Consistent sales growth has proven to be a hallmark for some of the best-performing stocks in recent investing history. This typically stems from the fact that investors feel safe with companies that can show positive results in the form of money, always looking for the best bang for their buck.
Sometimes, in that same vein, many high-growth stocks get ignored due to "expensive" valuations compared to their slower-growing yet "cheaper" peers. Today, however, we will look at four companies that offer investors high-growth potential at recently reduced prices, making them supercharged growth stocks to consider immediately.
Operating as one of the few pure-plays already generating free cash flow in the increasingly buzzworthy metaverse, Roblox (RBLX 3.33%) feels like a stodgy veteran in the nascent industry, despite only going public last year.
With over 54 million daily active users (DAUs) exploring the virtual worlds on its namesake platform, Roblox recorded nearly $2 billion in revenue, equaling 108% growth in 2021. In addition, these sales created over $550 million in free cash flow, which rose 36% in 2021.
Due to this increasing cash generation and lowered share price, Roblox has reached one of the lowest price to free cash flow (P/FCF) ratios in its history.
With analysts expecting an average of 59% revenue growth for 2022, this P/FCF of 38 looks particularly promising. Anytime a stock's projected growth rate is higher than its P/FCF, it catches my eye, representing growth at a fair price.
Best yet for investors, Roblox is beginning to tap into large-scale brand partnerships with some of the most well-known companies in the world. As these partnerships grow and Roblox attracts brands to its platform, this new revenue stream should pair beautifully with its current subscription plans and sales of Robux (its virtual currency).
Thanks to this optionality and relatively cheap growth prospects, Roblox offers supercharged potential to any risk-tolerant portfolio.
Operating through its beautifully simple mission, "We stop breaches," CrowdStrike (CRWD 0.35%) has quickly become the market leader among endpoint detection and response (EDR) providers -- currently owning a 14% share of the market.
Led by its artificial intelligence-driven cybersecurity platform -- and its growing number of modules -- CrowdStrike's offerings are used by 65 Fortune 100 companies and 254 of the Fortune 500. With this rapid uptake from the larger enterprise market, CrowdStrike's share price has nearly quadrupled in less than three years since going public.
Despite this large base of enterprise customers, its growth prospects look more robust than ever -- especially considering its dollar-based net retention (DBNR) of 124%. DBNR measures how much more existing customers spend with the company from one year to the next (including customer churn).
With a DBNR above 120% displaying healthy growth, CrowdStrike's 16 consecutive quarters above this mark are encouraging. Best yet for investors, these strong retention figures pair well with CrowdStrike's 69% sales growth and 30% free cash flow margins in 2022.
As management guides for at least $5 billion in annual recurring revenue by 2026, CrowdStrike could be a bargain at today's prices, especially considering its tremendous cash-generating ability.
Driven by its goal "to create a world where anyone can belong anywhere," Airbnb (ABNB -1.39%) is quickly becoming an integral component of today's work-from-anywhere landscape.
Posting a record $46.9 billion in gross booking volume and $6 billion in revenue during 2021, Airbnb grew these figures by 23% and 25%, respectively, over pre-pandemic levels in 2019. To go along with this promising top-line growth, the company generated $2.1 billion in free cash flow during 2021 -- a marked improvement over 2020's negative $667 million.
Despite displaying this massive cash-generating prowess, shares of Airbnb are only slightly up from their initial public offering price.
Now trading at 49 times free cash flow, management's guidance for 60% growth year over year for its upcoming first quarter highlights an intriguing valuation for its expected growth -- much like Roblox.
Adding to this good news for investors, the company announced that its "Made Possible by Hosts" marketing campaign paid immediate dividends. In countries that saw the ads, Airbnb experienced a 20% increase in customer traffic compared to Q4 2019, along with a 40% increase in traffic to its hosting landing page over the same time.
Thanks to the world's voracious appetite to live and work from anywhere, look for Airbnb's ability to grow its 4 million hosts to be a key driver to long-term growth for investors.
Posting revenue growth of 74% year over year for Q4 2021, MercadoLibre has experienced a massive drawdown in its price to sales (P/S) ratio.
Now trading at a P/S it hasn't seen for over five years, the company's blistering growth looks like an excellent opportunity for investors with a decades-long time horizon.
On top of this, MercadoLibre's gross profits continue to grow while free cash flow has remained positive -- meaning that the business is cheaper than it was a year ago and has also become more powerful.
Leading this charge for MercadoLibre is its popular e-commerce operations that boast over 40 million users, and its fintech business (Mercado Pago), which has now grown to 34 million users of its own. Looking like a Latin American version of eBay and PayPal in 2014 before their separation, MercadoLibre is building out a complete ecosystem for its 82 million total members.
As Mercado Pago continues to mature, one needs to only look at PayPal's success over the last five years to become excited about MercadoLibre's optionality going forward.
Now looks like a great time to consider buying and holding MercadoLibre for the long term, thanks to its double-pronged growth attack and declining P/S.