Growth stocks are found across a spectrum of industries, and not all growth-oriented businesses are created equal. If you're looking for great stocks to buy in the new bull market, it's important to focus on businesses that have solid long-term competitive advantages, strong financials, and a healthy runway to growth in their respective industries.
If you have even $200 to invest, there are plenty of companies that you can scoop up with that amount either by buying whole or fractional shares. Here are two top growth stocks to consider.
1. Hims & Hers
Hims & Hers Health(NYSE: HIMS) is known for its subscription-based offerings that allow consumers to easily access prescriptions as well as other health and wellness products. Users can conduct a virtual care visit with physicians across a range of specialties and get the prescriptions they need, all without ever leaving the comfort of home.
In the first quarter of 2024 alone, Hims & Hers added 172,000 net new subscribers to its platform. It ended the three-month period with a total of 1.7 million subscribers, an eye-popping 41% increase from one year ago.
The various healthcare products available through Hims & Hers span a broad trajectory of needs, including weight loss, hair treatment, and sexual health and wellness. Rather than people waiting days or weeks to speak to a provider and access the treatment they need, Hims & Hers enables most users to receive a solution to their problem in less than 24 hours.
The ability to get recurring deliveries of prescription and nonprescription products with a single subscription is a valuable proposition for cash-strapped consumers as well as those who are exhausted by the hoops they might have to jump through if going to a doctor's office in-person. In the first quarter of 2024, Hims & Hers reported total revenue of $278.2 million, up 46% year over year.
Most of that total was online revenue driven by subscriptions, which was up 45% year over year. The company also earned $10.4 million in wholesale revenue from sales of nonprescription products distributed by wholesale partners, a 58% hike from one year ago.
Hims & Hers is only recently profitable and reported net income of $11 million in the first quarter of 2024. From a cash-flow perspective, however, the company brought in operating cash flow of about $26 million and free cash flow of around $12 million. Those two figures were up 172% and 70%, respectively from one year ago.
With its recurring revenue model and growing profitability, even a modest investment in this stock could pay off over the long run. Investors have pushed the the stock up of over 180% in the trailing 12 months. If you're looking at a three- to five-year investment or more, this looks like high-potential healthcare company to add to your basket of stocks.
2. PayPal
PayPal Holdings(NASDAQ: PYPL) is trading just above its 52-week low and is down approximately 21% over the trailing-12-month period. The payment processing giant has had to deal with tough comparisons to its pandemic-era growth and the frustration of investors as as user growth has slowed considerably from that time.
However, bear in mind that PayPal controls approximately 45% of all online payments generated worldwide. Moreover, its financial position isn't nearly as dire as its share-price performance might lead some investors to believe.
In the first quarter of 2024, PayPal delivered net revenue of $7.7 billion, a 9% year-over-year bump, or a 10% increase if you remove currency exchange headwinds. Total payment volume (TPV) increased 14% from one year ago to just shy of $404 billion. Those growth rates certainly aren't what they were a few years ago, but those net revenue and TPV figures represent increases of 86% and 151%, respectively, from the same quarter in 2019.
In Q1, payment transactions rose 11% year over year to 6.5 billion, while payment transactions per active account rose 13% over the trailing-12-month period to 60. This is despite the fact that active accounts decreased by a slim margin of about 1%.
PayPal is still profitable and cash-flow positive. Operating income rose 17% year over year in $1.2 billion in Q1, while net income increased 12% to $888 million. In addition, PayPal brought in cash flow from operations of $1.9 billion and free cash flow of $1.8 billion in the three-month period. PayPal had about $11 billion in debt on its balance sheet at the end of the quarter, but its cash position of close to $18 billion sufficiently outweighs those liabilities.
One recent initiative that investors will want to watch is PayPal's new ad business, which management just announced in May. Information is still somewhat sparse, but the company has already appointed the former vice president and general manager of advertising for Uber, Mark Grether, as the head of its new PayPal Ads division. Grether was instrumental in helping Uber grow its ad business to over $1 billion annually.
PayPal has a virtually endless treasure trove of data from the millions of consumers who use its platform to help inform its ad initiatives moving forward. The online advertising space is a multibillion-dollar industry that is only expanding in the digital age. There's still a lot to like about this business for its flagship payment processing platform and its newer growth ventures.
For patient investors with the adequate buy-and-hold horizon, PayPal could still be a worthwhile addition to a well-diversified portfolio.
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal and Uber Technologies. The Motley Fool recommends the following options: short September 2024 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.
