From time to time, Wall Street reminds investors that stocks can fall just as easily as they rise. Last year, all three major U.S. stock indices posted their worst annual returns since the financial crisis, with the growth-oriented Nasdaq Composite Index (NASDAQINDEX: ^IXIC) plunging 33%.
However, where there’s a bear market, there’s also opportunity for long-term investors. While no one can predict when a bear market will begin or how far it will ultimately decline, history shows that every bear market is eventually erased by a bull market rally. The current Nasdaq downturn will likely follow the same path.
Bear markets can be an especially smart time to buy innovative growth stocks that have been dragged down by emotion-driven trading. Here are five incredible growth stocks you’ll regret not buying during this Nasdaq bear market downturn.
1. Meta Platforms (META)
The first standout growth stock to buy with confidence during the Nasdaq bear market is social media giant Meta Platforms (NASDAQ: META). Concerns about an economic downturn have pressured short-term advertising spending, but Meta is well-positioned to deliver long-term value to shareholders.
Meta dominates the social media landscape, owning four of the most popular apps on the planet—Facebook, Facebook Messenger, WhatsApp, and Instagram. In the fourth quarter, these platforms collectively attracted 3.74 billion unique monthly visitors, which is more than half of the world’s adult population. As the clear leader in social media engagement, Meta holds significant pricing power when it comes to advertising.
Additionally, Meta boasts a cash-rich balance sheet (with $30.8 billion in net cash) and has the ability to cut costs as needed. With mounting losses from its Reality Labs division (focused on the metaverse and virtual reality), Meta has proactively cut its annual operating expense forecast by $5 billion and approved a stock buyback program worth up to $40 billion.
Although advertising revenue fluctuates with economic cycles, history shows that economic expansions last much longer than recessions. This means Meta can fully capitalize on advertising pricing power when economic conditions improve.
2. Lovesac (LOVE)
The second incredible growth stock you’ll regret not buying during the Nasdaq downturn is furniture retailer Lovesac (NASDAQ: LOVE). While furniture is typically a slow-growing, cyclical industry, Lovesac is disrupting the space with innovation.
Lovesac’s key differentiator is its furniture design. Around 90% of its revenue comes from its modular sofas (Sactionals), which can be rearranged in numerous ways to fit virtually any living space. These highly customizable products offer various upgrades (built-in surround sound, wireless charging stations) and over 200 cover options. Plus, the fabric covers are made entirely from recycled plastic bottles, aligning with sustainability trends.
Another major advantage for Lovesac is its diverse sales channels. The company employs an omnichannel approach, selling through physical showrooms, online platforms, pop-up stores, and retail partnerships. This strategy has helped Lovesac reduce overhead costs and improve its operating margins.
Lovesac also targets affluent consumers, who are less sensitive to inflation and economic slowdowns. This makes Lovesac more resilient during downturns than many of its competitors.
3. JD.com (JD)
The third remarkable growth stock to consider during the Nasdaq bear market is China-based e-commerce company JD.com (NASDAQ: JD). While investing in Chinese stocks carries added risks, recent short-term challenges have largely been resolved.
For the past three years, Chinese businesses faced severe lockdowns and supply chain disruptions due to the country’s zero-COVID policy. However, following a wave of protests, China finally reopened its economy in December. While the transition may have some bumps along the way, this reopening should ultimately put China’s fast-growing economy back on track.
Beyond benefiting from China’s reopening, JD.com has a key competitive edge—strong cost control. Unlike Alibaba, which relies heavily on third-party sellers, JD.com primarily operates a direct-to-consumer (DTC) model, meaning it manages its own inventory and logistics. This allows JD to adjust its profit margins as needed, giving it greater financial flexibility than its peers.
Additionally, JD.com is expanding beyond retail. Its logistics operations, JD Health division, and local delivery service Dada are creating new revenue streams and boosting JD’s organic growth potential.
4. Cresco Labs (OTC: CRLBF)
The fourth impressive growth stock you’ll regret not buying during the Nasdaq bear market is U.S. cannabis company Cresco Labs (OTC: CRLBF). While a lack of federal marijuana reform has hurt sentiment around cannabis stocks, Cresco has the tools and assets to thrive regardless of political gridlock.
As of last week, Cresco operated 63 dispensaries across the U.S. While it has a presence in high-volume markets like California and Colorado, it primarily focuses on limited-license states like Pennsylvania, Virginia, and Ohio. In these states, regulators intentionally limit the number of retail licenses, giving smaller players like Cresco a fair chance to establish their brands and build a loyal customer base.
Cresco’s game-changing move is its pending all-stock acquisition of Columbia Care, which will expand its footprint to 18 states and increase its retail presence to over 130 dispensaries. This broad network will allow Cresco to capitalize on any future federal cannabis reform.
What makes Cresco particularly intriguing is its wholesale cannabis operation. Wholesale margins are typically lower than retail margins, but Cresco makes up for this with sheer volume. It also holds one of the few cannabis distribution licenses in California, enabling it to place its proprietary products in dispensaries across the state.
5. Palo Alto Networks (PANW)
The fifth extraordinary growth stock you’ll regret not buying during the Nasdaq downturn is cybersecurity leader Palo Alto Networks (NASDAQ: PANW). Despite fears that a potential recession could slow cybersecurity spending, Palo Alto remains one of the smartest and safest growth stocks for investors.
One of the main reasons investors can trust Palo Alto is its shift to cloud-based cybersecurity solutions. Over the past five years, Palo Alto has transitioned from generating 61% of its revenue from cloud-based subscription services to nearly 79% in the first six months of fiscal 2023.
This shift toward subscription-based services provides multiple benefits:
- Higher profit margins compared to physical firewall products
- Stronger customer retention since businesses are less likely to cancel essential security services
- Better real-time threat detection and response
The results speak for themselves. Annual recurring revenue from next-gen security solutions surged 63% year-over-year in Palo Alto’s latest earnings report, reaching $2.33 billion. Additionally, adoption of Prisma Cloud (its cloud security platform) continues to grow rapidly, with the number of customers purchasing four or more cloud security modules more than doubling year-over-year.
With strong organic growth and a steady stream of strategic acquisitions, Palo Alto Networks is perfectly positioned to continue outperforming the market.
Final Thoughts
Bear markets create exceptional buying opportunities for long-term investors. While short-term volatility can be unsettling, history shows that every bear market is followed by a bull market.
If you’re looking for high-quality, innovative companies to hold for the long run, these five growth stocks—Meta Platforms, Lovesac, JD.com, Cresco Labs, and Palo Alto Networks—are worth serious consideration.
