If you've got a thousand bucks to put into growth stocks, consider these two solid options:
Being a persistent investor isn't always straightforward, especially when dealing with the market's natural oscillations, even if you invest during both bull and bear markets.
Consistent investment strategies throughout varying market climates is crucial. Maintaining your investments in reliable companies is vital, until your investment beliefs regarding them no longer hold, or you believe they've exhausted their value proposition for your portfolio.
If you're looking for enduring growth stocks to invest in for at least three to five years, and you have $1,000 to contribute to your portfolio right now, here are two suggestions.
1. DexCom
Medical technology company DexCom (DXCM 1.65%) concentrates on the diabetes care sector. Its continuous glucose monitoring (CGM) devices are utilized by diabetes patients globally to monitor their blood sugar levels and mitigate potential complications.
DexCom's shares have experienced a significant drop recently, and are now down approximately 40% year to date. Although the company remains financially sound, its revenue growth has slowed over the past few quarters.
This decline is attributed to several aspects, most of which appear to be temporary. Instances like an unexpected surge in patients using rebates for its flagship G7 CGM, resulting in rebate eligibility at a faster pace than experienced with its predecessor device, the G6 CGM, have led to a dip in revenue.
Other factors such as restructuring of its sales teams in line with its product developments, and lower-than-expected performance in its durable medical equipment (DME) channel have also impacted revenue. Management anticipates that these difficulties will diminish in the upcoming quarters, and is also working to strengthen its DME collaborations with distributors.
A portion of the stock's decline also stems from investors' apprehensions about the increasing use of GLP-1 drugs in diabetes care potentially reducing the long-term utility of CGM devices. However, therapeutic options like GLP-1 drugs do not replace the need for CGM devices, and these devices continue to offer a range of applications for the diabetic population as well as pre-diabetic individuals.
DexCom's U.S. revenue decreased by 2% in Q3, while international revenue increased by 12%. Total revenue was $994 million, a 2% increase year over year. Management has stated that rebate eligibility likely peaked in Q3, thus this impact on the top line should not be surprising.
It's essential to remember that DexCom remains profitable. Net income for the quarter totaled $134.6 million, a 12% increase from the previous year. DexCom finished the quarter with $2.5 billion in cash and cash equivalents, and it generated about $535 million in free cash flow during the past twelve months.
DexCom recently debuted Stelo, a new biosensor for adults with prediabetes and type 2 diabetes who are not on insulin. It's the first over-the-counter glucose biosensor in the U.S. In summary, this is not a portrayal of a faltering enterprise, and investors committed to the long term could find this a wise time to purchase shares on the dip.
2. Revolve Group
Revolve Group (RVLV 2.21%), too, has faced challenging investor sentiment. Although shares of the e-commerce fashion company have actually increased by approximately 100% since the beginning of 2024 as of this writing, the stock is still down by around 170% from its all-time high achieved in November 2021.
Recent consumer spending trends have been tough on numerous online retailers, and this has impacted Revolve's financial growth. However, the company, which offers products ranging from affordable to luxury, has remained steadfast, relying on its long-term marketing partnerships with influencers, artificial intelligence solutions that underpin its platform, and a diverse range of brands to drive business expansion. Sales continue to increase, and Revolve Group remains profitable.
As of the end of the third quarter, its trailing 12-month active customer base had grown by 5% compared to the previous year, to 2.6 million individuals. Net sales in Q3 were $283 million, a robust 10% increase from the previous year. The Revolve segment generated sales of $243.4 million, a 12% increase from the previous year. The company's in-house luxury brand, FWRD, reported revenue of $39.7 million, which barely decreased by less than 0.5% year over year.
Impressively, Revolve Group's net income in Q3 was just shy of $11 million, a substantial 238% increase from the previous year, even when considering large one-time charges associated with resolving a legal matter during that period.
Revolve offers more than 100,000 apparel and footwear products through its e-commerce platform, as well as home products, beauty, and accessories. It sells thousands of brands, including 25 owned brands alongside popular third-party brands. In 2023, around 79% of Revolve Group's net sales across all brands were at full price.
Last year, the company generated $1.1 billion in net sales from more than 2.5 million active customers, with an average order value of $297. As one of the largest fashion e-commerce brands in the U.S., Revolve Group has substantial growth prospects in a rapidly expanding target market. Its financials remain robust, and its business is demonstrating resilience despite shifting consumer spending patterns.
Accordingly, it appears there's a strong argument in favor of securing a few shares of this leading electronic commerce company's stock.
In light of the market's fluctuations, investing in companies like DexCom and Revolve Group could be a wise decision. Despite facing temporary setbacks, both companies have demonstrated financial stability and growth potential, making them worthy considerations for long-term investors.
