The stock market is roaring higher, and many growth stocks have benefited from this positive momentum. The S&P 500 index confirmed the bull market earlier this year when it reached a record — and it’s reached new records since.
Even after the gains, some of this year’s winning stocks still make great investments as they could climb further and their long-term prospects are bright. But it’s important to keep an eye on growth stocks that haven’t yet taken off because this is where you can find some particularly good bargains.
These players have been left behind so far, but some have what it takes to advance. I’m talking about demand for their products or services, revenue growth, and smart management of their financial situations.
Two stocks, in particular, fall into this category and could skyrocket as early as this year — and go on to gain over time. Let’s check them out.
1. Carnival
Carnival (NYSE: CCL) (NYSE: CUK) struggled during the early pandemic as sailings were temporarily put on hold. The longtime profitable company shifted to a loss, and its debt ballooned. But the world’s biggest cruise company tackled its problems by streamlining operations and lowering costs, and these efforts quickly started bearing fruit.
Early last year, Carnival’s cash from operations and adjusted free cash flow turned positive, and importantly, this ongoing trend is helping the company pay down debt. Speaking of debt, the company made debt payments of $6 billion last year, reducing debt levels from their peak. Part of this payment included the prepayment of variable-rate debt, an important step as it makes the company less vulnerable to periods of higher interest rates.
But Carnival’s recent successes aren’t only due to cost-cutting and careful management of debt. The company also is growing thanks to demand for its cruises, and this has been going on for several quarters. This is a positive, as it shows this isn’t a short-lived trend but one that signals the long-term appetite for cruises — including Carnival’s — is back.
In the most recent quarter, Carnival reported record first-quarter revenue of more than $5.4 billion, and booking volumes reached an all-time high. This gain in bookings came even in the context of higher cruising prices, showing the strength of demand for cruise vacations.
Meanwhile, Carnival shares haven’t yet reflected all of this good news, and today they’re trading at around their lowest ever in relation to sales. This looks like a steal, considering the company’s recovery and growth over the past year and Carnival’s track record prior to the pandemic. So now makes a great time to get in on this growth stock that’s ready to pop.
2. Chewy
Chewy (NYSE: CHWY) is a favorite e-commerce destination of pet parents because they can find just about anything they need for their pets here, from food and toys to health insurance and prescription medication. The company has become profitable in recent years, thanks to these loyal fans who keep coming back and spending more.
An important thing to look at in Chewy’s earnings reports is the company’s Autoship numbers. This service automatically reorders and ships your favorite items to your door, saving you time and assuring that you always have what you need available for your pet.
Autoship makes up more than 77% of Chewy’s net sales, showing that these regular orders — rather than random, one-time ones — drive the company’s growth. This is fantastic because it offers us visibility into future sales, with the idea that loyal customers generally keep coming back.
In addition, Chewy recently made some wise expansion decisions. The company has extended its e-commerce platform into Canada. This was done without great expense due to the company’s existing infrastructure and software stack. And it opened its first in-person veterinary clinics, a move that will diversify the revenue base and offer the e-commerce shop more exposure.
In other positive news, Chewy just announced its first ever share-buyback program, a signal the company is optimistic about its future.
Right now, Chewy trades for about 24x forward earnings estimates — a bargain, considering the company’s recent growth and long-term prospects. That’s why now is a great time to get in on this exciting stock that could roar higher at any moment.
Should you invest $1,000 in Carnival Corp. right now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chewy. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.
2 Growth Stocks That Could Skyrocket in 2024 and Beyond was originally published by The Motley Fool
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