Wall Street has long proven that it is a wealth-building machine. However, on shorter timelines, it has also proven to be unpredictable and highly unstable. Over the past four years, Wall Street's major stock indexes have alternated between consecutive bear markets and bull markets. These fluctuations are especially noticeable in growth-driven stocks. Nasdaq Composite (NASDAQINDEX: ^IXIC).
During the 2022 bear market, the Nasdaq Composite Index lost a third of its value. However, since the start of 2023, it has been green pastures for growth stocks, with the Nasdaq Composite Index soaring 54% to an all-time high. There's no question that Wall Street and the Nasdaq are in the midst of a new bull market.
But just because the Nasdaq Composite has soared doesn't mean there aren't some surprising trades to be found. The Magnificent Seven accounted for a large portion of the Nasdaq's gains, and remains a trade for opportunistic investors.
Here are four extraordinary growth stocks you'll regret not buying in the new Nasdaq bull market.
paypal holdings
Even as the Nasdaq hits new highs, fintech leaders are the first phenomenal growth stock that could make investors kick themselves for not taking the plunge. paypal holdings (NASDAQ:PYPL). Despite concerns about increased competition in the digital payments space, PayPal's performance suggests it remains competitive.
Before we dig into the details, understand that fintech should be an opportunity for sustained double-digit growth throughout the rest of the decade, if not beyond. The adoption rate of digital payments is still increasing, which should drive significant growth for PayPal.
What really stands out about PayPal is the sheer volume of payments that pass through its network, including Venmo. Total payment volume last year rose 12% on a currency-neutral basis to $1.53 trillion.
More importantly, active accounts are completing more transactions over time. As 2020 came to a close, active PayPal accounts averaged just under 41 transactions over the trailing twelve month (TTM) period. At the end of 2023, payment transactions per active account increased to 58.7 on a TTM basis.
PayPal is primarily a fee-driven business. If transactions per active account continue to increase, PayPal's gross profit should also increase.
Investors would also be wise not to overlook the importance of new CEO Alex Criss' plans to improve existing products and launch new services while keeping the company's costs in check. Before he joined PayPal in late September, Chris was one of the key people at PayPal. intuitionsmall business sector. He understands what small businesses want and how to keep costs down.
The best part is that PayPal stock is raising at just over 11 times prior-year earnings, which is historically cheap for the fintech innovator.
fiber international
Now that the Nasdaq Composite Index is firmly in a bull market, the second extraordinary growth stock you'll regret not adding to your portfolio is the online services market. fiber international (NYSE:FVRR). Despite persistent concerns that artificial intelligence (AI) could hinder the company's freelancer-based operating model, Fiverr's rich competitive advantages suggest it's nothing short of a bargain. ing.
On a macro basis, Fiverr has benefited greatly from changes in the labor market due to the worst of the COVID-19 pandemic. Although some people have returned to the office, a significantly higher percentage of employees are working remotely. This is great news for companies looking to connect freelancers with companies that need their services.
Fiverr's online marketplace is another reason for its success. While many of our competitors allow freelancers to list their services on an hourly rate, Fiverr's freelancers price their work as a completed task. This provides unparalleled price transparency and has steadily increased spend per buyer on the platform.
In addition to this, Fiverr's investment in AI has increased its gross merchandise value. The gains have been modest, but so far AI seems to be helping rather than hindering this premier gig economy stock.
But from an investment perspective, the single biggest reason to trust Fiverr is the company's take rate. “Take Rate” represents the percentage of each trade negotiated on the Platform that can be retained, including fees. While most of its peers have acquisition rates in the mid-to-high teens, Fiverr's increased its acquisition rate to 31.8% in the quarter ending December. It's a bigger piece of the pie, and we see active buyers spending more each quarter. This is a recipe that should produce superior operating margins within the industry.
biomarin pharmaceutical
The third incredible growth stock being bought in the young Nasdaq bull market is specialty biotechnology companies. biomarin pharmaceutical (NASDAQ:BMRN). BioMarin's TTM price-to-earnings ratio (P/E) of nearly 100 is bound to scare some value investors away, but the consensus annualized earnings growth rate for the next five years is 43. % should be music to the ears of growth investors.
First, BioMarin enjoys the advantage of being in the highly defensible healthcare sector. Regardless of what's happening in the U.S. and global economy, patients taking the branded medicines developed by BioMarin will continue to need those treatments in any climate. This means that your company's cash flow is always predictable and transparent.
What tends to separate BioMarin Pharmaceutical from other drug development companies is its focus on drugs for ultra-rare diseases. Brand-name treatments that focus on small groups of patients can be risky, but they can also be rewarding. In addition to addressing diseases for which there are few or no treatment options, drugs for ultra-rare diseases face limited competition and minimal list price hikes from health insurance companies.
BioMarin's biggest growth opportunity right now is with its dwarfism drug Voxzogo. Voxzogo's increased penetration, strong pricing power, and potential label expansion opportunities could ultimately push his annual sales over $1 billion. For context, Voxzogo's revenue increased by 178% in his 2023 to approximately $470 million.
Finally, BioMarin Pharmaceutical is well-capitalized and has sufficient capabilities to continue successfully developing rare disease drugs in-house. We ended 2023 with $1.68 billion in cash, cash equivalents and various short- and long-term investments. New drug launches, label expansion, and pricing power could sustain sales growth of 10% or more throughout the decade.
alphabet
The fourth extraordinary growth stock you'll regret not buying in the new Nasdaq bull market is none other than a member of the Magnificent Seven alphabet (NASDAQ:Google)(NASDAQ:GOOG). Despite a tough advertising environment, Alphabet makes a genius purchase.
Recessions are known to hit ad-driven businesses hard, but their effects tend to be short-lived. Since World War II, only three of the 12 recessions in the United States have lasted more than 12 months, but there have been two periods of growth that lasted at least 10 years during the same period. Patient investors tend to succeed in companies that focus on advertising.
Currently, Alphabet's main cash flow driver is Google, the world's leading internet search engine. In February, Google accounted for nearly 92% of the world's Internet search share. In fact, it's been nine years since Google last held its monthly share of global internet searches below 90%. A virtual monopoly on Internet search means that Google can wield extraordinary ad pricing power.
However, what shareholders are most looking forward to is growth from Alphabet's ancillary businesses. For example, Google Cloud has grown into the world's third-largest cloud infrastructure service provider by spending, according to technology analysis firm Canalys. More importantly, Google Cloud generates significantly more profit than advertising, and the division achieved its first profit in 2023.
Don't fall asleep watching YouTube. YouTube is his second most visited social site on the planet, with around 2.5 billion monthly active users.
One of the fastest growing innovations within YouTube is short-form videos, known as “Shorts.” Since its introduction in 2021, his average daily views of short videos has increased from 6.5 billion views to over 50 billion views in early 2023. Whether it's additional ad revenue or premium subscriptions, short videos are the driving force behind his YouTube and its parent company's cash flow. .
Finally, Alphabet stock is historically cheap. Of the Magnificent Seven stocks that propelled the Nasdaq to new heights, it's the cheapest, both in terms of forward P/E and multiple to cash flow.
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Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Sean Williams has held positions at Alphabet, Fiverr International, and PayPal. The Motley Fool has positions in and recommends Alphabet, Fiverr International, Intuit, and PayPal. The Motley Fool recommends his BioMarin Pharmaceutical and recommends the following options: His short March 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.
4 Extraordinary Growth Stocks You'll Regret Not Buying in the New Nasdaq Bull Market was originally published by The Motley Fool
