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15 Tech Stocks on the Road to Recovery

By Jeremy Bowman - Sep 22, 2022 at 7:00AM
Street signs saying Recession and Recovery at an intersection.

15 Tech Stocks on the Road to Recovery

The recovery is coming

There's a lot of uncertainty in the stock market these days, but one thing's for sure: Stocks, including beaten-down tech stocks, will eventually recover.

Inflation will cool off, and the Federal Reserve will stop pumping interest rates higher. While it's possible the economy will nose-dive into a recession, the unemployment rate remains near record lows, indicating the economy can withstand higher interest rates for now.

Though the bear market looks likely to endure for at least a few more months, conditions will change at some point, and for many tech stocks, they already have. Here are 15 tech stocks that are already bouncing back from the depths of the sell-off.

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An Amazon fulfillment employee preparing goods for shipping.

1. Amazon

Amazon (NASDAQ: AMZN) has reshaped industries from e-commerce to cloud computing to book publishing, and its Prime membership program is the gold standard for retail loyalty programs.

However, the stock fell sharply in the first half of the year due to tough comparisons with the period a year ago as e-commerce sales have slowed with consumer spending shifting to other channels.

Still, Amazon expects revenue growth to accelerate in the third quarter, and it should continue to improve from there as we head into the holiday season.

After hitting bottom in June, Amazon has gained more than 20% and seems unlikely to test those lows again.

ALSO READ: Amazon Stock: Headed to $200?

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Executives walking into Google's headquarters entrance.

2. Alphabet

Like Amazon, Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is another tech giant that recently issued a stock split.

In a difficult environment for digital advertising, Alphabet posted solid results in its second-quarter report, and its growth should improve as comparisons get easier after a boom during the reopening a year ago.

While social media stocks have struggled with the rise of TikTok and Apple's new ad-tracking policy, Google Search remains a hugely profitable growth business.

With the stock now hovering around 52-week lows, it looks like a great time to buy.

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A Carvana vending tower in Charlotte.

3. Carvana

Carvana (NASDAQ: CVNA) is one of the most volatile tech stocks on the market, as shares soared more than 1,000% from trough to peak during the pandemic but then crashed by more than 90%.

However, the online used car dealer is already up more than 60% from its bottom this year, and it's one of the few tech stocks that stand to benefit from rising interest rates. That's because much of its profit comes from financing and payments will increase as interest rates rise.

While a recession would be bad for the business, a normalizing of used car prices would probably help it, making pricing more predictable. Based on historical levels, Carvana stock is also dirt cheap at a price-to-sales ratio of just 0.2.

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Person looking at Pinterest images on tablet.

4. Pinterest

2022 has been a tough year for social media as TikTok has taken market share and Apple has made ad targeting more difficult.

Pinterest (NYSE: PINS) has fallen sharply this year, but it seems like the worst could be over for the image discovery engine.

After declining for a year, Pinterest's user base seems to have stabilized, as it was flat in the most recent quarter at 433 million monthly active users. Meanwhile, the company remains highly profitable despite the recent headwinds. In the second quarter, it posted $92 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), or a 14% margin. Its free cash flow margins are even stronger at 25% through the first half of the year.

The stock is up more than 50% from its bottom this summer as investors seem to believe that the company is turning the corner.

ALSO READ: Is Pinterest a Buy Now?

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Several rings from an Etsy seller.

5. Etsy

E-commerce growth was sluggish in the first half of the year as online retailers faced difficult comparisons, and Etsy (NASDAQ: ETSY) was one of many online retailers that struggled.

Gross merchandise sales fell slightly, though they were up on a currency-neutral basis, while revenue increased 11% thanks to a recent increase in seller fees.

However, active seller growth remains strong, up 41% to 7.4 million, a sign the company is expanding its product range and remains attractive to sellers.

Comparisons should get easier in the second half of the year as well. The stock has already bounced 70% from its June low.

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.

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6. Bill.com

Like Carvana, Bill.com (NYSE: BILL) is another stock that can benefit from rising interest rates. That's because the company, whose software helps small and medium-sized businesses manage back-office accounting and billing, collects interest on the money it holds between transactions.

Bill.com is also growing fast with core organic revenue up 71% in its most recent quarter, and the company's revenue is on track to reach nearly $1 billion in the current fiscal year.

The stock has gained more than 50% from its low in May, a sign investor confidence has returned.

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Person wearing headphones while looking at spreadsheet on computer screen.

7. MongoDB

Like many cloud stocks, MongoDB (NASDAQ: MDB), the leader in NoSQL database software, has seen its stock price slide.

Shares are down nearly two-thirds from their peak nearly a year ago, and the stock is hovering near its 52-week low even as the company continues to put up impressive growth. In its most recent quarter, revenue jumped 53% to $303.7 million, driven by 73% growth from Atlas, its cloud-based database product that now makes up 64% of its sales.

With the company set to cross the $1 billion annual revenue mark this year, profits should soon begin scaling up.

ALSO READ: Why Is MongoDB Still Unprofitable?

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8. MercadoLibre

Unlike most e-commerce stocks, MercadoLibre (NASDAQ: MELI) has actually continued to put up strong growth even as most of the online retail sector has faced a sharp slowdown.

