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Stocks with consistent growth for investors to buy now

Stocks with consistent growth for investors to buy now

Growth companies and the organisations which are working on disruptive technologies saw adverse impacts as a result of market conditions due to higher cost of capital in short time period. S&P 500 Growth Index, which is an index tracking growth stocks from S&P 500 Index, saw a decline of over ~30% in 2022. However, this index has since saw a recovery was up ~14.05% YTD as of 31st October. On a historically basis, this index outperformed overall S&P 500 index over long-term considering annualized returns over the previous 5 and 10 years. Top 3 holdings of the index consist of Apple Inc., Microsoft Corporation and NVIDIA Corporation. These 3 stocks can be considered as the stocks with consistent growth for investors.

Similarly, ARK Innovation ETF, which focuses on investing domestic and foreign equity securities of the companies which continue to work on “disruptive innovation”, saw a decline of ~67% of the value in 2022. Since then, this ETF has picked up and is now up by ~40% year-to-date as at November 20.

Difficult macroeconomic and investment conditions have the significant impact on growth stocks because these stocks offer returns with the risk of failure or loss over long run. Increased interest rates can impact the business performance as this lowers value of cash flow over the long-term, which then impacts the valuations of growth companies. In the current market scenario, investors should actually see the market situation and valuations of several growth stocks. Experienced investors continue to pile up on companies having good fundamentals, future prospects, stocks with consistent growth, etc. 

With this in mind, we will now have a look at the stocks with consistent growth for investors to buy now.

1. Etsy, Inc.

The company operate top-10 e-commerce marketplace operator in the US and U.K., having strong operations in Germany, France, Australia, and Canada.

The company’s consolidated 3Q results were seen in line with expectations for modest revenue growth and very strong profitability. Consolidated GMS of the company came in at $3.0 billion, exhibiting a rise of ~1.2% year-over-year and largely flat on currency-neutral basis. Headwinds and challenges to consolidated GMS consisted still dynamic macroeconomic environment which impacted consumer discretionary product spending and a small headwind from mid-quarter divestiture of Elo7.

Etsy marketplace GMS came in at $2.7 billion, exhibiting a rise of 1.0% year-over-year and down 0.3% on currency-neutral basis. Growth in active buyers picked up in 3Q with 4% year-over-year growth, setting new all-time high of 92 million. US active buyer trends saw a significant return to positive year-over-year growth for the first time over past 7 quarters, with international active buyer growth remaining strong.

Consolidated revenue of the company came in at $636.3 million, exhibiting a rise of 7.0% as compared to 3Q22, with take rate (i.e., consolidated revenue divided by consolidated GMS) standing at ~20.9%. Strong revenue growth was mainly because of growth in Etsy Ads, payments revenue and transaction fee revenue from Offsite Ads.

GMS for 4Q23 is presently expected to decline in low-single-digit range on year-over-year basis. Adjusted EBITDA margin for 4Q is expected to be in the range of 26%-27%.

2. Elastic N.V.

The company is a software company which is based out in Mountain View, California. It is focused on search-adjacent products. Search engine of the company enables it to process both structured and unstructured data. 

It has announced its financial results for its first quarter of fiscal 2024 ended July 31, 2023. Total revenue of the company came in at $294 million, exhibiting a rise of 17% year-over-year, as reported and on constant currency basis. Elastic Cloud revenue came at $121 million, exhibiting an increase of 24% year-over-year, as reported and on constant currency basis. 

GAAP operating loss of the company came at $36 million and GAAP operating margin was -12%. The company saw operating cash flow of $38 million with adjusted FCF of $49 million. Cash, cash equivalents, and marketable securities came at $957 million as at July 31, 2023. 

For the 2Q of fiscal 2024 (ending October 31, 2023), it is expecting its total revenue to be in the range of $303 million and $305 million, exhibiting a rise of ~15% year-over-year at the midpoint (13% year-over-year CC rise at the midpoint). Non-GAAP operating margin of the company is expected to be in the range of 9.5% – 10.0%.

3. Smartsheet Inc.

The company is engaged in providing cloud-based platform for the work execution, enabling teams and organizations for planning, capturing, managing and automating work at a scale which results in more efficient processes. 

It has announced financial results for 2Q fiscal year ended July 31, 2023. Total revenue of the company saw an increase of 26% year over year to $235.6 million and operating cash flow was $48.5 million and FCF was $45.5 million. 

The company’s platform’s scalability supports strong demand from the companies which look for solutions to manage mission-critical work securely and consistently. Calculated billings came in at $243.1 million, which exhibits year-over-year growth of 18% and dollar-based net retention rate was 121%. 

For 3Q fiscal year 2024, it expects total revenue in the range of $240 million – $242 million, representing year-over-year growth of between 20% – 21%. Non-GAAP operating income is expected to come at $8 million – $10 million. For FY24, the company expects total revenue of $950 million – $953 million, representing 24% year over year growth. Non-GAAP operating income is expected in the range of $62 million – $67 million. 

Conclusion

While above are some of the stocks with consistent growth growth stocks to buy now for long term, there are several other stocks which investors can consider buying in the current volatile environment. Investors continue to expect that the US Federal Reserve will maintain interest rates at similar level in upcoming meeting which has been scheduled to take place in December. 

After the December meeting, significant interest rate cuts are expected by 2024 end. Lower interest rates should benefit the growth stocks. Therefore, taking a long-term investment horizon, outlook for growth stocks appears to be strong.

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