Strong businesses with explosive growth potential are still to be found in the current market. While macro headwinds will undoubtedly affect most businesses to a certain extent, companies that possess strong leadership, balance sheets, and tailwinds to drive future growth can survive the mayhem.
If you're looking for stocks with the potential to not only supercharge your initial investment but sustain growth in the years ahead, here are two top growth plays to consider adding to your portfolio right now.
1. Pinterest
Pinterest (PINS 4.04%) saw a wave of user growth at the peak of the pandemic. In the last several quarters, as user growth has decelerated and the company has gone back to unprofitability, some investors have soured on the business. However, taking a step back from recent events, Pinterest's core underlying business remains strong and well-positioned for growth that long-term shareholders can benefit from.
Simply put, Pinterest's platform revolves around its ad business. The company generates most of its revenue from advertising, but its approach to attracting and retaining users is somewhat different than a traditional social media stock. As CFO Todd Morgenfeld noted in the third-quarter earnings call, "When you can address the entire consumer journey, it presents a significant monetization opportunity. We've been focused on this strategy for a while, and it's been working."
To the average user, Pinterest just looks like an image search-and-share platform. You can find image inspiration for everything from travel to home decor and beyond. Users can save "pins" to curated inspiration boards that align with the inspiration they're looking for. Often, these pins are actually advertisements that merchants, ranging from small brands to household names pay to place in front of user eyeballs.
This seamless connection from searching for inspiration to finding the exact product or service that fits in with that user search -- without the individual necessarily starting out looking for an exact product or service to buy -- creates a valuable opportunity for merchants looking to expand the outreach of their ad dollars to both new and existing cohorts of potential customers.
It's important to note that year-over-year comparisons for many tech and growth-oriented businesses, and Pinterest is no exception, have been particularly tough given the above-average numbers many of these companies reported at the peak of the pandemic. Comparing recent financial results to pre-pandemic levels, the third quarter of 2022 saw Pinterest grow its revenue and users by respective clips of 35% and 11% compared to the same quarter in 2019.
Pinterest is also looking to build upon the correlation between its social commerce platform -- social commerce is simply selling goods and services through social media -- and traditional e-commerce. The company's acquisition of the AI-driven e-commerce platform THE YES in 2021 is one example of Pinterest's move toward that long-term goalpost.
For now, Pinterest's value proposition as an advertising machine to merchants and consumers provides a compelling investing thesis that long-term buy-and-hold investors may want to tap into at current share prices.
2. Teladoc
Teladoc Health (TDOC -2.40%) is working to bridge the gap between the long-standing needs of healthcare consumers and the deficiencies of the traditional healthcare system. From an inability to easily access quality healthcare due to location, age, cost, pre-existing physical conditions, or other factors, telehealth provides virtual solutions to meet patient demands.
Even individuals who don't have health insurance can access many of the services available through Teladoc for a nominal out-of-pocket fee, which starts at as low as $75 for a general wellness visit. An increasingly core segment for Teladoc is its chronic care business, a segment that was boosted by its 2020 acquisition of Livongo and upon which it sees a long-term trajectory to build continued growth.
According to the Centers for Disease Control and Prevention, chronic conditions are the primary driver of the roughly $4.1 trillion spent on healthcare in the U.S. every year. A recent report by Global Market Insights estimates that the rise of chronic diseases will be a key catalyst for the growth of the U.S. telehealth industry over the next decade. As a result, the U.S. telehealth industry is on track to witness a compound annual growth rate of about 13% between 2023 and 2032, reaching a valuation of $116 billion at the end of the forecast period.
Teladoc has seen adoption of its chronic care services explode over the last few years, from 3% of its members utilizing these solutions in 2019 to the 28% of its members who are now using them. Then there's the company's mental healthcare service, BetterHelp, which alone raked in roughly $1 billion in revenue for the company in 2022.
Teladoc's significant market footprint gives it a distinct advantage to capitalize on the broader growth of the virtual healthcare market over the next decade, as well as established and emerging subsectors of this space. For investors, this healthcare stock could pose a tempting buy in the current market and well beyond.
