Wall Street has been a stomping ground for volatility since this decade began. Although it's been a banner start to 2024, it was preceded by four consecutive years where the major stock indexes traded off bear and bull markets. No widely followed index has been more volatile than the growth-focused Nasdaq Composite (^IXIC 0.70%).
In 2022, the index was mired in a bear market and shed 33% of its value by the time the year came to a close. But since the opening bell rang in 2023, this innovation-powered index has rallied a cool 60% and hit a fresh record high. There's absolutely no doubt that the Nasdaq is in a bull market -- albeit a fairly new one.
Image source: Getty Images.
Despite the Nasdaq Composite climbing to a new all-time high on May 15, plain-as-day bargains among growth stocks can still be found. Opportunistic investors simply have to be willing to look for amazing deals.
What follows are four incomparable growth stocks you might regret not buying in the new Nasdaq bull market.
Meta Platforms
The first matchless growth stock that's begging to be bought with the relatively young Nasdaq bull market stretching its legs is social media leader Meta Platforms (META 0.35%). Though Meta's forecast for higher capital expenditures recently spooked Wall Street, it possesses a couple of well-defined competitive advantages that allow this short-term headwind to be easily brushed off.
NASDAQ: META
Key Data Points
To start with the obvious, Meta Platforms is the parent of many of the most-visited social sites globally. It owns Facebook (the most-visited social site), along with Instagram, WhatsApp, Threads, and Facebook Messenger.
Collectively, its family of apps drew 3.24 billion daily active users during the first quarter and close to 4 billion monthly active users in the December-ended quarter. Advertisers are going to be hard-pressed to find a social media platform with a broader reach.
To add to the above, Meta benefits from disproportionately long periods of economic growth. Although advertising is highly cyclical and recessions are an unavoidable aspect of the economic cycle, periods of expansion last substantially longer than contractions. In simpler terms, long-term investors in ad-driven companies (Meta generates almost 98% of its sales from ads) are often handsomely rewarded.
Another reason current and prospective Meta investors shouldn't be too concerned with CEO Mark Zuckerberg's desire to spend on artificial intelligence (AI), the metaverse, and augmented/virtual reality devices is the company's phenomenal war chest and cash flow. The company closed out March with more than $58 billion in cash, cash equivalents, and marketable securities, and generated around $19.2 billion in net cash from its operations. As a cash cow, Zuckerberg's company has the luxury of investing for the future, even if the fruits of those investments won't be realized for years.
Lastly, Meta Platforms' stock is still a phenomenal bargain. Shares can be purchased right now for 13 times consensus cash flow for 2025, which represents a 12% discount to its average multiple to cash flow over the previous five years.
NYSE: FVRR
Key Data Points
Fiverr International
A second incomparable growth stock you'll regret not adding to your portfolio with the Nasdaq pushing to new highs is online-services marketplace Fiverr International (FVRR 2.10%). Despite worries that AI would adversely affect its operating performance, multiple dynamics appear to be working in the company's favor.
Although Fiverr's stock has retraced more than 90% from its all-time high, the macro environment couldn't be more favorable for its long-term success. While some workers have returned to the office following the worst of the pandemic, more people than ever are working remotely. This sizable increase in mobile workers is just what the doctor ordered for Fiverr's gig-economy-driven platform for freelancers.
As I've pointed out in the past, Fiverr's transparency is another key selling point. Rather than follow in the footsteps of many of its peers and have freelancers price their services on an hourly basis, Fiverr has its freelancers provide an all-encompassing price for their tasks. This transparency is likely the fuel that keeps powering spending per buyer higher.
But the secret sauce that makes Fiverr International a stellar investment is its take rate -- i.e., the percentage of revenue it gets to keep from negotiated deals on its platform, including fees. Whereas most of its competition has a take rate in the mid to high teens, it closed out March with a take rate of 32.3%, up 190 basis points from the comparable period in 2023. The company is keeping more and generating successively higher spending per buyer.
The icing on the cake is that Fiverr also unveiled a share-repurchase program for up to $100 million. Buying back stock could accelerate the growth in the company's double-digit adjusted earnings per share (EPS).
Image source: Getty Images.
BioMarin Pharmaceutical
The third unparalleled growth stock you'll likely be kicking yourself for not adding during the early innings of the new Nasdaq bull market is specialty biotech BioMarin Pharmaceutical (BMRN 0.15%). Although the launch of Roctavian, a one-time gene therapy treatment for patients with hemophilia A, has been marred by challenges (sales of the drug totaled just $800,000 in the first quarter), one bad apple isn't going to spoil BioMarin's juicy portfolio of novel therapies.
Before digging into product specifics, it's important to recognize that BioMarin focuses its efforts on drugs for ultra-rare diseases. While there are risks associated with small pools of patients, the rewards are plentiful. Namely, such drugs that have been approved by the Food and Drug Administration (FDA) often face little or no pushback from insurers regarding their high list prices, and they usually have minimal or nonexistent competition.
Even with Roctavian stumbling out of the gate, growth from dwarfism drug Voxzogo has more than made up for this fumble. Label expansion opportunities have broadened Voxzogo's use case, which in turn sent sales rocketing higher by 74% to nearly $153 million during the March-ended quarter. Increased uptake and strong pricing power should give Voxzogo a legitimate shot at eventually topping $1 billion in annual sales.
BioMarin's management also recently made the decision to focus its efforts and capital on its most-promising experimental therapies. By narrowing its clinical studies to three candidates, the company aims to reduce its annual operating expenses by up to $40 million.
With more than a half-dozen FDA-approved drugs in its portfolio, BioMarin should be able to sustain double-digit sales and EPS growth through at least 2027. In fact, Wall Street's consensus calls for its EPS to catapult from a reported $0.87 in 2023 to almost $5 by 2027.
NASDAQ: WDC
Key Data Points
Western Digital
A fourth incomparable growth stock you could regret not buying in the new Nasdaq bull market is storage solutions specialist Western Digital (WDC +2.46%). In spite of some spotty demand weakness from its consumer segment (i.e., personal computer sales have remained weak), numerous other aspects of Western Digital's operations are firing on all cylinders.
The first unmistakable catalyst is the AI revolution. Whereas artificial intelligence has created worry for some businesses, it's set to catapult demand for Western Digital. High-compute AI data centers require ever-growing computational needs, which in turn is going to accelerate demand for data-center storage solutions.
Something else to consider is that enterprise spending on cloud-based platforms is still in its early innings. As cloud spending ramps up, Western Digital's data-center storage products come into focus. Not surprisingly, the company's cloud segment was its biggest growth driver in the fiscal third quarter (ended March 29), with a year-over-year sales increase of 29%!
Pricing power and utility should also work in the business' favor. Although hard drives have long been a data center staple, Western Digital's NAND flash-memory solutions support higher transfer rates and consume less power. As NAND flash-memory adoption increases, the company's pricing power should improve.
The final piece of the puzzle is that Western Digital's bottom line is set to do a major about-face. After the company reported a $3.59-per-share loss in fiscal 2023, Wall Street is looking for close to $8 in positive EPS next year. This is a company that should benefit for years to come from growth in the cloud and AI.
