A bear market is usually a good time to pick up some growth stocks. However, not all growth stocks are worth buying, even in a bear market that has slapped them with a discount tag. They may not have the right fundamentals, or the sector might be in a relatively long-term slump from which the stock may not be able to break out.
But there are also stocks on the other side of the spectrum — i.e., the ones that are worth buying every time they go on sale. It might be because of their long-term return potential or the strong recovery-fueled growth they experience after each slump.
Currently, there are two growth stocks on sale that you might consider looking into.
Bombardier (TSX:BBD.B), now primarily an aircraft manufacturing company, has been soaring ever since it let go of its financially troubled train business. The new Bombardier has a singular focus and a relatively healthier balance sheet, though the debt is still quite significant. The financials are fluctuating but not falling.
Bombardier stock has been growing quite steadily and rapidly ever since the 2020 crash, and it’s one of the few stocks to do so without a correction pausing and temporarily reversing the bullish trend. But the smooth sailing was interrupted first in July 2022 and a second time in Feb 2023, and the stock has yet to recover from the second slump, which is quite shallow (13%).
There are two reasons to buy this modestly discounted growth stock: its valuation and financials. Thanks to a strong second-quarter earnings report in August, the company has already inspired a lot of confidence in investors. It’s still trading below most target price estimates, and the valuation is quite attractive. The company also has a sizable cash and investment position.
Descartes Systems Group (TSX:DSG) is a powerful growth stock well-known for its consistency. It’s also a leader in supply chain technology and solutions.
It has managed to access the most expensive logistics networks in the world and combined them with a comprehensive range of logistics and supply chain solutions in its platform.
The company has also experienced steady financial growth and has almost no debt.
But the strongest argument to consider Descartes as an investment is its performance history. It’s one of the few tech stocks that have grown consistently over the last decade and has returned over 720% to its investors over that period.
It’s currently trading at a modest discount of about 9%, and this downward movement is possibly driven by a weakening tech sector.
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The two growth stocks are worth considering every time they are discounted. Descartes should be considered for its long-term growth potential and Bombardier for its explosive recovery. However, it’s important to take the factors behind the discount into account.
If they are specific to the stock and have some fundamental weaknesses, you may consider looking into growth picks that are discounted because of macro factors like a weak sector or bearish market.