All three major stock indices fell into official bear market territory last year. The worst of them was the tech-heavy Nasdaq Composite, which lost 33% of its value in 2022.
Naturally, no one can say how long this downturn will last, but history shows us that on average bear markets tend to be measured in months, whereas the bull markets that always follow go on for years. That's why patient investors should view these corrections as buying opportunities.
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Considering how hard growth stocks were hit last year, there is no shortage of stocks poised to turn around -- and now could be the perfect time to put that money you've been building up to work in the market.
Here are two former growth stocks that have been beaten down, but look ready to regain that lost momentum and be solid buys in 2023.
Verizon
Over the next few years, expect to see telecom Verizon (VZ -4.67%) reap the rewards of the rollout of 5G networks as consumers spend more on enhanced video, AR and VR, and digital gaming. As Verizon tends to generate some of its best margins from data, this should serve as a tremendous catalyst for growth.
Investors shouldn't expect dramatic increases in Verizon's stock price -- this is a mature company in a mature industry. But the value of telecom stocks like Verizon is their ability to generate consistent cash flows from consumer demand for the newest communications hardware. There seems to be an endless upgrade cycle in motion, and the ability to consume more data plays to Verizon's strengths.
That's true both at home and in the office. 5G services to businesses and homeowners should expand the company's opportunity and keep its momentum moving. As noted, gaming and video, as well as the need for split-second access to data, should fuel Verizon's ability to weather any storm.
Its shares trade for 9 times trailing earnings and next year's estimates, and the company pays a dividend that yields 6.2% annually, providing investors with a fairly safe place to park their cash while getting paid to await the turnaround in the making.
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Palo Alto Networks
Like death and taxes, the threat of cybercrime seems like it will always be with us, and that means Palo Alto Networks (PANW 1.43%) will always have a recurring stream of revenue. Cybersecurity is no longer a luxury for business -- it has become a necessity that opens businesses up to financial and reputational risk if it is neglected.
Data from market research firm Gartner indicates spending on global information security and risk management is expected to reach $188.3 billion this, a near-20% increase from 2020, and will only keep growing from there. Despite this inexorable push, the market has been punishing Palo Alto Networks stock because of a fear that a recession will push security spending to the backburner for business.
The cybersecurity leader is also expanding its software offerings through acquisitions, giving it a stronger presence in the cloud security market. Its next-generation security platform is also growing rapidly, and is using its innovative technology to protect against advanced threats by using artificial intelligence and machine learning.
Shares are down 22% over the past 12 months, and are 36% lower from recent highs. At 17 times the significant free cash flow Palo Alto Networks produces, it might not be in the bargain basement bin, but it represents a stock with a long runway of opportunity ahead of it.
