Please ensure Javascript is enabled for purposes of website accessibility

3 Companies Whose Sales Could Jump 50% in 2017

By Demitri Kalogeropoulos - Oct 2, 2017 at 6:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A closer look at a few of the fastest-growing businesses around: Shopify, LendingTree, and Winnebago.

Investors love to see sales growth in their companies as a growing top line tends to correlate with rising profits. When revenue is skyrocketing, though, it could point to more than just a short-term pop in earnings.

A business with sharply rising sales might be disrupting a new industry niche, for example, or soaking up market share from stunned rivals. Situations like these could make the stock an attractive long-term bet.

With that in mind, let's look at three companies, LendingTree (TREE 5.16%), Shopify (SHOP 0.54%), and Winnebago (WGO 1.15%), that are on pace to boost sales by 50% or more this year.

LendingTree

Many things are going right for LendingTree right now. Steady improvement in the housing market is helping its core mortgage product sales spike. The online lending giant also managed to more than double its non-mortgage revenue, which includes things like personal loans, credit cards, and home equity loans, last quarter. Recent acquisitions like CompareCards played a big role in pushing overall revenue higher by 51% over the past six months, too. 

A tablet showing charts and tables.

Image source: Getty Images.

CEO Gabe Doug Lebda and his executive team are targeting sales of between $580 million and $590 million this year, which would represent growth of between 51% and 53%. The good news is that, since these gains are being powered by non-mortgage lending, they're helping the company diversify its revenue stream. On the other hand, non-mortgage loan categories are unsecured, so they are raising the overall risk profile on LendingTree's debt portfolio.

Shopify

Shopify helps companies do business online. And given that consumers are increasingly passing on trips to the mall in favor of shopping from home, the e-commerce platform is ideally positioned for growth.

Sales soared 75% last quarter as the volume of business transactions jumped to $5.8 billion from $2.5 billion just a year ago. Gross profit expanded at an even faster pace, rising 83%. Executives credited the company's ability to capitalize on a few concurrent trends in the industry. "The fundamental shift in retail toward multi-channel and mobile, the ongoing adoption of Shopify by larger brands, and our continued focus on building out the market-leading platform for sellers," Chief Financial Officer Russ Jones told investors in early August, "all contributed to the strength of our results." 

Shopify will need to continue anticipating market shifts even as competitive threats pour into this quickly growing industry. Many far larger companies will be looking to elbow in on its industry over the next few years, but shareholders are hoping that its early lead will mature into a huge, well-defended sales base before rivals can catch up.

Winnebago

The recreational vehicles market is inching higher at just a 3% pace this year, but Winnebago is enjoying much faster growth. In fact, the RV specialist's sales are up 53% over the past nine months. Winnebago achieved that result mostly thanks to an expensive acquisition, having recently closed on a deal to fold General Design and its $428 million of annual revenue into its operations.

An RV parked in the desert.

Image source: Getty Images.

Executives had predicted that the merger would immediately boost the overall business -- and they were right. Revenue jumped 75% last quarter as gross profit margin soared to 14.9% of sales from 11.1% a year ago. 

Winnebago's shifting focus toward towable RVs should continue boosting its profitability. Its new, much larger scale, meanwhile, will be a huge asset as it works to fill out the holes in its portfolio. The buyout saddled the company with an elevated debt burden, unfortunately, but management is aiming to pay that down rapidly so that its leverage rate returns to normal by the end of next year.

Investors have rewarded each of these stocks with market-thumping price gains so far in 2017. That rally increases the risk that shares will slump if operating results fail to live up to Wall Street's high expectations. But it also reflects sharply improving operating trends that have the potential to create far more profitable businesses over the long term.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$31.41 (0.54%) $0.17
Winnebago Industries, Inc. Stock Quote
Winnebago Industries, Inc.
WGO
$49.12 (1.15%) $0.56
LendingTree, Inc. Stock Quote
LendingTree, Inc.
TREE
$46.08 (5.16%) $2.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.