Even During a Market Crash, Certain Stocks Are Soaring

These days, we’ve been watching the market crash. And yesterday was no different. A day after dropping more than 1,000 points, the Dow Jones shed another 230 points yesterday. It wasn’t alone. The other two major stock market indices — the S&P 500 and Nasdaq — both fell yesterday, too. The former is down almost 20% in five months. And the latter has plunged more than 30%.

An image of a man falling and bouncing up off of a trampoline, indicating a market crash and then rebound
Source: fandijki / Shutterstock

Everywhere you look, stocks are crashing.

But what if I told you that amid this stock market crash, I’ve found a group of stocks that are actually soaring?

Very recently, my team and I unveiled a portfolio of the top 10 stocks to buy to profit off this wild market.

Yesterday, while the Dow lost another 230 points, that hand-picked portfolio of stocks to buy right now soared 5%! One stock was up 12%.

That’s the good news. But it only gets better. Our analysis strongly suggests that while the overall market may head lower over the coming months, this portfolio will surge.

In our opinion, this portfolio isn’t just the best way to make money in the markets these days. It’s one of the only ways to make money.

Let’s find out why.

The Rolling Bear Market

As dedicated students of the stock market, we’ve been prodigiously researching previous stock market crashes over the past several months. That exploration has led us to develop a unique theory about crashes that we’re calling the “Rolling Bear Market Theory.”

Bear markets don’t just appear overnight and bring every stock down by 20% all at once.

On the contrary, bear markets first appear in the riskiest corners of the market. And then over the course of about 12 months, they “roll” into every other asset.

This happened in 2000. It happened in 2008. And it’s happening again right now.

The current rolling bear market started with hypergrowth stocks in March 2021. Then by September, it rolled into software stocks. By December, the bear market had rolled into Bitcoin (CCC:BTC-USD). A month later, it snuck up on small-cap stocks. Then it rolled into tech stocks in February, followed by large-cap tech stocks in March and bonds in April. And now in May, it’s hitting the broader averages.

U.S. E- Commerce Sales. A chart showing revenue since 1999 shows upward growth in billions.

The opportunity here is that stocks don’t just roll into bear markets — they also roll out of them. Importantly, they roll out in the same order they rolled in.

In other words, the market’s “riskiest assets” tend to be the first to reach bear market territory. They also tend to be the first to leave it. Oftentimes, they emerge from their bear market — and begin soaring — even while the broader markets keep crashing.

Back in 2001-02, hypergrowth stocks bottomed in April 2001 — more than a year before the broader market did. In that time, certain hypergrowth stocks rose 100% or even 200%, while the broader indices fell 20%.

Back in 2008-09, for example, small hypergrowth stocks bottomed in November 2008, five months before the market did in March. Over that stretch, many hypergrowth stocks doubled while the broader indices dropped 10%.

Now, take a look at the chart above again. Notice how the purple line has actually moved higher over the past week while every other line has kept dropping?

We’re seeing history repeat. We’re nearing the point where the broader markets keep spiraling, but certain hypergrowth stocks start to stage a huge comeback.

A Generational Market Crash U-Turn

Yesterday, the S&P 500, the Dow Jones and the Nasdaq all closed in the red. Yet, hypergrowth stocks largely rallied, with our portfolio of the top 10 growth stocks to buy now soaring 5%.

We think this is the early stage of the hypergrowth “U-turn.”

To support this, we’ve compiled the following chart, which compares the trajectories of hypergrowth tech stocks during previous crashes. The X-axis represents days from the time the stocks peaked, and the Y-axis represents percent decline from all-time highs.

The blue line follows the average decline of selected hypergrowth tech stocks during the 2000-01 crash. The orange line represents the average decline of selected hypergrowth tech stocks during the 2007-08 market crash. And the black line signifies the average decline of selected hypergrowth tech stocks during the 2021-22 crash.

U.S. E- Commerce Sales. A chart showing revenue since 1999 shows upward growth in billions.

In terms of duration and magnitude, it appears the current hypergrowth tech stock crash is in its final innings. And that’s if it’s not already in the very final inning.

In more granularity, the hypergrowth tech stock crash of 2000 started in late 1999 and ended in April 2001. It lasted 16 months. The one in 2008 lasted about 13 months. The average decline in 2000-01 was about 80%. In 2008, the average decline was 65%. Low-margin stocks bottomed with an EV/sales multiple of about 1X. Mid-margin stocks bottomed with an EV/sales multiple of about 4X, and high-margins did with an EV/sales multiple of about 5X.

Where are we today?

In the exact same place across time, percent decline and valuation.

We’re about 15 months into the current hypergrowth tech stock crash. The average decline is about 80%. And based on gross margin profile, sales multiples in the sector are ranging from 1X to 7X.

These stocks are today where they were in mid-2001 and late 2008. Those were generational buying opportunities in hypergrowth stocks that yielded multi-thousand-percent returns over the following years.

We expect the same profit pattern to repeat over the next few years.

The Final Word on the Market Crash

A lot of folks look at the stock market these days and get really scared. But we are getting really, really excited.

Honestly, I don’t think our team has even been more enthused about single-stock investment opportunities than we are today.

The reality is that the stock market follows a repeating cycle. For about nine or 10 years, it goes higher, led by huge rallies in growth stocks. Then for about a year or two, it crashes, weighed by big declines in growth stocks. Then the crash ends. And we reenter a nine- or 10-year bull market, wherein growth stocks rally hundreds (if not thousands) of percent.

1987 — big market crash. Took a few months to sort through everything, then stocks soared throughout the 1990s.

2000 — big market crash. Took a year to sort through everything, then stocks soared throughout mid-2000s.

2008 — big market crash. Took a year to sort through everything. Stocks soared throughout the 2010s.

2022 — big market crash. It’ll take a year to sort through everything. Then stocks will soar throughout the 2020s.

So, in light of this, we’ve compiled a portfolio of the top 10 stocks to buy to prepare for a massive market rebound.

Again, that portfolio was up 5% yesterday, even though the market was down. And we strongly believe this is just the beginning of weeks, months, and years of significant outperformance.

But don’t just take my word for it. Find out about the big-picture theme that connects all of those strong stocks together.


Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2022/05/even-during-a-market-crash-certain-stocks-soared-yesterday/.

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