Growth stocks had a tepid year in 2022 as worries over rising interest rates and soaring inflation dampened sentiment.
It has not been better this year as the economy has been beset with concerns over a potential recession amid an environment of continued interest rate hikes.
Despite these challenges, some businesses have continued to post healthy growth.
If you are a growth investor, you should watch for companies with strong franchises that remain dominant in their respective fields.
These characteristics can ensure continued growth through tough times until the storm clouds have passed.
Here are four stocks whose share prices lost more than 8% recently, but they could qualify for inclusion into your buy watchlist.
DocuSign (NASDAQ: DOCU)
DocuSign is a leader in electronic signatures (e-signature) and boasts 1.3 million customers with more than a billion users in over 180 countries.
The company’s share price lost 15.2% of its value in the past month, closing at US$56.55.
DocuSign had, last week, released its fiscal 2023 fourth quarter (4Q FY2023) and full-year results (FY2023) for the period ending 31 January 2023.
4Q FY2023 saw total revenue increase by 14% year on year to US$659.6 million with subscription revenue coming in at US$643.7 million, also up 14% year on year.
The e-signature company reported a small profit of US$4.9 million, reversing the US$30.4 million loss in 4Q FY2022.
Looking at FY2023, revenue came in at US$2.5 billion for a 19% year on year growth.
Subscription revenue took up 96% of total revenue at US$2.4 billion and was up 20% year on year.
The free cash flow generated was US$429.1 million for FY2023, just a tad lower than the US$445.1 million generated a year before.
DocuSign’s customer base continues to expand, with total customers rising from just 373,000 in FY2018 to 1.36 million in FY2023.
The company believes that it still has significant growth potential with a total addressable market (TAM) of US$50 billion.
Snowflake (NYSE: SNOW)
Snowflake offers a data cloud service that helps clients to unite data silos and securely share data. These clients can then carry out detailed analytics by tapping into this data warehouse.
The cloud company also saw its shares decline by 15.1% in the past month, ending at US$139.58.
Like DocuSign, Snowflake reported a strong set of earnings for 4Q FY2023, with revenue surging by 53% year on year to US$589 million.
FY2023 ended with a 70% year on year jump in revenue to US$1.9 billion.
Free cash flow for the fiscal year catapulted more than eight-fold year on year from US$56.9 million to US$495.8 million.
Snowflakes customers grew by 31% year on year to 7,828 and customers with over US$1 million in product revenue saw an even bigger jump from 184 to 330 over the same period.
Management has identified a US$248 billion TAM by 2026 that demonstrates the potential for the company to continue growing its top line.
Zoom Video (NASDAQ: ZM)
Zoom offers videoconferencing software and a platform for people to connect.
The company saw a surge in usage during the pandemic years but recently saw its share price decline by 8.8% in a month. The stock has also lost a third of its value in one year.
Zoom also released its FY2023 earnings in the past month and reported a 7% year on year increase in revenue to US$4.4 billion for the fiscal year.
Operating profit came in at US$245.4 million while net profit clocked in at US$103.7 million, down sharply from the US$1.4 billion booked in the previous fiscal year.
Free cash flow, however, remained healthy, coming in at US$1.2 billion for FY2023.
Zoom continued to see its enterprise customer base rise, moving up 12% year on year to 213,000.
FY2024’s revenue, however, is projected to be flat year on year.
The company plans to enhance collaboration and productivity and look for additional use cases for its cloud software for FY2024.
Mattel (NASDAQ: MAT)
Mattel is one of the largest toy companies in the world, with storied brands such as Barbie, Hot Wheels, and Fisher-Price.
The company’s share price has slid by 13.1% in the past month, closing at US$16 recently.
Mattel released a mixed set of earnings for 2022.
Sales remained flat year on year at US$5.4 billion while net profit plunged by 56% year on year to US$393.9 million.
The company, however, maintains a strong brand franchise that could see it do better this year.
It plans to scale its portfolio of power brands such as Barbie and Hot Wheels, with a Barbie movie slated for release in July this year in partnership with Warner Brothers.
Mattel also plans to expand its intellectual property partnerships with Disney (NYSE: DIS).
The company is also coming up with new content to engage its audiences, with 14 live-action motion pictures in development and 12 series and specials slated for the remainder of this year.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.