The market sell-off in 2022 has not been a walk in the park for investors. But those with a long-term horizon know that times like the present are when you can buy big growth stocks at deep discounts to where they were just a few months ago.
If you want to build long-term wealth, here are three growth stocks you can invest $1,000 each in once in a while and then hold to build a fortune a decade from now.
1. Dutch Brothers
dutch brothers (BROS 1.63%) – the Oregon-based supplier of coffee, iced drinks and energy drinks with colorful names like Shark Attack, Unicorn Blood and even the Double Rainbro – has grown by leaps and bounds in recent years, nearly tripling its revenue since 2018 Not only that, Dutch Bros has been rapidly expanding its footprint, with 572 locations at the end of 2021 compared to 328 at the end of 2018.
Dutch Bros was also one of the hottest initial public offerings (IPOs) of the last year and hit an all-time high of $81.40 before returning to Earth during the market-wide sale of This year. Dutch Bros has been hit by inflation not only due to rising dairy prices (a key input for the business), but also rising gasoline prices, as its locations are services at wheel and many of its customers belong to the younger population and, therefore, particularly affected. by rising gas prices.
The sale is an opportunity for investors who feel like they missed out on Dutch Bros the first time to invest in this dynamic, fast-growing company and feel good about themselves 10 years from now.
Dutch Bros has grown by leaps and bounds so far, but let’s remember that many customers east of the Mississippi River haven’t even heard of Dutch Bros, let alone try it. That means there’s still a lot of untapped growth if the company can become successful in the eastern United States like it did in the west. Dutch Bros plans to eventually open 4,000 stores in the United States, and if it executes that plan, it should be worth a lot more in a decade than it is today.
2. Nextdoor placements
Nextdoor Holdings (KINDLY 9.97%) doesn’t get nearly the same attention as some of his social media peers, but maybe he should. Led by former Square executive Sarah Friar, Nextdoor is a neighborhood-focused social network that connects neighbors, businesses and utilities. The company increases its revenue by 48% year over year and its average revenue per user (ARPU) by 12%. Meanwhile, weekly active users grew by 33% to 37 million.
Despite these impressive results, the company was caught up in the market sell-off which particularly affected former special purpose acquisition companies (SPACs) and start-ups. But this selloff now offers an attractive entry point for risk-tolerant investors who have the opportunity to buy the next potential social media powerhouse at an 80% discount to where it was trading a few years ago. barely months.
The company recently authorized a share buyback that could remove about 10% of the outstanding shares from the market. So it looks like management is also looking at the current price as an attractive entry point.
While Nextdoor is increasing its average revenue per user, it remains below that of other social media companies. So there is room for it to grow further and become an attractive option for advertisers. And I think it will since Nextdoor’s hyper-local focus offers an attractive value proposition to small and medium-sized businesses (SMBs).
If Nextdoor can continue to grow its user count and active revenue per user and bring those two numbers closer to those of some of its biggest social media peers, the stock should be worth a lot more than it is today. today.
Like the two previous actions, carvana (CVNA 10.06%) is a story of monster growth, but one that has recently fallen on hard times. Shares in the used car market are down 93% from their 52-week high in November. The company burns a lot of cash and is not profitable, which does not make investors warm and fuzzy in the current market environment. Carvana also raised a lot of debt to acquire ADESA’s physical auction business.
You’re probably thinking, “That doesn’t look great. How could this action bring me a fortune in 10 years? Here’s the answer: Carvana is growing at a phenomenal rate and improving in a massive, lucrative market that many consumers say is in dire need of improvement – a winning combination. It has already become the second largest seller of used vehicles in the United States in less than a decade of existence.
The company grew revenue from $5.58 billion in 2020 to $12.81 billion in 2021, for a year-over-year gain of 129%. The company also sold 425,237 vehicles in 2021, compared to 244,111 in 2020. The growth has been phenomenal. The challenge now is for the company to determine how to translate this revenue growth into profitability and free cash flow.
The management team is now focused on reducing selling, general and administrative (SG&A) expenses and improving the economics of the unit so that it can become profitable. If they can do that and meet the current challenges, the opportunity here is huge and looks like an attractive high-risk, high-reward opportunity for risk-tolerant investors.
10 years from now
Looking at opportunities like these with a long-term perspective can help investors add growth stocks to their portfolios when the market is down. As these companies rise to the current challenges and the market heats up again towards growth stocks, these stocks could become considerably more important in 10 years than they are today, and a few thousand dollars invested could become a fortune.