Bear markets provide investors an opportunity to create generational wealth, as the valuations of most growth stocks move lower at an accelerated pace during periods of turmoil. If you can successfully identify quality stocks trading at a discount, you can build significant wealth over time, even with a small amount of capital.
For example, an investment of $1,000 in Amazon stock at the depths of the dot-com bubble would be worth close to $265,000 today. So, let’s see where you can invest $1,000 right now.
The Trade Desk stock
A company that operates in the programmatic advertising space, The Trade Desk (NASDAQ: TTD) is valued at a market cap of $27.4 billion. Down 50% from all-time highs, TTD stock should be on your watchlist in March 2023.
Despite a weak macro environment and lower enterprise ad spending, The Trade Desk increased its sales by 24% year over year to US$491 million in the fourth quarter (Q4) of 2022.
The company is well poised to benefit from the global shift towards online streaming, as the connected TV segment is a major business for TTD. Ad spending in the Connected TV vertical is forecast to double in the next four years, making TTD a solid bet right now.
In the last three years, The Trade Desk has already increased revenue from US$661 million in 2019 to US$1.58 billion in 2022. Analysts now expect sales to touch US$2.4 billion in 2024.
So, TTD stock is priced at 11 times forward sales, which is quite steep. But Wall Street remains bullish on the tech stock and expects it to surge over 20% in the next year.
Right now, sales generated outside North American markets account for just 10% of total revenue. But ad sales in global markets (excluding North America) account for 67% of total sales, providing enough room for TTD to drive the top line higher.
Well Health stock
A digital-health company, Well Health (TSX: WELL) has already returned a monstrous 4,460% to investors since its initial public offering seven years back. Now valued at a market cap of $1.04 billion, Well Health stock is also down 50% from record highs.
Well Health aims to provide a robust end-to-end healthcare system in Canada while offering omni-channel healthcare services and solutions in specialized markets in the U.S.
It expects to end 2022 with revenue of $565 million, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $100 million, and a free cash flow of $50 million. So, WELL stock is priced at 20 times trailing free cash flow, which is quite reasonable for a growth stock.
Around 90% of its sales are recurring in nature, which should enable Well Health to report consistent cash flows across business cycles.
In the last few years, Well Health has depended on highly accretive acquisitions, in addition to organic growth, to increase sales. It acquired a 58% stake in Circle Medical for US$14 million in November 2020, and this entity has increased sales by a whopping 1,000% in the last two years. Well Health also acquired CRH Medical for US$373 million, which increased profitability by 17% in the last 12 months.
At current prices, Well Health stock is trading at a discount of 70% to consensus price target estimates.
