock price soared in response to COVID-related lockdowns. But this year, the stock has tanked by around 76% because investors are afraid that a recession could limit the hiring of freelancers.
Analysts on Wall Street who follow Fiverr are more optimistic. Their average price target on the stock suggests a 62.1% gain over the next year.
Wall Street is bullish for Fiverr because its addressable market is both enormous and relatively untapped. The company estimates that the U.S. market for independent skilled services is around $247 billion annually, and the vast majority of this freelancing is still arranged offline. Because Fiverr operates a leading platform in this space, its shares have a good chance of soaring again once the temporary factors that are pressuring it abate.
