Strong and sustainable growth is challenging to discover. Growth stocks provide the ideal opportunity as they see earnings and revenues rise at above-average speed. One risk of investing in growth stocks is that future potential is considered instead of current operations.
As a result, growth companies may keep low-profit margins, reinvesting most of the earnings back into the company. Investors, therefore, should be willing to sacrifice current return as long as the revenue keeps on increasing at an above-average rate.
For 2017, the following 4 companies (with a proven track record of growth) offer investors an opportunity to take shelter in an optimistic future:
1. GoPro.
NASDAQ GPRO has an opportunity to be impactful due to the growth of GoPro enthusiasts and the strong growth of the company’s drone business. There was a 33% year-over-year growth in camera unit sales from the recent Thanksgiving to the Cyber Monday period, indicating that consumer demand for GoPro units continues to be strong. If the Hero 5 sales surpass expectations continuously, there could be a significant pop in the GoPro stock. Moreover, the company’s performance in global markets (last year the unit sell-through increased 90% in China) could work well in favor of investors.
2. Netflix.
The stock went up 70% in 2016 and the company’s growth is expected to become gradual after the recent uptick in subscriptions. Yet the future prospects of the stock look as promising as they’ve ever been. Despite the fact that Netflix introduced higher prices to its US –base, it didn’t affect the increase in subscriptions. In fact, people ended up paying extra fees as they returned to Netflix. The CEO of the company indicated that this year the business will begin generating more earnings after two years of significant investment in expanding internationally. Profits should rise to 7% this year, up from the 4% of the last two years.
3. Snap Inc.
Snap Inc’s stock SNAP increased 44% from the initial IPO rate on the first trading day. The public offering started at $17 per share, more than the expected $14-$16 range. Shares started trading at $24, reaching highs and lows of $26.05 and $24.48 on the same day. They’re still trading above $20. The company’s outlook is strong for 2017. For instance, it has a partnership with Shazam that puts the latter’s music-identification technology inside Snapchat. This would be useful for personalization and cross-user acquisition. The user base is expected to grow to 217 million users by the end of this year, with millennials occupying the largest user base. Expect these developments to have a positive impact on Snap Inc’s stock in the long run.
4. MercadoLibre Inc.
The Latin American electronic commerce venture has benefitted from strong demographic tailwinds. Because e-commerce, web, and smartphone penetration is still behind the United States, the trend is going to positively impact the company’s stock in the foreseeable future. The company’s user base has grown consistently over the last 5 years and is expected to increase 22% annually on average. The stock – MELI – has seen estimates increase over the previous month for 2017 at about 3.8%, which has brought it strong buy ratings. This is definitely one of the hottest growth stocks for investors to consider in 2017.
Which growth stocks are you eyeing for 2017? Did any from the above 4 make your list?
