A bear market often provides a fantastic opportunity to acquire high-quality stocks at a lowered cost. 2023 has seen the technology sector of the stock market start with a bang, with the Nasdaq-100 index already climbing 25% this year. However, it remains below its early 2022 peak after experiencing a 33% slump in 2022. Although some investors remain cautious after the Nasdaq-100’s bear market, historical data shows it typically rebounds after a down year. Thus, the current upswing may be foreshadowing the imminent bull market. Below are two stocks investors may want to consider purchasing in anticipation of this upward trend.
Datadog Cloud
Computing Technology has become indispensable for businesses of all sizes, with large, complex organizations leaning heavily on this technology. These corporations rely on the cloud for global team collaboration, work process streamlining, and digital sales channel operations. However, they also face powerful data management and cloud infrastructure monitoring challenges. This need has led many to Datadog (NASDAQ: DDOG), a leading cloud monitoring tool.
Datadog constantly scans corporate networks for bugs and technical glitches, providing instant alerts when issues arise. This proactive approach can save businesses from prolonged downtime or the negative impact of customer complaints. Its customer base includes various industries, such as real estate technology firm Zillow Group and entertainment behemoth Comcast.
As of the first quarter’s end, Datadog had 2,910 customers spending at least $100,000 yearly, a 29% YoY increase, indicating a growing need for cloud monitoring tools among large corporations. The company’s Q1 revenue was $482 million, up 33% and significantly higher than projected, prompting a revenue forecast upgrade for 2023 to $2.1 billion.
With a Grand View Research forecast estimating a 151% growth in the cloud industry over the next seven years, reaching over $1.5 trillion by 2030, the demand for cloud monitoring tools like Datadog is set to increase. As the stock currently trades at 51% below its all-time high, this could be an excellent time for investment.
Tenable
With the widespread adoption of cloud services, organizations are increasingly vulnerable to digital threats. Tenable (NASDAQ: TENB), the cybersecurity sector’s leading vulnerability management software provider, protects over 40,000 businesses globally.
Its comprehensive solution, Nessus, is customizable to meet individual, organizational needs. Tenable claims it to be the most accurate vulnerability management tool on the market, protecting against over 76,000 common vulnerabilities and exposures. Tenable also offers a range of industry-specific solutions, stressing the importance of advanced cybersecurity tools, given the costly potential of downtime.
As of Q1’s end, Tenable had 1,444 customers spending at least $100,000 annually, an increase from 1,112 the previous year, showing a similar growing demand from large organizations. Q1 revenue was $189 million, an 18% YoY increase. However, due to economic difficulties, including inflation, it adjusted its full-year revenue forecast from $810 million to $785 million.
Tenable aims to broaden its market with the newly launched Tenable One platform, a unified product targeting large companies looking to streamline their cybersecurity stack with one provider. This move could spur long-term growth for the company.
With Tenable’s stock currently 38% below its peak, now may be a wise time for investors to consider this stock.
Both Datadog and Tenable are poised for significant growth, driven by the increasing reliance of organizations on cloud services and the corresponding need for robust monitoring and security tools. These companies have demonstrated their resilience and adaptability, making them promising prospects for savvy investors anticipating the upcoming bull market. Amid the tech bear market’s trough, these stocks offer a compelling entry point for those looking to capitalize on the expected rebound. Conducting personal research and possibly seeking advice from financial advisors before investing is crucial.
