The end of the Great Recession in 2009 marked the beginning of a show of force on Wall Street by growth stocks, which fueled the massive gains the market made over the past decade and a half. The S&P 500 has tripled in value over that time period, turning an investment of $10,000 into more than $38,000 today.
Historically low lending rates and a compliant Federal Reserve pumping billions and billions of dollars into the economy created a pool of abundant, cheap capital that fast-paced companies used to grow their businesses.
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Although the market recently turned against tech stocks and other previous high flyers -- the broad market index is down almost 10% year to date, toying with an official correction -- it's made many once-unaffordable stocks cheap again. These are still solid growth stocks, but they're now being offered at a discount.
For those with only $100 available to invest (assuming it's not needed to pay bills or for an emergency), the following pair of growth stocks has what it takes to make you richer -- and well into the future.
Image source: Dutch Bros.
Dutch Bros
Dutch Bros (BROS 0.46%) doesn't have the same name recognition as Starbucks or Dunkin Brands. However, with some 538 drive-thru coffee shops in 12 western and southwestern states, it's actually the third-largest coffee chain behind those two industry giants.
It's because of its regional status that it still has such potential for growth as it can continue to expand into ever more states. Last year, it opened nearly 100 more stores, and virtually all of the locations it opens going forward will be company-owned, having abandoned the typical franchise model several years ago.
While you might not be familiar with the brand, it's actually been in business since 1992 and has posted 15 consecutive years of comparable sales growth. In a business update last month, it reported same-store growth of 10% in the fourth quarter (over 15% on a two-year basis) and were up 8.4% for the full year (over 10% for the two-year time period).
I've mentioned elsewhere that I'm typically leery about recommending newly IPO'd stocks -- it went public in September -- but Dutch Bros. is no fly-by-night operation and has a solid track record of proven growth under its belt. Wall Street is looking for a 38% compounded annual growth in earnings while revenue grows five-fold by the middle of the decade.
Analysts have a one-year consensus price target of $68.50 per share, implying a 42% upside from where it currently trades. I suspect we haven't heard the last of Dutch Bros and its stock yet.
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Fiverr
Freelance marketplace operator Fiverr (FVRR 2.80%) is one of those former high-flying tech stocks brought up short by the market's transition to more consumer goods stocks and away from companies that outperformed during the pandemic. Its stock is down 78% from its August highs. Wall Street may have fled this gig economy stock a little early.
While it's true Fiverr saw remarkable gains after people were locked down in their homes at the onset of COVID, and growth rates have eased up with the reopened economy, it's still in expansion mode and is moving into new international markets. This is one of those cases where analysts have compiled a narrative about a supposedly slowing business, and that negative model overshadows a healthier reality.
NYSE: FVRR
Key Data Points
Fourth-quarter revenue was up 43% year over year to $80 million, faster than the 42% increase it saw in the third quarter. The number of active buyers jumped 23% to 4.2 million as spending per buyer rose 18% from last year, hitting $242 versus $205 in 2020. This isn't the look of a company losing its stride.
Part of its success can be attributed to the Great Resignation, the phenomenon where millions of people quit their jobs during the pandemic and never went back to the office again, preferring instead to strike out on their own. Last year, Microsoft suggested that as much as 40% of the global workforce was thinking of leaving their employer, and this is part of the reason why retailers and others have had a hard time staffing their stores recently.
Fiverr, of course, connects creators with businesses and individuals looking for a service. Instead of going through an agency or posting on social media sites, they use Fiverr to make the connection. While its name derives from an earlier time when every gig would be worth $5, today freelancers can and do charge upwards of $1,000 for some tasks.
The consensus one-year price target for Fiverr's stock is $119 per share, or 70% higher from where it trades now. At the same time, some analysts have pegged it as high as $220, or triple its current value, indicating that even some Wall Street professionals still see Fiverr as a big growth story.
