One of the few guarantees for investors on Wall Street is short-term unpredictability. Although the stock market has been a genuine wealth-building machine over extended periods, the year-to-year performance of the major stock indexes is no more predictable than a coin flip.
Since this decade began, the major stock indexes traded off bear and bull markets in successive years. These swings were especially pronounced in the growth stock-driven Nasdaq Composite (^IXIC -0.28%), which shed 33% of its value during the 2022 bear market, but has rocketed higher by 49% since the start of 2023.
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But as of the closing bell on Feb. 21, 2024, the Nasdaq Composite was the only one of the three major stock indexes to have not put the 2022 bear market fully in the rearview mirror. This growth-fueled index remained 3% below its all-time high, set in November 2021.
Although some traders may view a 3% decline over a span of 27 months as a lost period for fast-paced companies, long-term investors are liable to see this decline as an opportunity. As long as the Nasdaq remains in the wake of the 2022 bear market and hasn’t reached a new record close, bargains can still be found.
What follows are four exhilarating growth stocks you’ll regret not buying in the wake of the Nasdaq bear market dip.
The first exciting growth stock you’ll be kicking yourself for not buying with the Nasdaq Composite still attempting to put the 2022 bear market in the back seat is social media company Pinterest (PINS -0.36%).
One of the biggest knocks against Pinterest by skeptics had been its lack of monthly active user (MAU) growth following the worst of the COVID-19 pandemic. When people were effectively stuck in their homes during the early stages of the pandemic, MAUs soared. When vaccines became available and life returned to some semblance of normal, the company’s MAUs retraced. During the December-ended quarter, Pinterest tallied 498 million MAUs, which is an all-time high. Despite a wild couple of years, Pinterest has shown that its platform is resonating with more people than ever.
What’s been particularly noteworthy about Pinterest’s operating model is the resilience of its ad-pricing power. Although a 1% increase in average revenue per user (ARPU) in 2023 is a far cry from the double-digit ARPU growth it’s consistently delivered, it’s nevertheless impressive that ARPU is still climbing considering how challenging the advertising environment has been.
Perhaps the best aspect of Pinterest’s operating model is that its 498 million MAUs willingly share their interests with the company, which provides critical data that advertisers/merchants can rely on to target users. Even though app developers have been giving users the option to remove tracking tools, they’re not nearly as important for Pinterest.
Based on Wall Street’s consensus estimate, Pinterest is expected to double its adjusted earnings per share (EPS) to north of $2 by 2027. Assuming it continues to develop its e-commerce ambitions, this represents an attractive valuation for a leading (and continually growing) social platform.
AutoZone
A second exhilarating growth stock you’ll regret not adding to your portfolio in the wake of the Nasdaq bear market swoon is auto parts retailer AutoZone (AZO -0.09%).
The first factor working in AutoZone’s favor is that Americans are hanging on to their vehicles longer than ever before. Last year, S&P Global subsidiary S&P Global Mobility noted the average age of the 284 million vehicles currently registered in the U.S. is 12.5 years. Rapidly rising prices for new vehicles, coupled with tight supply (partly due to the pandemic), have encouraged owners to hang on to their existing vehicles for a lengthier period. That’s excellent news for auto parts suppliers like AutoZone, which are helping owners keep their older cars running well.
AutoZone’s operating success is also a reflection of its innovation on the supply chain front. A few years ago, management chose to add 20 “mega hubs” to its distribution network. These mega hubs carry up to 110,000 stock keeping units (SKUs), and they’re designed to be centrally located to ensure that stores can quickly access the part(s) they need.
Another reason growth investors can trust AutoZone is its virtually unbeatable share repurchase program. While Apple may have the largest nominal-dollar buyback program among public companies, AutoZone’s aggregate repurchases put it in a class of its own. Since initiating a stock repurchase program in 1998, the company’s board has authorized $37.7 billion in share repurchases. Through Nov. 18, 2023, the company had bought back $35.3 billion worth of its stock, which represents 89% of its outstanding shares since 1998.
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Read More: 4 Exhilarating Growth Stocks You’ll Regret Not Buying in the Wake of the Nasdaq