Many growth stocks rose to an all-time high last year as stay-at-home trends during the pandemic, stimulus reviews, and the rise of “meme” investing opened doors for stampede of bulls. But over the past six months, many of those highfliers have fallen because inflation, rising interest rates, and other macro challenges have pushed investors toward safer assets.
However, selling all your growth stocks early can also cause you to miss out on some big multibagger benefits over the next few years. So instead of focusing on which stocks to pile on, investors should watch out for promises to buy as the market crashes.
Now, let’s take a look at four downside growth stocks that could rebound this year and generate bigger profits in the long run: CrowdStrike (CRWD -9.53%), Twilio (TWLO -5.27%)at Service Today (NOW -2.77%).
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1. CrowdStrike
CrowdStrike provides endpoint security services with a cloud-native platform called Falcon. Unlike traditional cybersecurity services, Falcon doesn’t require any on-site appliances-which are expensive, require ongoing maintenance, and are difficult to measure as an organization grows.
CrowdStrike’s cloud-only approach is winning over many customers. Between fiscal 2019 and fiscal 2022, which ended this January, its total number of subscription customers increased from 2,516 to 16,325, boosting its annual revenue from $ 250 million to $ 1.45 billion.
Its dollar -based net retention rates have remained above 120% since its IPO in 2019, and 57% of its customers will be using five or more modules by the end of fiscal 2022 – compared to 47 % only last year.
CrowdStrike expects its compound annual growth rate (CAGR) to increase at least 31% over the next four years and exceed $ 5 billion by fiscal 2026. It also expects total addressable market (TAM) for all its services which will grow from $ 58 billion in calendar 2022 to $ 126 billion in calendar 2025.
In other words, CrowdStrike still has a long runway for growth. It’s still not cheap at 15 times sales this year, but it could still be a great long -term buy at these levels if it achieves its goals.
2. Twilio
Twilio’s cloud-based communications platform handles text messages, voice calls, video, and authentication features for mobile apps. Developers can outsource those features to the Twilio platform using a few lines of code instead of thoroughly building them from scratch.
Twilio only served over 28,000 active customers in early 2016, but that number grew to 268,000 in the first quarter of 2022. That expansion was driven by both organic growth and its acquisition. Its annual revenue increased from $ 277 million in 2016 to $ 2.8 billion in 2021.
It expects its organic revenue to grow by at least 30% annually through 2024, and achieve profitability on an unusually accepted accounting principles (not GAAP) by 2023.
That’s a promising outlook for a stock that is trading at just five times sales this year. Twilio faces some near -term concerns about its gross margins, which have been squeezed by higher fees on wireless carriers over the past year, but it is likely to continue to expand over the next few years as more mobile app developers use of its communication services.
3. Service Today
ServiceNow’s cloud-based platform streamlines digital workflows for businesses. Between 2016 and 2021, the company’s annual revenue rose from $ 1.2 billion to $ 5.8 billion as the total number of its enterprise customers more than doubled from 3,600 to more than 7,400.
ServiceNow’s renewal rate has just reached just below 100% over the past few years. It also became profitable on the basis of GAAP in 2019 and remained in the black in both 2020 and 2021.
ServiceNow has expanded its ecosystem with a long list of acquisitions, and the move toward remote and hybrid work – which actually began even before the pandemic – has generated long -term tailwinds for its business. It expects to generate more than $ 15 billion in annual revenue by 2026 – representing a CAGR of more than 20% over the next five years.
ServiceNow stock isn’t cheap at 65 times forward earnings and 11 times sales this year, but its consistent growth, stable earnings, and stability over past economic downturns make it a top stock. growth that accumulates during market crashes.