The Next Big Thing: 7 Up-and-Coming Growth Stocks with Immense Potential

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Is the bear market over? Are we in a bull market? The awaited moment may have arrived as the S&P 500 index finished 20% above its October low, indicating a potential end to the bear market. While it may be too early to confirm a bull market, the expectation of reaching new all-time highs brings optimism. To prepare, consider investing in top growth stocks with solid businesses and long-term potential. These stocks can excel in an emerging bull market, making them valuable additions to your portfolio.

Palantir

CEO Alex Karp made the following statement during Q1 2023’s earnings call, “The issue of how do you have security, a data model or knowledge and wisdom that’s proprietary, interact with an external large language model or with generative AI is not new to Palantir, and that’s why we were able to launch our platform AIP so quickly, the demand for — of which is nothing I’ve ever seen in 20 years of being involved in Palantir.” And the markets responded with enthusiasm. Palantir has experienced a remarkable surge of 150% in its shares over the past month. While skeptics say the stock is over-valued, this upward momentum could persist. The company’s integration of generative AI is expected to expedite customer acquisition and fuel revenue growth in the coming quarters. Investors with a long-term perspective might consider accumulating Palantir shares, considering the potential for price corrections. With continued growth and innovation prospects, Palantir presents an opportunity for investors to capitalize on its potential for sustained success.

Payoneer

Payoneer Global is a leading provider of payment solutions for global e-commerce businesses and freelance workers. Its recently released Q1 earnings report on May 9th showed an EPS lower than analyst consensus. Q1 EPS came in at $0.02, falling below Wall Street’s consensus estimate of $0.03. However, its impressive revenue growth should overshadow concerns regarding lower EPS. Payoneer Global’s revenue for the quarter reached an impressive $192 million, exceeding expectations and showcasing the company’s ability to generate significant income. The robust revenue growth demonstrates the company’s strong market presence and ability to attract business. While EPS may fluctuate in the short term, the consistent increase in revenue suggests a solid foundation for future profitability and long-term success. Investors should consider the bigger picture of Payoneer Global’s revenue growth and market position, recognizing that a lower EPS in a given quarter does not necessarily reflect the company’s overall potential and trajectory.

MercadorLibre

MercadorLibre is a significant player in the Latin American e-commerce, shipments, and fintech landscape, especially in Brazil and Argentina. While it operates under geopolitical uncertainties and currency fluctuations, it is a powerhouse in space and region. MercadoLibre boasts a staggering user base of over 100 million active users on its marketplace platform. It has made several investments over the years that should start to pay off now. Around 40% of Latin America is unbanked. MercadorLibre’s fintech arm is experiencing rapid growth, addressing the needs of this population. In addition, MercadoLibre has revolutionized shipping logistics, achieving an impressive 77% delivery rate within 48 hours, making it the market leader in its territories. With record-breaking earnings and a remarkable net margin of 6.6% in the first quarter, MercadoLibre’s position appears unassailable, poised to reap the financial rewards of its strategic investments and operational excellence.

Ulta Beauty

Ulta Beauty operates 1,350 specialty retail stores selling cosmetics, fragrances, haircare, skincare products, and related accessories and services in the United States. In the company’s Q1 2023 earnings call, CEO David Kimbell said that its margins are under pressure and reduced its operating margin. That said, the revised guidance is 14.5% which is still good. In fact, Loop Capital analyst Anthony Chukumba changed his stock rating to Buy from Hold and revised his per-share price target to $520 from $490. He believes that adding luxury brands, including Chanel, Hourglass, Natasha Denona, Dior, and Lancôme Absolue, with more likely to come, is a good thing. He said this can provide “…a multi-year comparable sales growth driver.” Ulta Beauty stores are split into luxury products and economic ones. Premium products offer higher margins which should work in Ulta Beauty’s favor. Another advantage for the beauty company is that its stores offer salon services that most competitors don’t. This added revenue stream could do well even in a possible recession.

Lovesac

People love beanbag chairs. Everyone searches for a beanbag at least once in their lifetimes. Often, beanbags tear easily, and the stuffing goes everywhere. Not Lovesac’s beanbags. They have a reputation for being sturdy, and that’s why people love them. Their Sactionals range of essentially sectional couches that you can keep changing and expanding are massive hits. The company has aced shipping, and its numbers have met or exceeded expectations for the last four quarters. The company ticks all the sustainable boxes as well. Lovesac has been around since 1995, and the next few years could be an excellent ride for shareholders.

Etsy

Etsy operates online marketplaces that connect buyers and sellers across the world. While its central marketplace, Etsy.com, is a platform for artisans and entrepreneurs to engage with customers, it has specialized marketplaces for musical instruments (Reverb), fashion resale (Depop), and one for unique Brazilian handmade items (Elo7). There were fears that Etsy would be a pandemic stock, but the e-commerce company has retained its metrics post-pandemic. It has consistently reported profits; in the latest quarter, it had over $1 billion in cash. Etsy’s most significant advantage is its capital-light business model, which allows it to convert approximately 90% of its adjusted EBITDA into free cash flow.

Lululemon Athletica

After conquering the world of women’s yoga pants, the company has set its sights on the men’s market. In 2022, the company announced its Power of Threex2 plan. The plan aims to double its revenue to over $12 billion in 2026 by doubling men’s growth and increasing international revenues by 4x. Its results for the latest quarter showed 24% sales growth, and the company didn’t mention a slowdown in consumer spending, unlike other retailers. Its margins and earnings per share beat market estimate as well. With macroeconomic numbers continuing to remain strong, there’s no reason why Lululemon can’t do well in a bull market.

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