After rallying last month, the U.S. stock market resumed its bear market trajectory in early September, with the S&P 500 index down 18%. Many fast-growing companies are suffering even worse drawdowns, with the Nasdaq 100 index down 27% and the closely followed Ark Innovation ETF down 53%. If you have cash on the sidelines and are building for retirement, now could be the perfect time to buy some of these fast-growing companies and hold for the long term.
Here are two hypergrowth stocks to consider buying in 2022 and holding for many years.
1. Revolve Group
The first company is Revolve Group (RVLV 1.29%), an online apparel and fashion retailer. As an e-commerce-only company, Revolve -- along with its other brand Forward -- mastered marketing through social media, where its target audience (younger women) spends a lot of time. It signed deals with popular celebrities like Kendall Jenner and has a brand ambassador program where women with a popular social media presence can advertise Revolve's fashion items while earning referral fees.
NYSE: RVLV
Key Data Points
Even though Revolve is an online-focused business, it had a tough time during the pandemic due to its focus on higher-end items that are worn at social events like weddings or parties. For example, in the second quarter of 2020, during the heart of the pandemic, Revolve Group's revenue fell 12% year over year. But as the United States and many other regions have moved past COVID-19 lockdowns, Revolve's business has rebounded in a big way. In the second quarter of 2021, revenue grew 60% year over year to $228.6 million. Then, in Q2 of 2022, Revolve's revenue grew 27% on top of last year's 60% growth, hitting $290 million in the period.
RVLV Revenue (Quarterly YoY Growth) data by YCharts.
Looking at a longer time horizon, Revolve's revenue hit $1 billion over the trailing 12 months last quarter. Excluding the pandemic, annual revenue has grown every year since 2016, when Revolve was only doing $312 million in annual sales. With only 2.17 million active customers, it looks like the online fashion retailer has a long runway to grow its business, especially as it continues to expand internationally.
With the stock down 56% this year, now could be a perfect time to buy shares of Revolve Group.
2. Remitly Global
Second on this list of hypergrowth stocks is Remitly Global (RELY 1.53%). The company, which went public through an IPO in late 2021, is trying to disrupt the remittance and international money transfer market for immigrants. Traditionally, services like Western Union charged high fees to send money internationally. But with its digital and mobile-first options, Remitly has been able to undercut legacy providers and offer people a better customer experience at a lower price.
NASDAQ: RELY
Key Data Points
This enhanced customer value proposition led Remitly to grow at a rapid rate as it tries to tackle the $700 billion global remittance market. In Q2 2022, send volume increased 40% from a year ago to $7 billion, with revenue up 42% to $157.3 million. The company is not yet profitable, but with $429 million in cash on its balance sheet, Remitly has a lot of firepower left to remain in hypergrowth mode.
Since 2019, Remitly's revenue has grown at an 71% rate year over year. With only 3.4 million customers around the globe, the company has a long runway to grow with its disruptive platform this decade.
Even though business is booming, Remitly's stock is down 42% this year and over 75% since going public. At a current market cap of $2 billion, the stock trades at a price-to-sales ratio (P/S) of 3.2 based on management's 2022 revenue guidance. With high gross margins and a huge market opportunity to go after, this seems like a great time to pick up shares of Remitly while they are trading on the cheap.
