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One of the few guarantees for Wall Street investors is short-term unpredictability. The stock market has long been a true wealth creation machine, but the annual performance of major stock indexes is as unpredictable as a coin flip.
Since the start of this decade, the major stock indexes have bounced back and forth between consecutive bear markets and bull markets. These fluctuations were particularly pronounced among stocks led by growth stocks. Nasdaq Composite (^IXIC -0.28%)its value fell 33% during the 2022 bear market, but has soared 49% since the start of 2023.
Image source: Getty Images.
However, as of its close on February 21, 2024, the Nasdaq Composite Index was the only one of the three major stock indexes that did not fully reflect the 2022 bear market. The growth-driven index remains 3% below its all-time high set in November 2021.
While some traders may view a 3% decline over 27 months as a lost period for a fast-paced company, long-term investors tend to view this decline as an opportunity. As long as the Nasdaq remains in the aftermath of the 2022 bear market and doesn’t hit a new record closing price, there are still bargains to be found.
Here are four exhilarating growth stocks you’ll regret not buying following the Nasdaq bear market decline.
Social media companies are the first exciting growth stocks you’ll be upset about not buying on the Nasdaq Composite as it looks to put the 2022 bear market behind it. pinterest (pin -0.36%).
One of the biggest blows to Pinterest by skeptics was its lack of monthly active user (MAU) growth after the worst of the coronavirus pandemic. MAUs skyrocketed during the early stages of the pandemic when people were effectively confined to their homes. Once a vaccine became available and life returned to some degree of normalcy, the company’s MAUs rebounded. In the quarter ending December, Pinterest recorded 498 million MAUs, an all-time high. Despite a turbulent few years, Pinterest has shown that its platform resonates with more people than ever before.
What’s particularly noteworthy about Pinterest’s operating model is the resilience of its ad pricing power. While a 1% increase in average revenue per user (ARPU) in 2023 is a far cry from the double-digit ARPU growth that has been consistently achieved in the past, it is still, given how challenging the advertising environment is. It’s impressive that ARPU is still rising.
Perhaps the best part of Pinterest’s operating model is that its 498 million MAUs actively share their interests with us, providing critical data that advertisers and sellers can rely on to target users. That’s what they will do for you. App developers give users the option to remove tracking tools, but they don’t really matter to Pinterest.
Based on Wall Street consensus estimates, Pinterest is expected to double its adjusted earnings per share (EPS) to more than $2 by 2027. Assuming the company continues to develop its e-commerce ambitions, this is an attractive valuation for a large (and growing) company. ) Social Platforms.
autozone
The second exhilarating growth stock you’ll regret not adding to your portfolio after the Nasdaq bear market downturn is auto parts retailer autozone (Azo -0.09%).
The first factor working in AutoZone’s favor is that Americans are clinging to their cars longer than ever before. last year, S&P Global Its subsidiary S&P Global Mobility noted that the average age of the 284 million vehicles currently registered in the United States is 12.5 years. Rapidly rising new car prices and a lack of supply (partly due to the pandemic) are driving owners to keep their existing cars for longer periods of time. This is great news for auto parts suppliers like his AutoZone, which helps owners keep older cars running well.
AutoZone’s business success is also a reflection of innovation at the forefront of the supply chain. Several years ago, management opted to add 20 “megahubs” to its distribution network. These megahubs store up to 110,000 stock-keeping units (SKUs) and are designed to be centrally located so stores can quickly access the parts they need.
Another reason growth investors can trust AutoZone is our virtually unbeatable stock repurchase program.meanwhile apple While the company may have the largest nominal dollar buyback program of any publicly traded company, AutoZone’s total buybacks put it in a class of its own. Since the company’s stock repurchase program began in 1998, the company’s board has authorized $37.7 billion in stock repurchases. The company has repurchased $35.3 billion worth of shares through November 18, 2023, representing 89% of its outstanding shares since 1998.
With earnings expected to grow at an annual rate of 11% over the next five years, AutoZone remains a bargain.
Image source: Getty Images.
jazz pharmaceutical
The third exciting growth stock you’ll be upset to have missed out on after the 2022 Nasdaq Composite bear market decline is specialty drug development companies. jazz pharmaceutical (jazz 2.98%).
One of the best things about investing in healthcare stocks is that this sector is very defensive. Just because the U.S. economy isn’t growing as fast or it’s been a tough few weeks for Wall Street doesn’t mean demand for prescription drugs and medical services will stop. Consistent demand for Jazz’s new treatments provides predictable and highly profitable operating cash flow in virtually any economic environment.
For quite some time now, Jazz’s oxybate franchises (Xyrem and Xywav) have been driving that growth. These are treatments that treat a variety of sleep disorders, including narcolepsy. Jazz’s genius move was to develop a second-generation treatment, Zywab, that contains 92% less sodium than Xyrem, his $1 billion-plus drug in annual sales. . Zywab’s reduced sodium content makes it a safer alternative for patients at risk for cardiovascular disease and, more importantly, protects the company’s cash flow from generic competition for a long time to come. .
In addition to its Oxybate franchise, Jazz sees its oncology portfolio and cannabidiol drug Epidiolex tipping the needle decisively higher. Epidiolex’s label expansion opportunities could allow the drug to reach peak annual sales of more than $1 billion. Meanwhile, annual sales in the oncology field are expected to well exceed $1 billion due to organic growth in existing cancer drugs and an expanding pipeline.
In terms of valuation, Jazz Pharmaceuticals is hard to rank among drug development companies. Annual earnings growth is expected to average 10% over the next five years. However, Jazz stock could rake in more than six times expected EPS in 2025.
Starbucks
The fourth refreshing growth stock you’ll regret not buying after the Nasdaq bear market decline is a global coffee chain. Starbucks (SBUX -0.17%).
What has enabled Starbucks to make such a great investment over the decades is the extraordinary loyalty of its customers. As of the end of 2023, the company had 34.3 million Starbucks Rewards members, an increase of 13% year over year. On average, Rewards members spend more per ticket than non-members and are also more likely to use mobile ordering, which speeds up the ordering process and helps Starbucks stores run more efficiently.
Another thing working in Starbucks’ favor is its innovation. During the COVID-19 pandemic, Starbucks had to completely rethink its drive-thru lanes as many stores were closed. Adding video to your order board makes drive-thru transactions more personal, and suggesting food and drink pairings on your drive-thru menu is an easy way to increase ticket size and improve margins. Ta.
I would be remiss if I didn’t also mention that Starbucks is perfectly positioned to benefit from China’s economic expansion. The world’s second-largest economy by gross domestic product (GDP) just abandoned strict COVID-19 mitigation measures in December 2022. Starbucks’ roughly 7,000 stores in China should benefit as supply chain kinks are ironed out and the Chinese economy gains footing.
Finally, Starbucks stock is the lowest it’s been in at least a decade. The stock is valued at 20 times year-over-year earnings, and Wall Street expects average annual earnings to increase 16% over the next five years. Considering how strong Starbucks’ brand and pricing power is, this is an unusual deal for patient growth-seeking investors.
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