The Nasdaq has had an awful start to 2022, falling nearly 30% year to date. In the past 12 months, it has sunk 20%. This poor performance has been driven by inflationary pressures, which has recently reached its highest for 40 years. But although my growth stocks are reaching multi-year lows, which has caused significant pain in my portfolio, I am not tempted to sell. Instead, I feel that now is a great time to buy stocks on the cheap for their long-term future. Here are three I would buy right now.
Established chipmaker
Nvidia (NASDAQ: NVDA) has excelled in the past few years, rising 350% in the past five. However, due to macroeconomic concerns, the Nvidia share price has sunk 40% in the past six months and around 8% in the past year. There are equally some worrying signs for the firm. For instance, in Q2, the company expects a $500m reduction of revenues, due to the Russia invasion of Ukraine and Chinese lockdowns. But I see these as short-term issues.
Indeed, the firm is still reporting excellent financials, with Q1 revenues up 46% year-on-year to $8.29bn. Further, with Q1 operating profit margins of over 40%, Nvidia has one of the largest margins among all growth stocks. This has also enabled the group to launch a share repurchase programme of $15bn until December 2023, which should boost metrics like earnings per share. Therefore, Nvidia shares are a no-brainer buy for me.
More resilient growth stock
It is rare to find growth stocks that are raising guidance in the current macroeconomic environment. However, Salesforce (NYSE: CRM), a cloud-based software and consumer relationship management company, recently increased its adjusted profit forecasts for 2022 to $4.75 per share, up from previous forecasts of $4.63. This has been driven by expanding operating margins, highlighting that the firm has dealt with inflationary pressures excellently.
There are still risks for the firm, however. For instance, some analysts have pointed to the potential for companies to cut costs to cope with inflation, and this could include cancelling subscriptions with Salesforce. However, with a price-to-earnings ratio of around 35, which is historically cheap for the group, I am still tempted to add more Salesforce shares to my portfolio.
Global e-commerce giant
Sea Ltd (NYSE: SE) is the final growth stock I would buy on the dip. After sinking over 70% in the past year, this is the heaviest faller out of the three. With the group continuing to post very large losses – including a total adjusted EBITDA loss of $593.6m in 2021 – it is not hard to see why. However, this loss has been recorded due to the firm’s heavy investment into its e-commerce sector.
This investment has led to soaring revenues. For example, in 2021, revenues for the group reached $10bn, which was a 127.5% increase year-on-year. This growth has also continued into 2022, with Q1 revenues up over 60% year-on-year. Although this signals slightly slower growth, it is still far higher than other growth stocks. After the recent dip, Sea Ltd also has a forward price-to-sales ratio of under 3, compared to over 30 at the start of 2021. This indicates that the e-commerce company has dipped too far. Therefore, I am adding more Sea Ltd shares to my portfolio.
