Dealing with ups and downs is part of being a Wall Street investor. Since the beginning of this decade, all three major stock indexes have bounced back and forth between consecutive bear and bull markets.
This volatility is especially noteworthy for growth-oriented companies. Nasdaq Composite (NASDAQINDEX: ^IXIC)It lost 33% of its value during the 2022 bear market, but has soared 53% since the start of 2023. The Nasdaq recently hit its highest closing price in November 2021, and there is no doubt that the Nasdaq has firmly established its position. It's like we're in a new bull market.
But the interesting thing about bull markets is that value is always found. Stock market corrections are a natural part of the investment cycle, but declines in major stock indexes (including the Nasdaq Composite) are eventually reversed by a bull market rally. This means now is the perfect time for opportunistic long-term investors to look for quality growth stocks.
Here are four bright growth stocks you'll regret not buying in the new Nasdaq bull market.
paypal holdings
The first standout growth stocks to add to your portfolio during the early stages of the new Nasdaq bull market are fintech leaders paypal holdings (NASDAQ:PYPL). Despite increasing competition in the digital payments space, PayPal's key performance indicators and management team suggest the company is positioned for long-term success.
First, total payment value (TPV) passing through the company's network (primarily PayPal and Venmo) has grown by double-digit percentages over the last year. If PayPal was able to grow its TPV by 12%, excluding currency fluctuations, at a time when most companies were expecting a mild recession, it would mean that the U.S. economy would spend a disproportionate amount of time growing and the adoption of digital payments would increase. Imagine what happens in the long run when you expand.
Even more impressive is PayPal's ability to increase engagement among its active users. Over the past three years (ending December 31, 2023), his average number of payments completed by active accounts over the subsequent 12 months has increased from less than 41 to nearly 59. If this trend continues, PayPal's gross profit should rise. High in any meaningful sense.
In addition to the above, financial technology (“fintech”) solutions are still in a relatively early stage. If Boston Consulting Group's estimates come true, global fintech revenues could increase sixfold to $1.5 trillion by the turn of the decade. This leaves plenty of room for multiple winners in the fintech space, with PayPal currently leading the way.
Finally, newly appointed CEO Alex Chriss knows something about small businesses.He used to lead intuitionsmall business sector with a keen eye for reducing costs and increasing profits without sacrificing high growth initiatives.
PayPal is historically cheap at 11.5 times the previous year's earnings.
Starbucks
The second bright growth stock to blame for failing to properly lift the Nasdaq in the new bull market is the coffee giant. Starbucks (NASDAQ:SBUX). While some are obviously concerned about rapidly rising coffee and labor costs, Starbucks' exceptionally strong brand and continued innovation should make patient investors noticeably richer.
The driving force that keeps Starbucks' engine running is the loyalty of its customer base. The company has been able to offset inflationary pressures by raising prices, but it has not been able to scare away customers.
Perhaps even more important is the company's rewards program. As of the end of 2023, Starbucks has 34.3 million active Rewards members in the United States. These rewards members tend to spend more per ticket than the average customer and use mobile ordering, sometimes in exchange for free food and drinks. The latter can help speed up the ordering process and reduce wait times at stores and drive-thrus. In other words, rewards members are increasing Starbucks' operational efficiency.
Another key reason why Starbucks can perform well for investors is innovation. In addition to developing new drinks and food, the company completely revamped its drive-thru ordering board during the pandemic. We personalized the experience by incorporating barista video into our drive-thru ordering board. On the other hand, promoting food and drink combinations is an easy way for the company to increase profits.
Investors also have the opportunity to buy Starbucks at a historically cheap valuation. The stock can currently be devoured at less than 19 times forward earnings, which represents a 34% discount compared to the average forward earnings multiple over the past five years.
intel
As the Nasdaq Composite Index hits new highs, the third surprising growth stock you'll regret not buying is semiconductor stalwarts. intel (NASDAQ:INTC). Intel last week pointed to huge losses from its foundry business, but the pieces of the puzzle are in place for the company to be a huge success later this decade.
The initial excitement stems from Intel's role in the artificial intelligence (AI) revolution. Most investors are focused on Nvidia With the dominance of graphics processing units (GPUs) in high-computing data centers, Intel is debuting its own AI-focused GPU. In particular, the company announced its Gaudi3 AI GPU in December, with the goal of offering customers this year a generation chip that leverages this AI. Intel's move into AI-powered data centers could be a meaningful growth driver as GPU shortages drive a sell-off in AI stocks.
Another reason investors can trust Intel stock over the long term is its underlying central processing unit (CPU) division.meanwhile Advanced Micro Devices has taken away some of Intel's CPU share, and while CPUs for personal computers (PCs), mobile devices, and data centers aren't the high-growth story they once were, these segments remain important cash sources for Intel. It is the driving force behind flow.
Additionally, Intel maintains a dominant market share in PC and traditional data center CPUs. This operating segment cash cow is not going away, providing Intel with significant cash to reinvest in high-growth initiatives.
Don't overlook Intel's foundry services division. Building a chip manufacturing business (basically) from scratch takes time and money. By the end of the decade, Intel could become the world's second-largest foundry.
While Intel's revenue growth isn't indicative of a traditional growth stock, the company's earnings per share (EPS) are expected to more than quadruple to $4.44 between 2023 and 2027. That makes it an incredible value for patient investors.
Octa
Cybersecurity companies are the fourth bright growth stock you'll regret not buying in the new Nasdaq bull market Octa (NASDAQ:OKTA). Although last year's security breach caused the company's stock to temporarily decline, Okta's competitive advantages should help fuel its sustained double-digit growth for the foreseeable future.
Before digging into the details, it's important to realize that cybersecurity is no longer an “optional” service. Hackers and robots waste no time trying to steal sensitive data. As businesses accelerate the movement of data online and into the cloud, the responsibility to protect this information from unauthorized parties increasingly falls on third-party providers like Okta. This is why the temporary weakness caused by the breach did not become a long-term problem for the company.
Okta's identity verification platform is cloud-native and relies on AI and machine learning. In other words, the company relies on the countless events it monitors each week to identify and respond to potential threats smarter and more efficiently over time. While the platform is continually improving, it needs to be more agile and effective than on-premises solutions.
The addition of Auth0, which Okta acquired two years ago, is also a key part of the expansion plan. Auth0 specializes in customer identity, an addressable market estimated at $30 billion. Just as importantly, Auth0 opens the door to international expansion, which Okta will need to maintain his double-digit growth rate.
Investors concerned about a potential economic downturn may find that Okta exits fiscal year 2024 (ending January 31, 2024) with a current remaining performance obligation (cRPO), or approximately $1.95 billion in outstanding balances. You can take comfort in the fact that Even after a high-profile year-end data breach, Okta's cRPO grown This was an increase of 16% compared to the same period last year.
Okta's adjusted EPS is expected to more than triple to $5.20 over the next four years, so it looks like an incredible buy.
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Sean Williams holds positions at Intel and PayPal. The Motley Fool has positions in and recommends Advanced Micro Devices, Intuit, Nvidia, Okta, PayPal, and Starbucks. The Motley Fool recommends Intel and recommends the following options: Long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, short March 2024 $67.50 calls on PayPal, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
4 Brilliant Growth Stocks You'll Regret Not Buying in the New Nasdaq Bull Market was originally published by The Motley Fool
