Living through a bear market can be brutal. Seeing your hard-earned portfolio gains wiped out stings.

But sharp market declines also offer a rare chance to pick up shares of great companies at steep discounts. Savvy investors who buy during bear markets historically make fortunes.

That’s why now is an ideal time to put some money into growth stocks trading way below their true value. The market selloff has pulled down the share prices of many high-quality, fast-growing companies that have bright futures.

Here are two growth stocks I’m buying hand over fist because they could make patient investors really rich over the next decade.

Table of Contents

Bluebird Bio: Curing Rare Diseases to Generate Billions
Arista Networks: The AI Infrastructure King
Key Takeaways
FAQ

Bluebird Bio: Curing Rare Diseases to Generate Billions

Bluebird Bio is a gene therapy pioneer focused on developing one-time curative treatments for severe genetic diseases.

This innovative biotech already has two FDA-approved therapies:

Zynteglo — the first gene therapy for transfusion-dependent beta thalassemia (TDT), a debilitating blood disorder. Zynteglo allows patients to stop painful, lifelong blood transfusions.
Skysona — the first and only gene therapy for cerebral adrenoleukodystrophy (CALD), a neurodegenerative condition that destroys brain function. Skysona can halt CALD progression and save lives.

Gene therapies represent a breakthrough in medicine — correcting defective genes to treat disease at its genetic root cause. But they are also extremely complex to develop and manufacture.

As Motley Fool contributor Keith Speights explains, “Bluebird’s approval of two gene therapies when many other companies have failed demonstrates its leadership in the field.”

However, Bluebird’s stock has gotten slaughtered, plunging over 60% year-to-date even after the recent rally.

This rout stems from some short-term concerns:

Slow Zynteglo launch
Competition from CRISPR gene editing
Cash burn

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But these problems have created a golden buying opportunity in Bluebird for long-term investors.

Here are 3 reasons this beaten-down growth stock could make you rich:

1. Blockbuster Potential

Bluebird’s approved gene therapies only need to capture a tiny portion of their multibillion dollar addressable markets to succeed.

TDT affects about 36,000 patients globally. Analysts project Zynteglo peak sales around $1.5 billion.

CALD impacts roughly 14,000 patients worldwide. Skysona could generate over $500 million annually.

And Bluebird has more irons in the fire:

Phase 3 data for lovo-cel to treat sickle cell disease, a $3 billion market, is expected by year-end
Over 10 additional gene therapies in earlier testing for cancer, neurodegenerative and cardiovascular diseases

This deep, diverse pipeline provides Bluebird with many shots on goal for further blockbuster therapies.

2. Leadership Position

Bluebird is the gene therapy leader, with:

2 approved products generating revenue
Cutting-edge platform technology
170+ patents granted
Manufacturing expertise

As Dr. Philip Gregory, D. Phil., chief scientific officer of Bluebird, stated, “We have invested nearly two decades building a gene therapy platform and manufacturing capability without parallel in the field.”

Bluebird’s first-mover advantage in gene therapy will be hard for competitors to overcome.

3. Massive Upside Potential

At a measly $400 million market cap, Bluebird is priced for failure.

But if Zynteglo and Skysona realize even a fraction of their peak sales potential, Bluebird should be a multi-bagger stock.

Analysts’ average 12-month price target of $8 implies 100%+ upside from current levels.

For risk-tolerant investors with a long-term horizon, Bluebird offers life-changing return potential as gene therapies transition from vision to reality.

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Arista Networks: The AI Infrastructure King

Arista Networks is a leading supplier of cloud networking hardware and software for next-gen data centers.

With its high-speed switches and routers, Arista provides the mission-critical infrastructure enabling artificial intelligence (AI) to transform industries.

As Nvidia CEO Jensen Huang explained, AI is driving “the largest computing deployment in history.”

But AI models only function well with fast, efficient data transmission. That’s Arista’s specialty.

Arista’s revenue soared 27% in 2021 to $3.2 billion as demand for AI solutions surged. The company expects torrid 30%+ sales growth in 2022.

Yet the stock trades at a reasonable forward P/E of 35 after retreating 25% from its highs.

Here are 3 reasons Arista should crush the market in the years ahead:

1. AI Growth Tailwinds

AI adoption is still in the early innings across sectors like cloud, healthcare, autonomous vehicles, social media and more.

As AI expands, the need for high-speed networking infrastructure rises in parallel.

Leading AI chipmaker Nvidia considers Arista a key partner in building the computing platforms to enable AI’s progress.

Arista’s fortunes are tied directly to the mass implementation of AI that’s just getting started.

2. Wide Moat Business

Arista enjoys strong competitive advantages that cement its leadership in data center switching:

Superior software — Extensible Operating System (EOS) offers customers flexibility, programmability and feature richness
Customer stickiness — Average relationship lasts over 7 years once Arista gains a foothold
Innovative products — More advanced silicon, hardware and software than competitors

Gartner Group ranks Arista as the market share leader for data center switching in the world — ahead of Cisco, Huawei and others.

These formidable moats give Arista durable pricing power and excellent profitability.

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3. Visionary Management

Arista was founded by legendary Silicon Valley entrepreneurs including:

Andy Bechtolsheim — Co-founder of Sun Microsystems and early investor in Google
David Cheriton — Computer science professor at Stanford and early Google backer
Kenneth Duda — Software genius who architected Arista’s EOS network operating system

“I believe Arista has one of the strongest management teams in the industry.” — Bill Miller, legendary investor

This all-star team gives Arista a big edge in innovative product development to stay ahead of competitors.

Led by this seasoned leadership, Arista is poised to rule the AI infrastructure market for many years ahead.

Key Takeaways

Bluebird Bio’s gene therapies can potentially cure deadly diseases and generate billions in peak annual sales. At just a ~$400M valuation, Bluebird offers life-changing return potential.
Arista Networks is the leader in supplying the high-speed networking infrastructure critical for AI adoption. With AI growth just starting, Arista’s best days likely still lie ahead.
The stock market’s pullback has discounted many high-quality growth companies way too much. Savvy investors who buy at today’s lower valuations could bank massive gains over the long run.

FAQ

Q: Is now a good time to buy growth stocks?

A: Yes — the recent bear market has put many top-notch growth stocks on sale at big discounts to fair value. Valuations are much more attractive for long-term investors.

Q: Are Bluebird Bio and Arista Networks risky investments?

A: All growth stocks carry risk, especially pre-profit biotechs like Bluebird. But the huge potential upside rewards outweigh the risks for patient investors with appropriately sized positions.

Q: How long will it take for these stocks to rebound and make new highs?

A: No one can predict exactly when. But over 3–5 year holding periods, quality growth companies bought at low valuations historically tend to deliver big returns.

The bear market has created a once-in-a-decade opportunity to buy stakes in world-changing companies Bluebird Bio and Arista Networks at bargain prices.

Smart investors who take action now could look back in 5–10 years with portfolios multiplied many times over.

Have a high conviction growth stock you’re buying amid the bear market? Share in the comments below!

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