Unlocking Tomorrow’s Giants: 2 Hypergrowth Stocks to Buy Now
As a growth investor, I’m always on the lookout for the next big winners. My successful bets on Netflix and Alphabet have yielded over 1,000% returns each, but I didn’t get there overnight. I started investing in these companies in 2010 and 2011, respectively. Now, I’m searching for the next generation of market leaders.
Roku and Toast: The Perfect Pair
Two companies that have caught my attention are Roku and Toast. These growth stories are still in their early chapters, but they have tremendous potential for long-term success. Both companies are tackling enormous markets, with Toast simplifying restaurant management and Roku revolutionizing media streaming.
Massive Growth Opportunities Ahead
Toast has already installed its system in 127,000 locations, just 14.5% of the American restaurant market. Roku has reached 85.5 million media-streaming households, with annualized platform revenues of $3.6 billion. The domestic TV advertising market is estimated to be worth over $90 billion this year, providing a vast opportunity for Roku to continue growing.
Impressive Track Records
Both companies have seen remarkable sales growth, with Roku’s sales quadrupling over the last five years and Toast’s quadrupling in just three years. They have also demonstrated solid cash profits, paid down their long-term debt, and amassed billion-dollar cash reserves.
Valuation: Worth Every Penny
Toast’s stock has surged 120% year to date, trading at 50 times forward earnings estimates and 4.9 times trailing sales. While it may seem expensive, I believe it’s worth every penny. Roku, on the other hand, has seen its stock price decline 21% in 2024, making it an attractive buy at just 2.5 times sales.
A Buying Strategy for Success
If you’re concerned about market volatility, consider setting up your Toast and Roku positions in several transactions over time or automating a dollar-cost averaging plan. This approach can help smooth out market fluctuations and avoid getting stuck with a single buy at an uncomfortable starting price.
The Verdict: Roku and Toast Deserve a Closer Look
Whatever buying method you prefer, Roku and Toast are worth a closer look from every growth investor. While I can’t promise they’ll match my Netflix and Alphabet returns, the opportunity is undeniable. I believe we’re looking at tomorrow’s business giants in their early years.
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