As brutal as 2022 has been, media outlets keep trumpeting headlines to the tune of "things will get worse in 2023." With the Federal Reserve indicating it isn't through with its interest rate hikes to try to throttle the economy (in an attempt to get inflation under control), worry is mounting that a recession could strike. All this suggests business profitability is due for a big slowdown, if not a contraction, heading into the new year.

Despite the messy state of affairs out there, more than a few companies are more than holding their own. While the market could care less about business performance right at the moment, once the mood improves, top growth stocks are set to launch. Three contributors think Palo Alto Networks (PANW 2.99%), Ring Central (RNG 1.05%), and Marqeta (MQ 4.15%) are a buy right now.

This top cybersecurity provider keeps getting bigger

Nicholas Rossolillo (Palo Alto Networks): Cybersecurity has become an incredibly important component of the digital world. With critical personal and business data zipping across the web, new security measures are needed to counter the constantly evolving efforts of those with nefarious intent. Lots of high-flying cloud-computing-native upstarts get plenty of attention from investors. However, Palo Alto Networks is far and away the leader in pure-play cybersecurity services (as measured by market cap and revenue).  

Big doesn't mean slow-moving and boring, either. On the contrary, Palo Alto Networks was a market-beating stock over the last year, a clear contrast to the beatdown many other growing tech stocks endured. Revenue jumped 29% in fiscal 2022 (the 12 months ended in July 2022), and Palo Alto Networks' management forecast another 25% increase for fiscal 2023.  

CEO Nikesh Arora, a former executive at Alphabet's Google and SoftBank Group, has aspirations to make Palo Alto Networks the first cybersecurity pure-play company worth $100 billion -- a little over double its valuation today. In the four years under Arora's leadership, shareholders have already been treated to a more than doubling in stock price.

But let's not simply assume Arora and the top team can duplicate their success over the last four years. After all, the company still isn't profitable on an unadjusted basis. Net losses totaled $267 million in fiscal 2022, although the business swung to a small net profit in the fourth quarter, ended July 31. High levels of stock-based compensation ($1.07 billion in the last year), particularly related to an aggressive run of acquisitions a couple of years ago, are the main reason.  

However, Arora said reducing stock-based comp is a top priority now. And even up to this point, the company is free-cash-flow-positive ($1.79 billion generated over the last 12 months). It offset stock-based comp with $892 million in share buybacks (paid for from free cash flow) in fiscal 2022.  

With its cybersecurity sails unfurled to benefit from a rapid migration to all things digital, Palo Alto Networks is a fantastic growth stock to own for the long haul. Shares trade for a reasonable 25 times trailing-12-month free cash flow right now.

Growing, profitable, innovative: Choose all three

Anders Bylund (RingCentral): Cloud-based communications are the future, especially in the business world. Voice calls are moving online in a hurry and video calls always had a home on the internet. The sector is dominated by tech giants such as Cisco WebEx and Microsoft Teams, but one company offers a full-featured unified-communications-as-a-service (UCaaS) platform without the distraction of a sector-spanning business model.

I'm talking about RingCentral, founded in 1999 and still steered by CEO and co-founder Vlad Shmunis. The RingCentral MVP platform includes top-quality voice, video, and messaging solutions, including call center functionality and automated workflows.

In the just-released third-quarter report, RingCentral's sales rose 23% year over year while adjusted profit margin widened to new all-time highs. The stock price had fallen 85% for the year leading up to Wednesday's well-received quarterly report. Shares are changing hands for approximately 16 times adjusted earnings, far below RingCentrals' historical average of 200 over the last two years.

In RingCentral, you're getting a visionary investor with dynamic sales growth and robust cash profits, but at a valuation normally reserved for sleepy value stocks. Grabbing a few RingCentral shares while they're cheap should serve you well as the UCaaS market continues to expand -- with RingCentral leading from the vanguard.

This cash-rich company is outperforming its hated sector

Billy Duberstein (Marqeta): There is perhaps no sector more reviled in the market today than the fintech sector. Fears of higher interest rates are hurting all growth stocks, and the prospect of a recession is causing sector-wide selling among newer financial companies, likely due to their smaller size and shorter track record.

However, Marqeta is more of a technology company, as it doesn't lend money or take credit risk. Rather, it's a cloud-based platform of configurable APIs that allows companies to configure credit and debit cards in highly customizable ways, in what management calls "modern card issuing." So, it should be fairly well insulated from a recession. 

The ability to customize cards in a very easy, highly configurable, and real-time way translates across many verticals, giving Marqeta a huge total addressable market. Fintech company Block is a huge customer; Marqeta powers Block's Cash App card and other money-movement services. Instacart uses Marqeta to load delivery driver cards with the exact amount needed for an order. And one of Marqeta's fastest-growing verticals is expense management, whereby large financial institutions use Marqeta's technology to help commercial customers digitally manage and keep track of employee transactions.

One prominent new partnership Marqeta just announced is with ONE, the independent fintech start-up backed by Walmart and Ribbit Capital. Given Walmart's massive scale, that partnership has the potential to blossom into a large new business. Marqeta also announced a new "Marqeta for Banking" offering, a suite of APIs that enable any company to embed direct deposit, ACH, ATM, and other banking capabilities into their platform. The move potentially sets Marqeta up to compete with larger digital banking fintech players, as well as Galileo, the banking-as-a-service platform owned by SoFi Technologies.

But it wasn't just product announcements and customer wins that were exciting. Marqeta is displaying exciting financials as well. The company released third-quarter earnings results on Wednesday, and handily beat analyst revenue expectations. Revenue grew 46% on total processing volume (TPV) growth of 54%. Moreover, Marqeta guided to revenue growth between 29% and 31% next quarter, which was actually higher than analyst expectations and management's prior outlook.

The deceleration in the fourth quarter is due to a very difficult comparison in the year-ago quarter, as well as a slowing economy; however, Marqeta said that while some newer smaller customers in verticals like cryptocurrency were slowing their spend as expected, Marqeta's larger, established customers were actually strengthening, and taking market share from weaker players, boosting results above management's initial conservative expectations.

Marqeta is also the rare young growth stock that actually started repurchasing its shares, helping to offset the stock-based compensation dilution that is such a big expense for most young tech companies. Marqeta repurchased nearly $14 million of its stock near its recent lows last quarter, as part of a $100 million program.

Marqeta is flush with $1.65 billion in cash and marketable securities, and it doesn't burn much cash even at this growth rate, so it can afford the buyback. In fact, as many fintech competitors and peers come under stress, management has lots of options to repurchase shares, make acquisitions, or invest in growth as smaller competitors pull back. It seems like a good setup.