After a tumultuous 2022, the U.S. equity market breathed a sigh of relief in early 2023. However, this relief may be short-lived. Considering the latest inflation data (for January 2023), Federal Reserve Chairman Jerome Powell has highlighted the need for "faster tightening" of the money supply and, subsequently, higher-than-expected interest rates in the coming months.

These conditions suggest the possibility of another bear market rally, which can be quite painful for investors. However, bear markets also offer the potential to pick up strong businesses with tremendous growth prospects at relatively cheap prices.

Currently, stocks such as The Trade Desk (TTD -1.98%) and Splunk (SPLK) are trading at a discount of around 25% and 33%, respectively, from their 52-week highs. Let's assess why these supercharged stocks could prove to be attractive bets in the long run.

1. The Trade Desk

For the past few years, leading demand-side programmatic advertising company The Trade Desk has been a significant beneficiary of the shift of ad spending from traditional media formats (e.g., linear TV, print) to digital advertising. But even beyond this secular tailwind, the company itself has done several things right to drive its growth.

Unlike the walled gardens, such as Meta Platforms' Facebook and Alphabet's Google, with closed ecosystems restricting access and sharing of data, The Trade Desk has been focused on data transparency and objectivity. This has helped foster customers' trust in the accuracy and efficacy of The Trade Desk's data metrics. The company's data-driven technology is helping customers better target their audiences -- a major advantage in times of economic downturn (when every penny counts).

Further, since Meta Platforms and Alphabet own ad-supported content, customers fear being overcharged or influenced to make less-than-optimal decisions for their advertising campaigns. Since The Trade Desk does not own content, customers believe the company will help them make the best decisions regarding their advertising budgets.

Increasingly more advertisers are now shifting from linear television to connected TV (CTV) platforms. Additionally, advertisers are opting out of walled gardens and focusing on premium streaming content instead of user-generated content. Finally, content owners are also opting away from ad-free subscription models, instead choosing ad-supported options on CTV. The Trade Desk has been quite successful in capitalizing on these trends.

The Trade Desk gained market share in the second half of fiscal 2022 when competitors posted negative or mere single-digit top-line growth. So it seems to be an attractive pick in the current uncertain economic environment.

2. Splunk

Enterprise software company Splunk helps customers visualize and analyze internal data (records related to transactions, interactions, and operations) from various endpoint devices and digital systems in the company's network. The data is mined to derive business insights for improving outcomes in areas such as observability, security, and platform use cases. The company estimates its target market to be worth over $100 billion.

The past two years have been quite painful for the company. Besides the broader tech sell-off, the company was also affected by its rather rough transition from a perpetual license sales model to a cloud-based subscription model.

However, things may now be taking a turn for the better. The company reported impressive financial performance in the fourth quarter of fiscal 2023 (ending Jan. 31, 2023), with both revenues and earnings surpassing consensus estimates.

Splunk reported an 18% year-over-year jump in annual recurring revenues (ARR) to $3.67 billion in fiscal 2023. The company's cloud-based ARR has grown annually at a compounded average growth rate (CAGR) of 64% in the past four years, while non-cloud ARR grew annually at a 22% CAGR in the same time frame. Hence, the company seems well poised to benefit from the growth of the hybrid cloud market (mixed computing environment comprising public and private clouds as well as on-premise servers) estimated to be worth $322.63 billion in 2030.

Splunk has also managed to expand its customer base despite the difficult macroeconomic environment. The company ended fiscal 2023 with 790 large customers with ARR of $1 million or more, up from 675 customers at the end of fiscal 2022. Currently, over 90 of the Fortune 100 companies have deployed Splunk's technology.

Splunk is already profitable and cash-flow positive. Coupled with improving operating leverage, the company is well poised to face the uncertain economic environment in the coming quarters.