It's amazing how much can change on Wall Street in one year. 2023 has been a phenomenal year for bulls, as the three major stock indexes continue to oscillate between bear and bull markets every year. Although, Dow Jones Industrial Average This is an all-time high, with an annual increase of 43%. Nasdaq Composite (NASDAQINDEX: ^IXIC) That became a hot topic.
But despite this impressive gain from 2022 onwards; bear market, the Nasdaq, which drives growth, has not yet surpassed its previous high. As of the close on January 3, 2024, the Nasdaq remains more than 9% below its all-time high.
While short-term traders may view the past 26 months as a lost period for growth stocks, long-term investors tend to see this decline as an opportunity to jump on. After all, all the notable declines in the major indexes Finally (Keyword!) Put on the back seat by the bull market rally.
Here are four great growth stocks you'll regret not buying following the Nasdaq bear market decline.
Palantir Technologies
With the Nasdaq Composite Index still a long way from its closing high, the first blue-chip growth stock you'll be kicking yourself for failing to scoop up is a data mining company. Palantir Technologies (NYSE:PLTR). Palantir trades at a very high margin, just above his 50x prior-year earnings, but has clear competitive advantages that merit a premium.
Palantir is best known for its Gotham platform. Gotham is an artificial intelligence (AI) and machine learning (ML)-driven software-as-a-service (SaaS) solution primarily used to assist the U.S. federal government with mission planning and data collection. With the U.S. government being our primary customer, not only do we have little to worry about receiving payments; Palantir land contracts often last four or five years.. This results in predictable cash flow and consistent double-digit sales growth.
Palantir's larger long-term growth driver appears to be its Foundry platform. Foundry is his Palantir enterprise SaaS solution that incorporates AI and ML to help companies better understand their data and streamline their operations. Foundry is still in the early stages of growth, with business customer numbers up 34% year-over-year in the quarter to the end of September.
Additionally, the combination of sustained double-digit sales growth and conscious cost reductions has propelled Palantir beyond recurring profit levels. The third quarter marked the company's fourth consecutive quarter of growth in generally accepted accounting principles (GAAP) earnings.
Finally, and perhaps most importantly, Palantir Technologies has an irreplaceable operating model. No company can do what Palantir does at scale. This is why high valuation premiums are supported.
JD.com
The second great growth stock you'll regret not adding to your portfolio after the Nasdaq bear market crash is an e-commerce company based in China JD.com (NASDAQ:JD). While China's economic data over the past few months has left much to be desired, Jingdong is perfectly positioned to serve patient shareholders.
One of the factors that is working in JD's favor is the restart of the Chinese economy following the end of the “zero coronavirus” mitigation measures. Those regulations were repealed in December 2022, but the world's second-largest economy has been slow to put its supply chain problems in the rearview mirror. Thankfully, e-commerce is still in a relatively early stage of growth in China. If the country's economy takes off, JD.com could sustainably achieve double-digit sales growth.
What sets JD apart from its competitors is its e-commerce operating model.Meanwhile, major e-commerce providers alibaba Although the company derives much of its revenue from third-party sellers, JD primarily benefits from acting as a true direct-to-consumer provider. In other words, Jingdong will be in charge of inventory and logistics. The advantage of this approach is that JD has much more control over its operating profits than Alibaba.
Another exciting thing about JD.com is the anticipated spin-off of two of its divisions: real estate and industrial. Spunting off these units and listing them on the Hong Kong Stock Exchange could not only alleviate antitrust concerns, but also give investors a better understanding of how JD makes its profits. It will be easier to understand.
At a forward price/earnings ratio (P/E) of just 8x, JD.com is ripe for selection.
AstraZeneca
The third exceptional growth stock you'll regret not buying following the Nasdaq bear market decline is Big Pharma AstraZeneca (NASDAQ:AZN). After 20 years of struggling with patent cliff issues, AstraZeneca is now firing on all cylinders with its extensive portfolio of treatments.
Two areas that have received particular attention in recent years are oncology and cardiovascular. AstraZeneca has four cancer drugs with annual sales of more than $1 billion, three of which (Tagrisso, Imfinzi and Calquence) had double-digit sales at constant currency in the first nine months of 2023. Achieved growth. Meanwhile, the type 2 diabetes treatment Faxiga, with constant currency sales up 40% through September, appears on track to overtake Tagrisso as the company's top seller.
This is a great time to mention that healthcare companies are well-insulated operationally from Wall Street fluctuations and short-term recessions. Because we cannot control when we get sick or what illnesses we develop, the demand for prescription drugs tends to remain constant in any economic climate.Translation: AstraZeneca's operating cash flow is highly predictable – and Wall Street really like Predictability.
Another key to AstraZeneca's success was its acquisition of ultra-rare disease drug company Alexion Pharmaceuticals in 2021. Developing medicines for very small numbers of patients carries inherent risks, but the rewards can also be substantial if successful. In addition to helping patients who previously had few or no treatment options, approved ultra-rare treatments often have minimal pushback from insurance companies regarding list price and often have little or no competition. Or not at all.
Most importantly for AstraZeneca, Alexion has developed a next-generation treatment for its blockbuster drug Soliris, known as Ultomiris. This will secure billions of dollars in annual cash flow from the rare disease sector going forward.
Baidu
The fourth blue-chip growth stock you'll regret not buying after the Nasdaq bear market decline is none other than China-based Internet search giant Baidu (NASDAQ:BIDU). China's slower-than-expected post-pandemic recovery has weighed on the country's biggest companies, but Baidu, like Jingdong, is ideally placed to take advantage of long-term growth prospects across a variety of channels. It is in.
Baidu's basic business segment is Internet search engines, and that is unlikely to change. As of December, Baidu accounted for 66.52% of total search share in China, according to GlobalStats data. With some exceptions, the company has maintained its 60% to his 85% share of Internet searches in the world's second-largest economy over the past nine years. Baidu, the clear leader in Internet search, should have no problem commanding fairly strong advertising pricing power in most economic conditions.
But there's more to Baidu than just a huge internet search moat. Specifically, the company's fast-growing AI-driven segment offers significant growth potential.
Apollo Go is the world's number one self-driving ride-hailing company by total number of rides since its inception (4.1 million). Meanwhile, enterprise cloud spending is still in the early stages of expansion, which should drive Baidu's AI cloud revenue growth. AI has the potential to be a major cash flow driver for Baidu, but it may require some patience as the technology matures.
Evaluation also has great meaning. Even considering the additional regulatory risks associated with investing in Chinese stocks, Baidu stock can be purchased for less than 11 times year-over-year earnings. This is an unusually low price for a company with a history of double-digit growth.
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sean williams He holds positions at Baidu and JD.com. The Motley Fool has positions in and recommends Baidu, JD.com, and Palantir Technologies. The Motley Fool recommends Alibaba Group and AstraZeneca. The Motley Fool has Disclosure policy.
4 blue-chip growth stocks you'll regret not buying after the Nasdaq bear market decline Originally published by The Motley Fool
