After racing out to huge gains during 2020 and 2021, growth stocks hit a wall in 2022. But for individuals near the start of their investing careers, the sell-off represents an opportunity to build a portfolio of top growth stocks at significant discounts to where they were a year ago. You don't need a fortune to get started -- there are plenty of great growth stocks you can buy right now for $100 or less to start building your financial future.
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1. Revolve Group
If you're looking for a stock with both scorching revenue growth and earnings growth, Revolve Group (RVLV 0.42%) is a good place to start. The online fashion retailer is no flash in the pan -- it has consistently increased revenue and earnings over a multi-year basis. Revenue has grown from $399 million in 2017 to $891 million in 2021, which adds up to an impressive 22% compound annual growth rate (CAGR). Now, analysts expect the company to top $1 billion for the first time in 2022. Earnings before interest, taxes, debt and amortization (EBITDA) has grown by about 47% over the same time frame.
So what is Revolve Group's secret sauce that makes it successful even when many other retailers and clothing companies are struggling? The California-based company uses proprietary technology to scour hundreds of millions of data points from a variety of sources to forecast emerging styles. It uses its data to predict trends and manage inventory, and it manages to turn this inventory around and keep things fresh. For example, the company featured an average of 1,300 new items a week during 2021. At the same time, the company heavily leverages social media influencers to showcase its products and gain exposure to the influencers' large audiences.
Despite its success so far, shares of Revolve are down 56% year to date. The stock hit a particularly rough patch in August, losing 17% on the month after the company reported impressive revenue growth but a decline in earnings due to higher costs. However, Revolve Group is not unique in dealing with cost pressures, and the stock deserves credit for growing sales when many retailers are reporting declines. This may prove to be little more than a speed bump over the long run and gives investors the chance to add shares of this profitable, forward-looking e-commerce stock to their portfolios at a discounted price.
2. Dutch Bros
Staying on the West Coast, Oregon's Dutch Bros (BROS -0.66%) is building a fast-growing coffee empire across the Western United States. The chain is a favorite of millennial and Gen Z consumers and is serving up torrid revenue growth. Dutch Bros has increased sales from $238 million in 2019 to $498 million in 2021, representing a 28% CAGR.
Dutch Bros is rapidly expanding its store count and moving into new markets. The company has nearly doubled its store count over the past few years, from 328 in 2018 to 603 midway through 2022. The company only recently began expanding beyond its home base on the West Coast and is entering new markets in a big way. For example, the company just opened its first shop in Texas about 18 months ago and it already has 61 locations in the Lone Star state.
Dutch Bros isn't stopping there -- the company is set to expand into the Eastern United States, and its long-term goal is to grow to 4,000 locations over the next 10 to 15 years. If Dutch Bros can keep growing at this rate and reach this target while leveraging this scale into more profitability, this monster growth stock could bring massive returns to investors' portfolios.
3. Floor & Decor
While hard flooring surfaces might not sound quite as exciting as luxury fashion or a coffee chain that some have dubbed "the next Starbucks," there's nothing boring about the type of earnings and revenue growth that Floor & Decor (FND -1.35%) is posting. The seller of hard flooring (e.g., tile, wood, and stone) has grown sales at a CAGR of 25.5% over the past five years, posting an increase each year. It has raised its adjusted EBITDA at an even more impressive rate of 37.1% over the same time frame.
Floor & Decor has carved out a niche for itself within the home improvement space by having a laser focus on flooring instead of trying to be a jack of all trades. Floor & Decor has nearly doubled its store count over the past five years, growing from 83 locations in 2017 to 160 in 2021. And we shouldn't expect the growth story to end there, as management sees plenty of white space for future stores, stating that it sees potential for at least 500 locations further down the road.
Not much is going wrong for Floor & Decor, but shares are down 36% year to date anyway as the broader market is in a bear market, and stocks related to housing have suffered. It seems like this profitable, high-growth stock has been thrown out with the proverbial bathwater, creating a good entry point for new investors.
You don't need a fortune to get started as a growth investor. Buying shares of any (or all) of these exceptional growth stocks while the market is down should help position your portfolio for long-term growth -- and you can buy them for under $100. Rinse and repeat the next few times you have a spare $100, and before you know it, you'll have the foundation of a dynamic growth portfolio.
