Over multiple decades, you'd struggle to find a more consistent wealth creator than Wall Street. But when examined over shorter timelines, the stock market becomes highly unpredictable. Since the start of 2020, all three major stock indexes have vacillated between bull and bear markets, with the growth-driven Nasdaq Composite (^IXIC 2.02%) getting whipsawed the most.
After losing a third of its value during the 2022 bear market, the Nasdaq Composite has rallied 27% this year, as of the closing bell on October 18. Nevertheless, the index most responsible for lifting the broader market to its peak remains 17% below its record-closing high. Though that might be disappointing to some, it's a blessing in disguise for long-term, growth-seeking investors hungry for bargains.
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In particular, discounts are readily apparent on industry-leading growth stocks that have been weighed down by near-term recessionary concerns. While it's impossible to precisely predict when downturns in the U.S. economy and stock market will occur, it's highly unlikely that a short-lived recession will alter the long-term growth trajectory or strategy of fast-growing industry leaders.
What follows are four unbeaten growth stocks you'll regret not buying in the wake of the Nasdaq bear market dip.
Walt Disney
The first unrivaled growth stock that's begging to be bought with the Nasdaq Composite still well below its all-time high set in November 2021 is media giant Walt Disney (DIS -0.04%). Though ongoing losses from the company's streaming segment are clearly weighing on Disney stock, the competitive advantages this company brings to the table make it a no-brainer buy for patient growth seekers.
The single biggest edge Disney has over other media companies is its storytelling. While there are other theme parks people can go to, none compare to the "happiest place on Earth," Disneyland.
Likewise, other movies and shows simply can't compete with the vast content library Walt Disney offers. No other media company engages consumers or transcends generational gaps the way Disney can, which is what makes it irreplaceable.
To build on this point of irreplaceability, Disney enjoys incredible pricing power at its theme parks and with its services. When Disneyland in Southern California opened its doors to the public in 1955, an admission ticket cost $1. Today, the cheapest admission ticket to Disneyland will set an individual back $104. This more than 10,000% increase in admission pricing is about 10x the actual rate of inflation in the U.S. since 1955.
Additionally, Walt Disney has had little trouble raising the monthly subscription price of its key streaming services. The exceptional loyalty of Disney's fanbase has helped it pass along higher costs with only modest subscriber losses. This should help push the company's streaming segment to recurring profits sooner rather than later.
Lastly, CEO Bob Iger is back in the saddle. Iger was previously responsible for a number of key acquisitions, including Pixar, Marvel, and Lucasfilm. Look for Iger to focus on bolt-on acquisitions as a way to enhance growth at the "House of Mouse."
Okta
A second unbeaten growth stock you'll regret not scooping up following the Nasdaq bear market swoon is cybersecurity company Okta (OKTA -0.69%). Despite higher-than-expected integration costs following the acquisition of Auth0, the puzzle pieces are in place for Okta to deliver a sustained double-digit increase in sales and even faster profit growth.
Before diving into company specifics, it's important to recognize that cybersecurity solutions have become something of a necessity service. Since robots and hackers don't take days off, the need to protect consumer and enterprise data is a necessity in any economic climate. For companies like Okta, it means stable cash flow no matter how well or poorly the U.S. economy is performing.
Okta's proverbial stomping ground is identity verification. The company's cloud-native platform is fueled by artificial intelligence (AI) and machine learning (ML). This combination of AI and ML allows Okta's platform to be nimbler and more effective at identifying and responding to potential threats than on-premises solutions. According to Okta, it's staring down an $80 billion addressable market in identity-cloud protection.
Although wider-than-expected losses following the Auth0 deal have left a bad taste in investors' mouths over the short run, Auth0 is a key cog to Okta's long-term success. Auth0 provides Okta with a pathway to further penetrate the $30 billion consumer identity market and gives its new parent ample opportunity to expand into Europe and other foreign markets.
Okta is also cheaper than most investors realize. Though its forward price-to-earnings (P/E) ratio of 57 leaves a lot to be desired, a forecast five-year earnings growth rate of greater than 26% means it's still a potential value for long-term investors.
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NextEra Energy
The third top-notch growth stock you'll regret not adding to your portfolio following the Nasdaq bear market dive is the nation's largest electric utility by market cap, NextEra Energy (NEE -1.36%). While higher interest rates could make future projects costlier, NextEra has laid a foundation that should result in above-average earnings growth, relative to its peers.
Similar to Okta, NextEra benefits from being a provider of a necessity service. If you own or rent a home, there's a very good chance you need electricity to power your appliances and, possibly, your HVAC system. Additionally, most utilities operate as monopolies or duopolies in the areas they service. The point is that NextEra's operating cash flow tends to be highly predictable year in and year out.
What's helped separate NextEra from other electric utilities is its focus on renewable energy. The company has 68 gigawatts (GW) of capacity in operation, nearly half of which is devoted to renewables.
No other utility generates more capacity globally from solar or wind than NextEra Energy. The advantage of a renewable-rich portfolio is substantially lower electricity generation costs and an adjusted earnings growth rate that's averaged almost 10% since 2012. For context, most electric utilities offer a low-single-digit earnings growth rate.
Despite a rapid uptick in interest rates, NextEra isn't taking its foot off the accelerator when it comes to clean-energy projects. From the start of 2023 through the end of 2026, the company anticipates bringing between 32.7 GW and 41.8 GW of clean energy online, with a heavy emphasis on solar, wind, and energy storage.
The safety of NextEra's operations also comes with a historically inexpensive valuation. The company's forward P/E of 15.7, as of Oct. 18, is its cheapest multiple to forward earnings since 2013.
Meta Platforms
A fourth unbeaten growth stock you'll regret not buying in the wake of the Nasdaq bear market dip is social media stock Meta Platforms (META 0.43%). Although a weaker ad environment has the potential to weigh on Meta's shares in the coming quarters, Meta's utter dominance in the social media arena, coupled with its balance sheet, make it a clear-cut buy.
While there's no denying that the social media space is competitive, Meta Platforms is the company behind the most valuable "real estate." It's the owner of Facebook, the most-visited social site in the world, as well as WhatsApp, Instagram, Facebook Messenger, and the newly launched Threads. It took the latter just five days to surpass 100 million users following its early July launch.
During the June-ended quarter, Meta attracted 3.88 billion users -- more than half of the world's adult population -- to its family of apps each month. Advertisers understand that no other social platform is going to give them the ability to reach or target as many users. As a result, Meta Platforms enjoys exceptional ad-pricing power in most economic environments.
Despite growing losses at the company's Reality Labs segment, Meta has the operating cash flow and abundant cash on hand to support CEO Mark Zuckerberg's aggressive investments in the metaverse and augmented/virtual reality. If and when the metaverse becomes a serious growth driver, Meta should be positioned as one of the key players.
Keeping with the theme of this list, Meta Platforms remains inexpensive. Even after more than tripling from its 2022 bear market low, Meta can be purchased for approximately 11x estimated cash flow for 2024. That's well below the company's five-year average multiple of nearly 16x year-end cash flow.
