10 Stocks That Could Soar in a Recovery

The bear market may be getting you down, but nothing lasts forever in investing, and that includes downturns.

While no one knows how long the tough times will last, eventually the market and the economy will rebound. And when it does, there are a number of stocks poised to make a strong recovery.

Keep reading to see 10 of them.

5 Stocks Under $49
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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

It's hard to think of a company with a more compelling network of competitive advantages than Amazon (NASDAQ: AMZN). It dominates e-commerce, so much so that it should soon overtake Walmart for the biggest company in the world by revenue. Its Prime membership program has more than 200 million members. Its logistics network is unmatched by any other retailer, and its cloud infrastructure business, Amazon Web Services, continues to grow at breakneck speed and deliver boatloads of profits.

However, Amazon stock is currently down 42% from its peak last fall because of the broad market sell-off and a slowdown in growth as the pandemic tailwinds have faded. Economic conditions will eventually normalize, and Amazon should return to its usual strength. Recovering to its previous levels would mean an 80% gain.

ALSO READ: Why Is Everyone Talking About Amazon Stock?

LIke Amazon, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is another tech giant whose stock price has fallen considerably during this year.

Shares of the Google parent are down 26% from their peak as the broad-market sell-off and concerns about a slowdown in digital advertising have weighed on the stock.

While advertising is a cyclical industry, Alphabet continues to put up strong growth as evidenced in its most recent earnings report, and it now trades at a price-to-earnings ratio of just 20, on par with the S&P 500.

Once fears of a recession pass, Alphabet should rebound to its historical valuation levels.

Not too long ago, Nvidia (NASDAQ: NVDA) was approaching a valuation of $1 trillion, but the market crash has hit the leading chipmaker much like it has with other growth stocks.

Nvidia's underlying business still remains solid, however, and the chip shortage and increasing demand in areas like artificial intelligence and vision technology favor the company's long-term growth.

Revenue jumped 46% in its most recent quarter, but the stock is down 55% from its peak last fall. Once market sentiment shifts, Nvidia should experience a healthy recovery.

Shopify (NYSE: SHOP) was a longtime market darling, but shares have ignominiously crashed this year, falling 80% from their previous heights.

Shopify was a big winner during the pandemic, but with e-commerce tailwinds turning to headwinds, the market quickly changed its view of the stock. However, the e-commerce headwinds won't last forever. Shopify says it expects sales growth to improve in the second half of the year, and unless a recession hits, the company's performance should rebound by then.

If Shopify can bring the growth story back, the stock should reward investors.

ALSO READ: Is Shopify a Buy After the Stock Split?

General Motors (NYSE: GM) isn't a tech stock, but it could still soar in a recovery, especially if the company can execute on its electric vehicle goals.

Car manufacturing is a cyclical industry, and auto stocks tend to get punished when investors expect a recession, but GM could bounce back in the recovery.

The stock is down 50% from its 52-week high and now trades at a price-to-earnings ratio of just 5 based on both 2022 and 2023 earnings estimates. Even for a longtime value stock, that looks too cheap.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Meta Platforms (NASDAQ: META), the company formerly known as Facebook, has suffered from some unforced errors in recent months, including the revelation that it's burning more than $10 billion annually on its metaverse experiment, Facebook Reality Labs.

However, even with that gamble, Meta is still hugely profitable, and the stock seems to be experiencing the same discount as Alphabet.

While its digital advertising business has slowed, it should still be a solid source of steady growth, making the company's forward P/E ratio of less than 15 look like a bargain.

Cloud software stocks have been hit hard by the market sell-off, and Okta (ASDAQ: OKTA) is no exception.

Shares of the cloud identity specialist are down nearly two-thirds from their peak last year even though the business's performance hasn't changed. Instead, valuation multiples have come crashing down in the software sector, but Okta now looks oversold. The company is targeting an $80 billion addressable market, and it expects to reach $800 million in free cash flow by 2025.

If the company can execute on its goals, the stock should have a lot of upside in the years ahead.

ALSO READ: Investing in Software-as-a-Service Stocks

Facebook isn't the only social media stock that's poised for a comeback. Pinterest (NYSE: PINS) should also recover once market conditions improve.

Like other pandemic winners, the stock has plunged sharply in recent months, but earlier concerns seem to be fading away. User growth has returned after several quarters of declines, and the company remains highly profitable with the stock trading at P/E ratio of less than 20.

If the company can reaccelerate its growth, the stock should respond.

LIke other e-commerce stocks, Etsy (NASDAQ: ETSY) has fallen sharply in recent months, down more than 75% from its recent peak.

Growth has slowed from triple digits during the pandemic to negative gross merchandise volume in its most recent quarter. However, its growth rate should improve as comparisons get easier over the rest of the year.

Etsy should also continue to benefit from its unique business model and steady growth in new buyers and sellers.

Consumer discretionary businesses tend to struggle during recessions, especially those that sell higher-end products.

RH (NASDAQ: RH), the company formerly known as Restoration Hardware, is getting hit on multiple fronts, including by the slowdown in home furnishings sales following the boom during the pandemic.

The stock is now down more than two-thirds from 2021, but the business is still highly profitable and in good shape to make a comeback once economic fears pass.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Though all of these stocks should do well in a recovery, the near term remains uncertain. The Federal Reserve is expected to continue raising interest rates, which should slow down the economy, potentially leading to a recession.

Depending on how that plays out, stocks could fall even further. However, there will be a recovery eventually. Investors may need to be patient, but stocks will eventually bounce back. They always have.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Amazon, Etsy, Meta Platforms, Inc., Okta, Pinterest, RH, and Shopify. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Etsy, Meta Platforms, Inc., Nvidia, Okta, Pinterest, RH, and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.