It's been nothing short of a wild ride for investors since this decade began. Wall Street's major stock indexes have traded off bear and bull markets on a couple of occasions over the past four years.
Though 2023 represented a veritable running of the bulls, the Nasdaq Composite (^IXIC 2.02%) has, to some degree, been left behind by its peers. Whereas the Dow Jones Industrial Average and S&P 500 have ascended to new highs, the Nasdaq Composite closed out Feb. 15 about 1% below its record-closing high set in November 2021.
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To some investors, the Nasdaq's inability to put its 2022 bear market blues fully in the rearview mirror suggests a lost two years for growth stocks. But for long-term-minded investors with cash at the ready, any notable downturn in the Nasdaq represents an opportunity to buy stakes in high-quality, fast-paced businesses at a perceived discount.
What follows are four electrifying growth stocks you'll regret not buying in the wake of the Nasdaq bear market dip.
PayPal Holdings
The first spectacular growth stock you'll be kicking yourself for not picking up with the Nasdaq Composite still struggling to put the 2022 bear market in the back seat is none other than fintech leader PayPal Holdings (PYPL 2.90%). Despite increasing competition in the digital payments space, PayPal has the necessary catalysts to make its long-term shareholders notably richer.
For starters, investors should understand that there's room for more than one winner in the digital payments space. Based on estimates from Boston Consulting Group, annual fintech revenue can grow by a factor of six to $1.5 trillion by the turn of the decade. PayPal is leading that charge.
While it's been disappointing to see active account growth stymied -- active accounts fell 2% in 2023 from the prior-year period -- the key performance indicators that matter most are headed in the right direction. Total payment volume traversing PayPal's platforms grew by 12% on a constant-currency basis to $1.53 trillion in 2023.
More importantly, the average number of payment transactions completed by active accounts over the trailing-12-month period expanded to 58.7 by the end of December. This represents a 43.5% increase in average payment activity among active accounts since the end of 2020. Even if active account growth is slower than expected, existing accounts are more engaged with the platform than ever before. Since PayPal is a predominantly fee-driven business, this is a recipe for higher gross profit.
Don't overlook the company's shareholder-friendly moves, either. PayPal repurchased $5 billion worth of its common stock in 2023, and has targeted at least $1.3 billion in annual operating expense reductions (as of 2023) to improve the company's margins.
PayPal is also historically cheap, with its shares trading for less than 11 times consensus earnings in 2025.
Green Thumb Industries
A second electrifying growth stock you'll regret not purchasing in the wake of the Nasdaq's 2022 bear market swoon is U.S.-focused cannabis multi-state operator (MSO) Green Thumb Industries (GTBIF 3.56%). Although marijuana stocks have been a buzzkill over the past three years, Green Thumb has set the standard for excellence among MSOs.
Despite cannabis reform bills failing to gain traction on Capitol Hill, medical and adult-use legalization efforts in individual states have led to steady growth for the pot industry. According to market intelligence company BDSA, the U.S. weed industry should enjoy a compound annual growth rate of 11% through 2027. That's $43 billion in potential legal weed sales up for grabs in the U.S. by 2027, and Green Thumb is in pole position to gobble up a significant percentage of it.
In December, Green Thumb opened its 90th dispensary, with the company now spanning 15 legalized U.S. states. The thing is, it has dozens of additional licenses in its back pocket to open dispensaries in key markets in the future. It took just five years for Green Thumb to rocket from $22 million in full-year sales to north of $1 billion.
But what makes this company so special isn't necessarily its market breadth so much as its product mix. During the September-ended quarter, 44% of net sales came from dried cannabis flower, with the remaining 56% coming from derivatives, which includes things like vapes, edibles, beverages, concentrates, prerolls, and health and beauty products. Derivative pot products boast higher price points and substantially better margins than cannabis flower. This is why Green Thumb has sustained profitability and virtually all other MSOs lose money.
The needle continues to point higher for Green Thumb Industries. Wall Street is currently expecting a tenfold increase in earnings per share between 2022 and 2026. If Capitol Hill eventually legalizes adult-use weed, profits could climb even faster.
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JD.com
The third amazing growth stock you'll regret not adding to your portfolio with the Nasdaq Composite still below its all-time high is China's No. 2 e-commerce player JD.com (JD 6.12%). Even though economic data out of China has disappointed in recent months, there's plenty of reason to believe JD.com is ideally positioned to thrive over the long run.
JD and its peers should benefit from the reopening of China's economy following three years of stringent COVID-19 lockdowns. Though regulators ended the zero-COVID mitigation strategy in December 2022, it's going to take time to work out years of kinks in the country's supply chain. With a burgeoning middle class and a history of outpacing the U.S. in the growth department, e-commerce should have a long runway of outsized expansion in China.
What makes JD so special is the company's operating model. Although Alibaba reigns supreme from a market share standpoint in China's e-commerce space, JD's operating model gives it far more flexibility. Alibaba generates most of its revenue from third parties using its online marketplace.
Meanwhile, JD operates as a true direct-to-consumer retailer. In other words, it handles the inventory and logistics required to get goods to consumers. This gives the company more control over its operating margin.
Current and prospective investors should also be excited about the company's plan to spin off its Property and Industrial segments and list them on the Hong Kong stock exchange. Spinoffs make complex businesses easier to understand and usually unlock shareholder value.
Lastly, JD.com is cheaper than it's ever been as a publicly traded company. Despite a lengthy track record of double-digit growth, shares can be purchased for a little over 7 times Wall Street's consensus earnings for the company in 2024.
Fastly
A fourth electrifying growth stock you'll regret not buying in the wake of the Nasdaq bear market dip is edge computing company Fastly (FSLY 4.43%). While Fastly's stock was pulverized last week after slightly missing Wall Street's consensus sales estimate for the fourth quarter, the building blocks for success are firmly in place.
Fastly is best known for its content delivery network, where it's responsible for moving data from the edge of the cloud to end users as quickly and securely as possible. With businesses shifting their data, and that of their customers, online and into the cloud at an accelerated pace since this decade began, Fastly is staring down a multiyear, if not multidecade, growth opportunity. This is why the company's global network capacity has grown by 58% to 313 terabytes per second since the end of March 2022.
Similar to PayPal, optimism with Fastly has a lot to do with the company's key performance indicators moving in the right direction. Average enterprise customer spend hit another all-time high in the fourth quarter at $880,000, with its enterprise customer count jumping to 578. In short, businesses are continuing to gravitate toward Fastly's services.
The company's dollar-based net expansion rate (DBNER) has, arguably, been an even more compelling source of optimism. In each of the past eight quarters, DBNER came in between 118% and 123%, including 119% in the December-ended quarter. What this tells investors is that Fastly's customers who've been with the company for at least a year are spending between 18% and 23% more on a year-over-year basis. Since this is a usage-driven platform, this is great news for Fastly.
The other positive for the company is the hiring of Todd Nightingale as CEO (he took over in September 2022). Nightingale previously headed the Enterprise Networking and Cloud division for Cisco Systems. Not only does he have a keen understanding of what catalysts can fuel growth at Fastly over the next five to 10 years, but he knows where levers can be pulled to reduce costs and push the company into the recurring profit column.
With sustained double-digit growth likely through at least the remainder of the decade, Fastly is a stock that could deliver triple-digit returns.