The company has built out leading positions in Latin America in both e-commerce and digital payments, and it's also developing other businesses like logistics and financing for small businesses.

That suite of services makes MercadoLibre similar to Amazon as it's using its strength in e-commerce to launch new businesses. Investors appear to be taking notice of its resilience as the stock is up more than 50% since it bottomed in June.

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Artist representation of the digital cloud.

9. Snowflake

Data warehousing specialist Snowflake (NYSE: SNOW) attracted a lot of attention in its 2020 IPO, but a sky-high valuation helped bring the software stock back down to earth as shares have crashed over much of the past year, losing nearly 75% at one point.

However, the company continues to deliver strong growth with revenue up 83% in its most recent quarter. Its usage-based model also drives strong net revenue retention, which is up 171% over the past four quarters, meaning existing customers increased their spending by 71%.

Since hitting bottom in June, Snowflake stock is up 60%.

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Airbnb camper in the moonlight in Joshua Tree, California.

10. Airbnb

Airbnb (NYSE: ABNB) was another top IPO stock of 2020, and the stock initially flew out of the gate. However, the market sell-off has been tough on the home-sharing leader even as its performance has been strong in the economic reopening.

From peak to trough, the stock fell more than 50%, but since June, investors seemed to have spied a buying opportunity as the stock is up more 40%.

Investors seem to be responding to 58% revenue growth in the most recent quarter, along with adjusted EBITDA of $711 million, equal to a margin of 34%.

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.

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Someone using the Uber app on their smartphone.

11. Uber

Like Airbnb, Uber (NYSE: UBER) got hit hard by the pandemic as global travel ground to a halt and white-collar workers ditched the commute, but the company has rebounded strongly with the reopening.

Its Uber Eats business benefited from a spike in demand for food delivery during the pandemic, and it's made good on a pledge to turn adjusted EBITDA positive. The company still has more work to do, but investors have rewarded its efforts. Shares are up nearly 60% in just a few months.

ALSO READ: Uber: Great Company or Bad Business Model?

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Exterior of PayPal's headquarters.

12. PayPal

Fintech stocks have gotten hit hard by the shift in market sentiment and worries about the recession. While the sector largely surged during the pandemic, it's since come crashing down, and PayPal (NASDAQ: PYPL) offers a good example of the challenges the sector is facing.

The payments stock fell more than 75% at one point, but it's since bounced back by nearly 50%. Growth has slowed, but with the stock still down, the valuation looks appealing at a price-to-earnings ratio of less than 25.

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A Netflix sign outdoors in a landscaped area.

13. Netflix

Netflix (NASDAQ: NFLX) has been one of the biggest disappointments among big tech stocks over the past year. The company's subscriber growth has stalled out in the first half of the year due to rising competition and fatigue with streaming entertainment following a boom during the pandemic, and the stock has crashed as a result.

However, after losing 70% of its value in six months, the stock has showed signs of life, gaining 50% from its bottom in the summer.

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Person looks at ups and downs of ETFs in the stock market.

14. The Trade Desk

While the digital advertising sector has mostly struggled with the anticipated economic slowdown, ad tech companies continue to do well, especially The Trade Desk (NASDAQ: TTD), the leading demand-side platform.

The Trade Desk blew expectations away in its latest quarterly earnings report, showing off strong revenue growth and profitability once again.

Thanks in part to that rally, the stock is up more than 50% from its lows a few months ago, which came after falling by nearly two-thirds.

With its third-party cookie alternative, Unified ID 2.0, gaining traction, the company should be able to continue putting strong growth numbers up over the coming years.

ALSO READ: Best Tech Stocks to Buy in 2022

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Gloved hands typing on laptop keyboard.

15. CrowdStrike

Like many of its cloud stock peers, CrowdStrike (NASDAQ: CRWD) fell sharply over the first half of the year. The cybersecurity-focused software-as-a-service (SaaS) company has continued to put up strong growth, but its valuation has proven to be a risk and it still trades at a pricey multiple.

However, it's clear why investors are willing to pay up for the stock. Revenue in the most recent quarter jumped 58% to $535.2 million, and the company is profitable on a free cash flow basis with $135.8 million in the quarter, giving it a margin of 26%.

Since cybersecurity is a must-have tool for businesses in any economy, CrowdStrike should be more recession proof than the typical SaaS stock. Shares have bounced back by a third from their lows in May.

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.

Previous

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A stock chart rising on a blue background.

The good news

With so many growth stocks up sharply from the market bottom in June, there seems to be ample evidence that investors believe that the market has already bottomed. Growth stocks are typically the first to recover after a bear market, and that seems to be happening now.

While the Fed isn't done raising interest rates, the strong results of the companies listed here should help reassure investors that these stocks can outperform in the long run, even in the event of a recession.

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. Jeremy Bowman has positions in Airbnb, Inc., Amazon, Bill.com Holdings, Inc., Carvana Co., Etsy, MercadoLibre, MongoDB, Netflix, PayPal Holdings, Pinterest, and The Trade Desk. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Bill.com Holdings, Inc., CrowdStrike Holdings, Inc., Etsy, MercadoLibre, MongoDB, Netflix, PayPal Holdings, Pinterest, Snowflake Inc., and The Trade Desk. The Motley Fool recommends Uber Technologies and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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