Have you noticed that growth stocks are starting to come back? the Vanguard Growth Corporationwhich contains heaps of growth stocks, is up 21% this year.
If you’ve been investing in growth stocks for a while, you probably remember that they started to rally last summer and then lost all those gains by the end of 2022.
If the volatility of growth stocks makes you nervous, consider making small purchases over time. Now that discount brokerages have lowered transaction fees, retail investors can manage a dollar cost averaging strategy just like the pros on Wall Street.
Right now, $200 is more than enough to buy shares of all three growth stocks, assuming your bills are already paid and your emergency fund is maxed out.
Shopify (Shop 1.10%) It is a software provider for e-commerce companies and its stock is very volatile. Shares fell sharply at the end of 2021 because the company told investors it would invest heavily to expand its logistics infrastructure.
Shopify stock recently soared after the company told investors it would sell its logistics business to Flexport for a 13% stake. Upon completion of the transaction, Flexport will be the official logistics partner for Shopify.
Despite the looming fear of an upcoming recession, Shopify helped its customers sell 15% more merchandise in the first quarter of 2023 than they sold during the previous year.
Shopify reported $86 million in free cash flow during the first quarter, which is a huge improvement over the loss it reported a year earlier. Now that he’s stopped pouring money into a tough logistics business, investors can look forward to much stronger cash flows in the coming quarters, too.
shares InMode (INMD -2.72%) It has been trading sideways this year despite a surge in sales of its medical devices. First quarter sales were up 23.5% year over year.
The company develops and markets proprietary surgical technology platforms geared toward dermatologists and plastic surgeons. For example, the BodyTite workstation allows providers to melt fat cells using a narrow probe inserted just below the surface of the skin. This produces results similar to liposuction with a much simpler procedure.
Instead of relying on continually selling more workstations to a limited number of providers, InMode is developing a razor and razor business model. Sales of services and consumer goods that must be replaced after each procedure increased 43% year-over-year in the first quarter.
As the only company that sells BodyTite workstations and purveyors of FMCG that need to use them, InMode has solid growth ahead of it. Fortunately for investors, the stock market hasn’t noticed yet. You can now buy InMode shares for 12.9 times future earnings expectations.
SoFi Technologies (Sovie 0.38%) It is a member-centric digital bank and one-stop-shop for financial services. Relatively high-interest savings accounts bring in savers who, sooner or later, apply for a loan or credit card from the same smartphone app in which they bank.
SoFi is very good at integrating various banking services that new members sign up for in large numbers. The company’s membership list swelled to 5.7 million members at the end of March, up 46% from the previous year.
SoFi is still losing money, but it is quickly heading towards profitability. Sales and marketing expenses as a percentage of revenue decreased 4.8% year over year. Its first-quarter GAAP net loss narrowed to $34 million from $110 million a year earlier.
An increasing number of mid-sized banks and credit unions are paying cocky To assess individual risk, but not SoFi. She has her own algorithm and she’s not afraid to use it. The number of lending products on SoFi’s books at the end of March was up 24% year-over-year. SoFi also has a technology platform that fintech companies rely on to manage 126 million customer accounts during the third quarter.
SoFi’s business is booming but you wouldn’t know it by looking at the share price. The shares are trading just below the book value of the bank. Bundling them now and putting them into a well-diversified portfolio for the long term seems like a smart move.
Cory Renauer has positions at InMode, Shopify, SoFi Technologies, and Upstart. The Motley Fool has positions at InMode, Shopify, Upstart, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has a disclosure policy.