3 Top Growth Stocks to Buy Hand Over Fist in February

of S&P500 The index is up 21% over the past year and is already set to hit some all-time highs in 2024. While the overall market has been growing well lately, some individual growth stocks still trade at low valuations and could be poised for big returns. Over the next few years.

See why three Motley Fool contributors believe so. toast (TOST 5.12%), Walt Disney (DIS 0.53%)and Coupang (CPNG 0.07%) A gathering is planned for the new year.

Early stage opportunities at great prices

Jennifer Cybill (Cheers): It’s hard to find great opportunities in the early stages. Investors often jump on blue-chip stocks before the general public learns about the initial public offering, and top stocks can reach high valuations before many people see them. So if the prices of blue-chip stocks soar, it can be a blessing in disguise.

That’s what’s happening with Toast. Toast is a catchy name for a disruptive tech stock in the restaurant industry. While that may not be where investors are hoping for the next big thing, Toast is making waves with its software-as-a-service (SaaS) platform aimed specifically at the restaurant industry. The company has become a leader by focusing on one specific niche and offering the most comprehensive suite of solutions to meet that niche, with any kind of hardware or software the client needs. is trying to establish itself as a.

Despite the difficult economic conditions, we have recorded tremendous growth. Annual recurring revenue for the third quarter of 2023 increased 40% year over year, and in the quarter he added more than 6,000 new locations for a total of 99,000 locations. While that may sound like a lot, it’s only a fraction of the market the company sees as serviceable today, and a fraction of the overall global restaurant industry it envisions expanding into. Only.

But Toast is one of those high-growth, low-profit tech stocks that has investors wary. Gross profit increased 50% in the third quarter from a year earlier, and net loss was about one-third of what it was in 2022, but the loss remained at $31 million.

With the bull market of the past 15 months now officially acknowledged, investors who have been on the sidelines may finally embrace Toast, as they tend to favor these types of stocks. Toast, which has fallen 21% over the past year, reported fourth-quarter results in February. The company’s price-to-sales ratio is just 2.5 times, which is an undervalued valuation considering its high growth rate, and Toast stock could soar if it reports solid results.

magic comes back

Jeremy Bowman (Disney): It’s no secret that Disney stock has been volatile in recent years. Part of the entertainment giant’s problems recently have been its lackluster response to the shift to streaming, and its efforts to bounce back have weighed on its bottom line. The company’s streaming division is losing money, and profits from its linear TV business are rapidly drying up.

But Disney seems to have finally turned a corner. Management says the streaming division will be profitable by September 2024, or the end of this fiscal year, but the company significantly increased prices for its streaming services in October 2023, making it much sooner. there is a possibility. The price of the ad-free version of Disney+ increased from $11 to $14 per month, while the ad-supported plan remained at $8 per month.

That strategy worked Netflixjust reported record fourth-quarter subscriber growth and strong adoption among ad-based demographics.

Meanwhile, Disney appears to be moving to leverage some of its linear media assets. The company is in talks with the NFL about investing in ESPN. The company has also received buyer interest from ABC and its cable channels and is in the process of merging its Indian television entertainment business with local company Reliance Industries. All of these moves are likely to increase investor confidence in the company and lead to higher stock prices.

Finally, Disney’s theme park business remains a fast-growing cash cow, and the company said it will nearly double its theme park capital spending over the next decade, which will increase profits.

If Disney can show it can achieve steady revenue growth, there is significant upside potential for Disney, which could begin with its first-quarter earnings report in February.

This stock is for those who missed out on Amazon

John Ballard (Coupang): eMarketer predicts the $5.7 trillion e-commerce market will grow to $8 trillion by 2027, making it a good area to look for winners in the next bull market. When buying growth stocks directly, significant growth alone is not enough. You should look for companies that are profitable, leading in their respective markets, and capable of long-term growth. Popular Korean online retailer Coupang fits this bill perfectly. It’s a bonus that the stock trades at a cheap valuation.

Coupang’s WOW membership service offers customers free shipping and content streaming. This is an excerpt from the following page. Amazonplaybook reports similar results. Revenue growth accelerated in 2023, with third-quarter revenue up 21% year-over-year, but the runway for growth is long.

Although its share of the total retail market is only in the single digits, Coupang is likely to continue to enjoy high growth over the long term. More importantly, it’s a profitable business that generates $1.9 billion in free cash flow. The company has sufficient resources to invest in expanding its assortment to capture a larger share of retail spending.

The future is bright for this fast-growing e-commerce company. The best part is that investors can buy the stock at his cheap sales multiple (P/S) of 1.1. This is a large margin of safety compared to his P/S multiple of 2.6 for the average stock price of the S&P 500 index. .