With the major indices down right now, the market might not look appealing to short-term investors. But long term investors know that every business goes through a period of turmoil. This is not the time to let fear pull you away from the stock market.
Inflation fears and less consumer spending might have dragged down these stocks for now. But these worries will abate, and when they do, these stocks will shine again.
If you have $1,000 to spare, you might want to consider these three excellent growth stocks.
Image source: Getty Images.
1. Pinterest
Visual-based social media company Pinterest (PINS 4.04%) thrived during the lockdown, when online platforms were a way to kill time. But now that lockdowns have eased and amid the tech sell-off, this stock might not seem attractive to investors. However, its consistent efforts toward recovery make me believe it has a bright future.
Even though Pinterest's number of global monthly active users (MAUs) declined in the first quarter, it managed to grow its revenue. MAUs in the U.S. and Canada took a major hit, down 13%, while in Europe, MAUs were down 12% from the year-ago quarter. But its global average revenue per user (ARPU) surged both in the U.S. and internationally, seeing total growth of 28% year over year to $1.33 per user. Total revenue came in at $575 million for Q1, representing 18% year-over-year growth. Its net loss also shrank from $21 million in the prior quarter to $5 million in Q1.
The company spent around $195 million in research and development while investing $174 million in sales and marketing in Q1. This implies it is heavily investing in its technology to revive user engagement this year and draw in more advertisers. The company launched 150 new features last year, which could also boost performance. It expects Q2 revenue to grow 11% year over year. Pinterest continues to work on strategies to create more inspirational content while improving its Pinners' shopping experience and advertisers' success.
Recently, CEO Ben Silbermann transitioned to be executive chairman of the company. Meanwhile, Bill Ready, who headed the commerce, payments, and next billion users segment at Alphabet, will be taking on the role of CEO.
A sudden C-suite leadership change brings uncertainty, but it could also turn out to be positive for the company. The new CEO has a lot to offer with his experience in e-commerce and payments, which could help drive growth for Pinterest. With a price-to-sales (P/S) ratio at 4.9 and the stock down 75% from its 52-week high, Pinterest could be an appealing buy now.
2. Jushi Holdings
Despite being a small-cap cannabis multi-state player, Jushi Holdings (JUSHF 5.02%) has shown outstanding performance over the last few quarters. In 2021, Jushi brought in $209 million in total revenue, representing 159% year-over-year growth. The company also saw its net profit jump to $25 million versus a loss of $212 million in 2020.
Jushi operates 33 retail dispensaries nationwide. Recently, it opened its fourth dispensary in Nevada, a popular market for tourists. Its first-quarter revenue of $61.9 million rose by 48.5% year over year. Management stated increasing the company's retail footprint from 17 to 29 stores in the quarter was what drove this growth. Its EBITDA of $1.1 million, however, fell $3 million from the prior-year quarter. Seasonal weakness and loss of store hours due to the ongoing pandemic affected the results in the quarter, according to management.
Jushi ended the quarter with $76.2 million of cash and cash equivalents. The company believes with its cost-savings measures and strategies, it will continue to drive profitability through the balance of the year. State marijuana legalization ramp-up this year could boost Jushi's quarterly numbers.
The marijuana industry is still nascent but has massive potential. Despite being a small company in a highly competitive industry, Jushi continues to expand aggressively and drive revenue growth each quarter. The consensus Wall Street analyst recommendation is a "buy" rating for the stock.
3. Etsy
My third favorite stock is e-commerce retailer Etsy (ETSY 0.34%). Similar to Pinterest, the pandemic also fueled Etsy's business. Now the market is revaluing it, which is why it is down 70% from its all-time high. But I believe its unique business model will allow it to grow even in the post-pandemic era. It acts as a two-sided online marketplace that brings buyers and sellers together globally, operating in the U.S., U.K., Germany, Canada, Australia, France, and India.
In Q1, gross merchandise sales (GMS) jumped 3.5% to $3.3 billion, bringing in revenue of $579 million, a 5.2% year-over-year increase. It generated $86 million in net income for the year, a 40% dip from the prior year. Though inflation fears might have created short-term headwinds for the company, it still acquired 7 million new buyers in Q1, according to management.
In Q4, Etsy increased its seller transaction fee from 5% to 6.5% which could help bring in more revenue going forward. The company plans to spend this incremental revenue on marketing and seller tools.
Etsy's strength is its consumer personalization, which is why the company sees repeat consumer behavior or habitual buyers. Its platform consists of various small businesses that sell unique or customized products. This factor acts as a moat in this hypercompetitive e-commerce sector, which could drive long-term growth.
Given that these stocks have promising potential, growth-oriented investors might be tempted to buy these at a favorable price now and hold them for the long haul.
