2 Great Growth Stocks to Buy in the Nasdaq Bear Market

Although it has enjoyed an impressive rally this year, it Nasdaq Composite: the index remains down roughly 19% from its highs and threatens to slide back to the 20% retracement level, which would officially put it back into bear market territory. And even with some impressive recovery momentum in the broader market, there are some big growth stocks that are still massively down from the highs they reached during the recent bull run.

If you’re looking for the best investment opportunities with big upside potential, read on to take a look at two underdog stocks worth buying today and holding for the long term.

Roblox’s growth engine is heating up

Kate Noonan. Following some rough comparisons of performance when the business has gone through periods characterized by increased, epidemic engagement, Roblox (RBLX: -0.44%) returned much stronger bookings and increased user engagement. With its stock price still 70% below its November 2021 high, now is an opportune time to establish a leadership position in the metaverse.

Total daily active users on the Roblox platform increased 22% year-over-year to 66.1 million in the first quarter, and total hours of engagement increased 23% to 14.5 billion. While the company’s bookings per user were flat from the prior quarter, user growth helped drive total bookings up 23% to $773.8 million. Sales, which typically lag due to accounting for deferred revenue from bookings, rose 22% year-over-year to $655.3 million.

While Roblox has already grown rapidly and is serving up strong sales, the virtual world innovator still has huge potential for expansion and some powerful growth levers it can pull. The company has just started experimenting with expanding its advertising system, and the advertising side of the business could turn into a big performance driver in the long run. With the Roblox platform once again seeing strong growth in bookings from in-game purchases and premium memberships, the expansion of advertising has the potential to take the metaverse player growth engine to the next level.

Although the company is not yet profitable, the company grew operating income by 11% year-over-year to approximately $173.8 million, and it has approximately $2.1 billion in cash and equivalents. Roblox’s return to strong engagement, bookings and sales growth, and strong financial position makes the stock worth buying for investors looking for potentially explosive tech games.

Netflix has beaten its toughest competition yet

Bag Tatevosyan. One of my favorite growth stocks to buy right now Netflix: (NFLX: 4.54%). The streaming pioneer has weathered the influx of new competition (pardon the pun) relatively well. It’s true that Netflix’s growth has slowed, but that’s no doubt reflected in its relatively cheap stock price. Moreover, competition among streaming rivals appears to be fading, with shares still down 45% from their highs.

indeed Disney, one of its biggest competitors, has announced several rounds of price hikes, content budget cuts and reduced marketing behind its services. That bodes well for Netflix, as consumers will look around and find higher prices everywhere. If consumers want streaming content, they will have to pay more. The opposite is bad news for investors, as lower prices and stiffer competition lead to smaller profit streams.

Netflix has already delivered $5.6 billion in operating income in 2022 on $31.6 billion in revenue. It wouldn’t surprise me to see those numbers trend upward over the next few years. In general, people are canceling their cable and satellite subscriptions and moving to streaming content instead. That secular headwind and softer competition bode well for the industry leader.

NFLX PE Ratio (Forward 1y) data with YCharts

To make investing in Netflix even more compelling, the stock is trading at a cheap price-to-earnings ratio of roughly 26. Investors may not be able to buy this great growth stock at this value for much longer.

Growth at the intersection of technology and media

While Roblox and Netflix have both enjoyed strong valuation gains during 2023 trading, both stocks are still trading at steep discounts compared to their highs over the past few years. The market still seems to be underestimating their competitive strengths and expansion opportunities. For long-term investors, a buy-and-hold approach to these two promising growth stocks can pay off big.