Nasdaq bear market: Where to invest $1,000 right now

Lower stock prices mean $1,000 now goes a lot further in the stock market.

| More on:
Woman on her laptop thinking to herself.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on All figures quoted in US dollars unless otherwise stated.

The recent bear market has left many investors scared and reluctant to invest. Many one-time high-flyers in technology, both inside and outside the Nasdaq Composite, now trade at a fraction of their highs. The Composite itself is down about 31% year to date. 

However, that bear market means that $1,000 buys a lot more stock than it did a year ago. To that end, the market has priced Amazon (NASDAQ: AMZN) and The Trade Desk (NASDAQ: TTD) well within the range of such investors.

Amazon stock is trading at a substantial discount

Until recently, Amazon shareholders with only $1,000 to invest would have had to settle for a partial share. But now that Amazon just split its stock 20-for-1, small-scale investors have an easier time buying whole shares of this e-commerce and cloud giant.

Even with an extensive online retail footprint, consumers have bought less online, which has hurt Amazon stock. Investors have sold off as its North America and International divisions reported negative operating income.

Still, Amazon Web Services, which pioneered the cloud computing industry, continues to fire on all cylinders. It made up only 16% of Amazon's revenue in the first quarter of 2022, but that revenue grew by 36% year over year.

This far exceeded the 7% revenue growth for the company over the same period in Q1. That revenue, which amounted to over $116 billion, still led to an overall net loss of $3.8 billion, down from an $8.1 billion profit in the year-ago quarter. This slower revenue growth has likely contributed to a 45% drop in Amazon's stock price from its 52-week high. 

Nonetheless, analysts believe it can recover to 12% revenue growth for 2022. Moreover, the lower stock price has taken the price-to-earnings ratio to 50, a substantial discount for a stock that has often sold for over 100 times earnings in recent years. Given cloud resilience and a likely retail recovery, such a price point could make today a good time to start adding Amazon positions. 

The Trade Desk's stock sells at a 60% discount at the moment

Investors who don't know this company may assume it has something to do with trading stock. While it most certainly operates a market, this particular trade desk buys available advertising inventories.

Additionally, to foster a competitive advantage, it helps clients tailor media campaigns and set spending parameters to ensure they buy ad spaces that would enhance the marketing goals of clients. And it utilizes further advantages through software. Thanks to a new platform called Solimar, it can work around privacy updates from Apple and Alphabet. Also, with its Unified ID 2.0 solution, clients no longer need access to third-party cookies, a concern that has hurt some media stocks in recent months.

In the first three months of 2022, its revenue of $315 million surged by 43% year over year. This means revenue growth had remained consistent with 2021, when revenue also grew by 43%. Though the company reported a $15 million GAAP loss, non-GAAP income rose 50% to $105 million when excluding stock-based compensation and an income tax adjustment.

Still, The Trade Desk also predicts modest slowing as it forecast $364 million in second-quarter revenue, which would mean a 30% surge year over year if that figure holds.

Investors have turned on the company amid the more modest increases, and it sells at a nearly 60% discount to the 52-week high. However, the price-to-sales ratio of 18 is a two-year low and has fallen from 50 in November. This discount and its growth potential could make it a great time for a starter investment. 

This article was originally published on All figures quoted in US dollars unless otherwise stated.

Will Healy has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and The Trade Desk. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and The Trade Desk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
International Stock News

Nvidia jumped 27% after its stock split announcement. Can Broadcom beat it?

Following in Nvidia's footsteps, Broadcom is doing a 10-for-1 stock split.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
International Stock News

3 reasons to buy Nvidia like there's no tomorrow (Hint: The stock split Isn't 1 of them)

The GPU leader's shares could head even higher in the coming months and years.

Read more »

A white and black clock face is shown with three hands saying Time to Buy reflecting Citi's view that it's time to buy ASX 200 banks
International Stock News

5 Reasons Nvidia isn't in an AI-fueled bubble

Nvidia's shares may actually be cheap.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

2 reasons to buy Nvidia after the stock split (and 1 reason to sell)

This tech giant is riding a tidal wave of AI-related demand. But is it too late for new investors to…

Read more »

Smiling man working on his laptop.
International Stock News

Which 'other' US AI stock is soaring this week?

This US AI stock is following Nvidia's footsteps in more than one way.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Warren Buffett meets AI: Is Berkshire Hathaway prepared for technological disruption?

Berkshire Hathaway's portfolio may contain underappreciated AI-associated risks.

Read more »

A man looking at his laptop and thinking.
International Stock News

Nvidia stock is still a great buy — but when should investors sell shares?

Here are three solid reasons for investors to consider selling shares of the artificial intelligence (AI) chip leader.

Read more »

Three exuberant runners dash towards the camera. One raises her arms in triumph; another jumps in the air with arms raised. The third runner gives a satisfied smile.
International Stock News

Why Tesla stock jumped today

Tesla investors seem to want to keep CEO Elon Musk happy.

Read more »