2 Hyper-Growth Stocks to Buy in the Next Bear Market

Last year was a roller-coaster ride for investors. After posting its fastest 30% drop ever, the S&P 500 (SNPINDEX:^GSPC) staged a stunning comeback, driven by a wave of stimulus-fueled liquidity and monetary easing…

This month, the stock market hit fresh record highs. But cracks in the facade are starting to show. Last week and part of this week, the S&P 500 dropped for five straight sessions — its longest losing streak in a year.

We don’t yet know if this is a brief pullback or the beginning of a big correction. What we do know, however, is that rallies never go uninterrupted. We also know the broader economy remains in shambles due to COVID-19.

But don’t panic. Instead, get excited — a bear market is a great time to buy great stocks — including hyper-growth names like Sea Limited (NYSE:SE) and Pinduoduo (NASDAQ:PDD).

Why Sea Limited should be on your radar

For many companies, 2020 was a year to forget. But for Sea, it was a year to remember.

The pandemic supercharged demand for Sea’s gaming, e-commerce, and digital finance businesses as socially distanced consumers adjusted to life in the new normal.

In the third quarter, the number of active users for Garena, Sea’s gaming division, grew 78% year over year to a staggering 572 million. Shopee, Sea’s e-commerce arm, experienced a 131% surge in gross orders to 742 million — leading to a 103% jump in gross merchandise volume (GMV). Sea’s digital finance business — the smallest of its three segments — also saw strong adoption, with paying users surpassing 17.8 million. As a result, revenue almost doubled to $1.2 billion.

And Sea’s just getting started. As the company expands across Southeast Asia and Latin America, investors can expect it to keep up its impressive momentum. In that regard, Sea has plenty of growth levers to pull. For one, it could further monetize its gaming and e-commerce businesses. Its e-commerce business also has a long growth runway, given Southeast Asia’s low levels of e-commerce penetration. Analysts expect Sea’s revenue to grow by 78% in 2021 and 46% in 2022.

It should be no surprise, then, that Sea trades at almost 40 times trailing 12-month revenue. But before you take the plunge, consider this: Amazon (NASDAQ:AMZN) — the world’s biggest e-commerce company — trades at 4.2 times sales.

Over the long term (five to 10 years), Sea looks poised to trounce Amazon’s returns. But given the premium the shares carry currently, it would be prudent to wait for a pullback before buying in.

Pinduoduo has posted impressive gains

I’m an avid fan of e-commerce platform operators like Alibaba (NYSE:BABA)JD.com (NASDAQ:JD) and MercadoLibre (NASDAQ:MELI). Operating in winner-take-most markets, these businesses have generated impressive gains for their shareholders.

But Pinduoduo is trumping them all. Despite being a relative newcomer — it came into existence only in 2015 — its GMV has…

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