Despite a healthy rebound in October, the stock market had a tough year. For example, the wide base S&P500which is considered the best barometer of the health of the US stock market, produced its worst first-half return since 1970 and plunged into a bear market.
But it’s still not as bad as heavy tech Nasdaq Compound (^IXIC)which has fallen 38% peak to peak since hitting an all-time high in November 2021.
Yet there is a glimmer of hope amid this turmoil: no matter how poorly the stock market has performed over a short period of time in history, a bull rally has always, eventually, recouped losses from major indexes. (even the Nasdaq Composite!). This makes bear market dips a great opportunity to put your money to work.
In particular, it’s a great time to shop in scruffy stocks that offer game-changing innovation. Here are four bargains in the Nasdaq bear market that have the potential to double your money by 2026.
If you were to take a superficial look at Teladoc Healthit is (TDOC -2.91%) operating results this year, you would probably find it hard to believe that was a bargain. The company took two massive write-downs, which are likely related to its overpriced acquisition of applied health signals company Livongo Health. But those one-time costs haven’t changed Teladoc’s growth trajectory or improved the disruptor’s potential.
Teladoc is not a fashionable title. Although virtual tours have increased dramatically during the COVID-19 pandemic, the company grew sales by an average annual rate of 74% in the six years to 2020. What this demonstrates is that Teladoc’s telemedicine services are changing the way personalized care is administered.
What makes Teladoc Health such an intriguing company is that it improves the lives of all facets of the treatment chain. It brings a convenience factor to the table for patients, while providing doctors with a way to monitor patients with chronic conditions more closely. Virtual visits are also less expensive than in-person visits and can improve patient outcomes. This should make telemedicine a popular promotion for insurance companies. In other words, telemedicine has great growth potential.
Finally, don’t overlook Livongo Health. Despite the company’s overpayment, this should ultimately help Teladoc attract high-margin chronic disease patients, as well as cross-sell opportunities.
A second bargain to grab during the Nasdaq bear market that can double your money over the next four years is small cap adtech stock. PubMatic (PUBM -3.87%). Even though ad revenue is one of the first things to be hit when the US economy weakens, this relatively small player in the programmatic advertising space is making big waves.
PubMatic is a Sell-Side Provider (SSP), meaning it helps publishing companies sell their digital signage space. Since there has been a lot of consolidation in the SSP space in recent years, there are not many choices left for businesses.
Beyond simply carving out a niche, PubMatic finds itself at the center of the fastest growing aspect of advertising. According to a company presentation, the digital advertising industry is expected to grow 14% per year through the middle of the decade.
However, PubMatic has consistently increased sales by 20% to 50% over the prior year period. Indeed, nearly three-quarters of its revenue comes from programmatic ads on mobile and connected TV, which are among the fastest growing advertising channels.
But as I’ve pointed out before, what makes PubMatic so special is the decision it made to develop and build its own cloud-based infrastructure. Not having to rely on a third-party vendor for its programmatic advertising platform should result in higher operating margins than its peers as its revenue grows.
Planet 13 farms
The third bargain that can help patient investors double their money by 2026 is the US marijuana stock Planet 13 farms (PLNH.F -3.94%). Despite the lack of cannabis reform on Capitol Hill, there are more than enough organic growth opportunities at the state level for a fast-paced company like Planet 13 to excel.
What really sets Planet 13 apart from other multistate carriers (OSMs) are the company’s SuperStores. While most MSOs have sought to establish a presence in 10 or more legalized states, Planet 13 only has three open dispensaries, two of which are truly massive. The Las Vegas SuperStore covers 112,000 square feet and includes an event center, cafe, and consumer processing center, while the Orange County SuperStore in California is 55,000 square feet.
The key point here is that Planet 13 stores are more than just selling. It’s an experience other cannabis retailers simply can’t match. In addition to this nostalgia factor, Planet 13 incorporates technology for convenience and relies on a wide variety of proprietary and high-margin branded cannabis derivatives to get closer to recurring profitability.
However, the future of Planet 13 is not entirely tied to its SuperStore model. With a medical cannabis retail operator license obtained in Florida, the company intends to open half a dozen neighborhood-style stores that each span approximately 4,750 square feet.
By 2024, Florida’s cannabis industry is expected to rank third among US states in annual sales. These neighborhood stores, combined with its unique SuperStore model, give Planet 13 a model for success.
The fourth glaring market that can double your money by 2026 is the China-based electric vehicle (EV) maker Nio (NIO -2.27%). Despite obvious supply chain concerns, historically high inflation, and China’s zero-COVID strategy, patient investors have plenty of reason to be excited about what they’re seeing from this company.
For starters, there is an undeniable long-term opportunity for global EV growth. Most developed countries want to reduce their carbon footprint, and electric vehicles are the most logical answer to doing so. By 2035, about half of all vehicles sold in China are expected to be electric vehicles.
In terms of production, Nio held its own despite historical supply chain disruptions. From June to September, the company exceeded 10,000 electric vehicles delivered each month. The company’s management team has previously suggested it could hit a monthly production rate of 50,000 electric vehicles within about a year, once supply chain constraints ease.
But above all, Nio lets its innovation do the talking. For such a relatively new entrant, it’s impressive that the company has introduced over half a dozen EVs, some of which can race (and win) against established/legacy automakers. Add to that the company’s innovative battery-as-a-service subscription, and Nio appears to have a path to recurring profitability and sustained double-digit sales growth.
#Nasdaq #Bear #Market #Bargains #Double #Money #Motley #Fool