In bull markets, everyone wants a piece of the growth-stock pie. When it’s a bear market though, no one wants anything to do with these names. However, there are some quality businesses in this group that get dumped lower with the selloff. So I want to look at growth stocks to buy if the markets retest the 2022 low.
It always pays to have a plan — particularly right now. While equity markets are trading much better, many would agree that we’re not necessarily out of the woods. With just seven stocks generating more than 85% of the year-to-date gains in the S&P 500 and a rising-rate environment, it’s still possible for the indices to struggle. Put simply, we need to be prepared for all sorts of outcomes. It helped to be prepared when a handful of great stocks fell in October. It paid off to know where to buy some high-quality companies at what I call “fantasy” prices.
In fact, a few of those names are included below. Let’s look at the best growth stocks to buy if the market rolls over hard.
| CRM | Salesforce | $192.38 |
| PANW | Palo Alto Networks | $179.01 |
| TTD | Trade Desk | $61.44 |
Growth Stocks to Buy: Salesforce (CRM)
Back in the fourth quarter, I was a big fan of Salesforce (NYSE:CRM). Now the value has been realized by the market and the stock has exploded higher as a result. From its 52-week low to the recent high, shares are up 58%. Have you ever used or worked on a Salesforce platform? It’s incredibly sticky (and intentionally so). In good environments and bad, companies simply can’t part ways with Salesforce. It’s what helps the company deliver its current growth.
In February, Salesforce delivered a top- and bottom-line beat and issued better-than-expected first-quarter and full-year outlooks. CEO Marc Benioff said during the conference call, “It’s one of the best performances of any enterprise software company our size, and it’s amazing that Salesforce is now over $30 billion in revenue.” He’s right and Wall Street knows he’s right. It’s why Salesforce has attracted five different active investors.
Palo Alto Networks (PANW)
One name too many investors leave off their watchlist? Palo Alto Networks (NASDAQ:PANW) and that’s even as shares were recently 50% above the low. Palo Alto Networks operates in the always-prevalent space of cybersecurity. Unfortunately for the rest of us, cybersecurity is a very real and ongoing threat. It doesn’t matter if we’re in an economic boom or a severe depression, there will be hackers and cyber-criminals looking for a payday.
They will go after everyone from government agencies to big-box retailers and it’s no surprise that Palo Alto’s business continues to grow as a result. It’s one of the few GAAP-profitable cybersecurity firms that also boasts strong growth. Analysts expect 25% revenue growth this year and 21% growth in 2024. That’s alongside estimates calling for 60% earnings growth this year and 16% growth in 2024. It’s simply robust. This stock can go through big swoons and if the market comes under pressure, I suspect PANW stock will take a big hit too. For long-term investors, it’s an opportunity.
Trade Desk (TTD)
I can’t say enough good things about Trade Desk (NASDAQ:TTD). Co-Founder and CEO Jeff Green has built a terrific company with strong growth and impressive profitability. Before and now after the Covid-19 pandemic, this firm has been profitable. For a growth stock, that’s rare (and impressive).
The stock came under strong selling pressure last year, suffering a peak-to-trough decline of about 65%. It found strong support around $40, although there’s no guarantee it will see this level again. Analysts expect about 20% revenue growth this year and 24% growth next year. On the earnings front, estimates call for just 8% growth this year, but a big acceleration of up to 27% growth in 2024.
While Meta (NASDAQ:META), Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), and other mega-cap tech giants are not able to operate in China, The Trade Desk is. I think this firm will be a monstrous winner and is one of the best growth stocks to buy for the long term. If we get a retest of the 2022 low for the S&P 500, The Trade Desk should be on sale.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
