Chances are that when 2022 draws to a close, it will be remembered as one of the toughest years in history for both professional and ordinary investors. The first half of the year saw the benchmark S&P500 produce its worst return since 1970. The S&P 500 is often considered the best barometer of the health of the US stock market.

But things have been significantly worse for tech-focused companies Nasdaq Compound (^IXIC 2.31%)which has lost up to 38% of its value since hitting an all-time intraday high in November 2021. Although all three major US indices are entrenched in a bear market, the Nasdaq’s drop really stands out.

However, problems on Wall Street often breed opportunity. With the exception of the current major index declines, all previous double-digit percentage declines have finally been erased by a rally in the bull market. This means that the falling Nasdaq bear market is the perfect opportunity for patient investors to grow their money.

This is a particularly good time to consider buying growth stocks, which have a history of outperforming value stocks when the US economy weakens. Below are five terrific growth stocks you’ll regret not buying during the Nasdaq bear market decline.

MasterCard

The first outstanding growth stock that long-term investors will regret not adding to their portfolios as the Nasdaq plunges is the payment processor MasterCard (MY 2.06%). Despite the growing likelihood of a recession in the United States, Mastercard is well positioned to serve its patient shareholders.

Although it may seem counterintuitive, being cyclical is actually a good thing for Mastercard. Even though recessions are an inevitable part of the business cycle, the economy takes much longer to grow. Mastercard benefits from consumer and business spending growing in step with the US and global economy over time.

Another thing that makes Mastercard special is its loan avoidance. Like its main rival, Visa, Mastercard strictly adheres to payment processing. When recessions hit, lenders typically see delinquencies and write-offs increase, forcing them to set aside capital to cover loan losses. Since the company does not lend, it does not have to worry about building up capital. This is one of the main reasons Mastercard bounces back so quickly from economic downturns.

Investors would also be wise not to overlook its potential for expansion. Globally, cash is still used in a high percentage of total transactions. This gives Mastercard a decades-long opportunity to expand its payments infrastructure into currently underbanked regions of the world.

PubMatic

For investors looking for something a little more low-key than one of the world’s top payment processors, consider adtech small cap stocks PubMatic (PUBM 0.90%). While there’s no doubt that advertising revenue is among the first to be hit when the winds of recession begin to swirl, PubMatic brings clearly defined competitive advantages to the table in the digital advertising space.

The first thing investors should appreciate about this company is its positioning. It is a sell-side provider (SSP), which means it uses its programmatic advertising software to help businesses sell their digital signage space to advertisers. There has been a lot of consolidation in the SSP space, which leaves little choice for companies other than PubMatic.

Advertising dollars are also shifting from print and traditional billboards to digital platforms, such as mobile, video and over-the-top channels. The digital advertising industry is expected to grow at a compound annual rate of 14% through 2025. PubMatic crushed industry growth rate forecasts with an organic rate that mostly fluctuated between 20% and 50%.

But what really stands out about PubMatic is the company’s in-house designed and built cloud infrastructure. He could easily have relied on third parties, like some of his peers. But because it chose to build its own cloud infrastructure, PubMatic can now enjoy higher margins than many of its peers as its revenues grow.

Deliveries of the new ET7 began at the end of March. Image source: Nio.

Nio

A third terrific growth stock you’ll regret not picking up during the Nasdaq bear market decline is the electric vehicle (EV) maker. Nio (NIO 2.19%). Although automakers face a mountain of supply chain challenges and historically high inflation, Nio’s location and innovation should help drive significant gains.

While most developed countries want to reduce their carbon emissions, the push towards consumer and enterprise electric vehicles represents a clear growth opportunity. One of the reasons Nio is so intriguing is that it’s based in China, which is the world’s largest auto market, and its electric vehicle industry is still relatively nascent. This gives a newcomer like Nio a reasonable chance to grab a sizable slice of the pie in the years to come.

Although it was founded less than eight years ago, Nio has some impressive innovations. The company aims to launch at least one new vehicle every year and has released more than half a dozen electric vehicle models. Nio’s recently launched sedans, the ET7 and ET5, are direct competitors of You’re herethe Model 3 flagship sedan in China. With the next level battery upgrade, Nio’s sedans can be driven significantly further than model 3.

And as I’ve pointed out before, Nio’s innovation sets it apart. The Battery-as-a-Service (BaaS) subscription that was introduced in August 2020 offers buyers a discount on the purchase price of their EV, as well as the ability to charge, swap and upgrade their batteries in the future. In return, Nio receives recurring high-margin revenue from BaaS and continued loyalty from early adopters.

Trulieve Cannabis

The fourth phenomenal growth stock that investors will kick their ass if they don’t buy during the Nasdaq bear market drop is the marijuana stock. Trulieve Cannabis (TCNNF -0.60%). Even though cannabis reforms have stalled on Capitol Hill, roughly three-quarters of all states have legalized weed to some degree, creating plenty of opportunity for a multi-state operator (MSO) like Trulieve.

One of the unique aspects of Trulieve has been its method of expansion. While most MSOs opened dispensaries and grow facilities in as many legalized states as possible, Trulieve focused almost exclusively on Florida’s medical-marijuana-legal market until last year. As of October 3, Trulieve operated 177 dispensaries in eight states, including 120 in the Sunshine State.

Besides the fact that Florida is expected to be one of the most profitable weed markets in the country by 2024, saturating the Sunshine State has a purpose. This has allowed Trulieve to reduce marketing costs, resulting in 18 consecutive quarters of adjusted profitability. Most US MSOs are not yet profitable.

The other aspect of Trulieve Cannabis that makes it interesting is its acquisition of MSO Harvest Health & Recreation, which it completed last year. This deal put Trulieve at the forefront of the cannabis market in Arizona, where adult use is legal. With a successful business plan in hand, Trulieve has another billion dollar market it can dominate.

CrowdStrike Holdings

The fifth terrific growth stock you’ll regret not buying during the Nasdaq bear market decline is the cybersecurity company CrowdStrike Holdings (CRWD 1.59%). Although recession fears are hitting virtually every premium-value growth stock, CrowdStrike has both macro and company-specific tailwinds working in its favor.

On a macro basis, the cybersecurity industry has become a basic service. No matter how poorly the US economy or stock market performs, there is always a need for security solutions to protect against bots and hackers trying to steal sensitive data. Services that are basic necessities often provide predictable operating cash flow – and Wall Street loves predictability.

What separates CrowdStrike — a provider of end-user cybersecurity solutions — from its competitors is Falcon, the company’s cloud-native platform. Falcon monitors approximately 1 trillion events per day and relies on artificial intelligence to become more effective at recognizing and responding to potential threats over time. While CrowdStrike isn’t the cheapest solution available, the fact that its raw retention rate hovers around 98% suggests it’s probably the best solution for businesses.

Plus, businesses seem to really appreciate CrowdStrike’s services. Over the past five years, the percentage of customers who have purchased four or more cloud module subscriptions has grown from less than 10% to over 70%. Getting existing customers to buy additional services is a recipe for a future subscription gross margin of 80% (or more).