These stocks are on fire right now.
Being a long-term investor isn’t always easy, particularly when the market deals as a volatile a hand as it has over these last few years. While some stocks have felt this volatility more or less than others, many investors have likely breathed a sigh of relief as the S&P 500 has delivered multiple new highs in the early days of 2024.
If the fresh bull market has reawakened your interest in investing, or simply made you want to add more cash to stocks, you’re not alone. However, it’s important to remember that both bear and bull periods are a regular part of the stock market cycle. And if you stay invested in companies for years at a time, however great they might be, you will likely feel the brunt of those tough market days.
The good news is, it’s always a great time to invest in wonderful businesses. If you’re consistently adding to top-quality stocks, you can benefit from the beaten-down share prices that often appear in bear markets and from the rebound that bull markets deliver. It’s also worth noting that while the average bear market lasts about 286 days, the average bull market continues about 1,011 days. You won’t be able to time exactly when those periods will be, but if you’re in the market consistently, you don’t have to.
On that note, if you have $2,000 to invest in stocks right now — money you don’t need for financial obligations like bills, rent, etc. — here are two incredible growth stocks to consider hitting the buy button on.
1. Hims & Hers Health
Hims & Hers Health (HIMS -1.16%) is trading up by 58% since the start of 2024. The company has gone from strength to strength lately as its virtual care platform continues to expand to reach customers with a range of specific healthcare needs. The telehealth company originally started selling treatments for sensitive conditions like erectile dysfunction and hair loss back in 2017, then expanded to birth control pills, and the business grew from there.
Today, Hims & Hers Health sells prescriptions, over-the-counter drugs, cosmetics, supplements, and other products spanning the areas of general wellness, skincare, sexual health, and hair care. The company also just expanded to weight loss products at the end of last year. Customers pay subscription fees to access these products via the company’s website or mobile app. Prescription-based orders are fulfilled through licensed pharmacies in the company’s partner network.
A customer selects how often they want deliveries of certain products and is billed based on that subscription period, which could be as often as every 30 days up to every 360 days for certain product offerings. Hims & Hers’ platform facilitates the full customer journey, from helping patients find the products they need to connecting them with medical providers for telehealth consultations.
In 2023, the company reported revenue of $872 million, up 65% from 2022. It finished the year with 1.5 million subscribers on the platform, up 48% from the prior year, while net orders for the 12-month period totaled 8.7 million, up 42% year over year. While Hims & Hers Health was not profitable in the full year, reporting a net loss of $23.5 million, it turned a profit according to generally accepted accounting principles (GAAP) in the final three months of 2023. That profit amounted to $1.2 million, compared to a net loss of $10.9 million in the year-ago quarter.
This business is still in its relatively early days only less than a decade in, which helps explain the above-average growth rates it’s witnessing. At the same time, a sticky but relatively asset-light model is allowing it to expand rapidly while improving profitability.
Management is forecasting that 2024 will be the year Hims & Hers Health surpasses the $1 billion revenue mark. Trading at a price-to-sales ratio of 3.7, even a small slice of this business might be a well worth adding to a diversified portfolio.
2. Toast
Toast (TOST -0.60%) has seen its stock soar by more than 30% since the start of the year. The company provides a range of hardware and software solutions for restaurants, helping businesses across the food industry run operations more smoothly and efficiently. The company’s focus has long been centered on smaller restaurant operations, although larger brands have started to take notice.
Toast’s software and hardware offerings span the full range of needs that restaurants face in an industry that is highly cyclical and seasonal. These include various point-of-sale solutions, digital ordering and delivery applications, payroll and workforce management products, supply chain management tools, and even various fintech solutions like payment processing and loan origination services.
Toast makes the lion’s share of its revenue from subscription services that restaurants pay for to access its various software solutions. Subscription terms can range anywhere from 12 to 36 months. The company also generates revenue from fintech solutions through sources like transaction fees, as well as for fees it charges for the use of its hardware products like terminals, tablets, and other accessories.
While the company is not yet profitable on a GAAP basis, revenue is growing at a rapid clip, gross profits are rising, and the company was free-cash-flow-positive in 2023. Last year, the company generated revenue just shy of $4 billion, a 42% increase from 2022. It also reported gross payment volume of $126 billion for the 12-month period, a 38% jump from the prior year.
Toast’s gross profit for the year jumped 63% from 2022 to $834 million. Where the company reported negative free cash flow of $189 million in 2022, it brought in positive free cash flow of $93 million in 2023. Toast has gone through some notable business shifts over the last 12 to 18 months, including layoffs and a CEO change.
Still, the business is growing at a solid clip, and both the top and bottom lines look to be headed in the right direction. Additional macro headwinds could dampen growth in the short term, but in the long term this is a business that looks to be on a solid growth trajectory. The company provides essential services and products to the restaurant industry, and most of its revenue comes from recurring sources. Forward-thinking investors might want to snag a slice of the action.
