The market's on the move. Wall Street's volatility is your opportunity. You don't need a lot of money to make a difference. Even if you have $100 to invest, it can go a long way in the right growth stocks.
Carnival (CCL 0.71%), Nintendo (NTDOY -0.50%), and Rover (ROVR) are three industry leaders with strong growth prospects. They all happen to be trading in the single digits right now, which helps that $100 go a long way. Let's see why these are three growth stocks that you can buy right now with even a modest investment.
1. Carnival
You might not see the cruise line industry in general and Carnival in particular as growth opportunities, but don't let this ship sail without you. Cruising was the hardest-hit niche in the travel market during the pandemic, but it's bouncing back with a vengeance. Travel and pandemic restrictions are easing, and even landlubbers are ready to give cruise vacations a shot after years of staying away from the open waters.
Revenue is expected to soar 72% this fiscal year, shattering its pre-pandemic record of $20.8 billion in annual revenue. It should return to profitability in fiscal 2024, and you can buy Carnival today for less than 10 times that year's projected profit. It gets better. Wall Street pros see Carnival earning nearly $3 a share by fiscal 2027, so the shares are trading for less three times what it's expected to earn four years from now.
Image source: Getty Images.
The growth outlook is strong, so why have the shares been cut in half over the past year? Let's talk about debt. Cruise lines had to do a lot of borrowing and share issuing to stay alive when their ships weren't allowed to take on customers. There were no government bailouts for an industry that pays minimal taxes doing the bulk of their business in international waters with foreign-flagged ships.
Carnival can take on water here if interest rates keep going higher, especially with more than $35 billion in debt on its books. The recent wave of bank failures isn't very comforting. If the economy buckles, the COVID-19 crisis claws its way back, or geopolitical risks make it less appealing to go on a cruise, it will slow the return to profitability for Carnival and its peers. The risks are high, but the other side of the coin is that the future could also be better than analysts are modeling. The upside is high with that particular itinerary.
2. Nintendo
The Japanese gaming giant is another stock that has fallen out of favor. It hit a nearly three-year low earlier this month. Revenue declined last year after several years of growth. It would be a mistake to count Nintendo out.
There are three juicy catalysts for Nintendo to resume its winning ways. Comcast's Universal Studios is now two weeks away from putting out The Super Mario Bros. Movie. The animated theatrical release has an all-star cast, and it's going to be huge for Nintendo's most iconic gaming franchise.
The next catalyst is Super Nintendo World. Teaming up with Comcast again, Nintendo opened a richly themed land inside Universal Studios Japan in 2021. The second Super Nintendo World debuted in California last month. Florida and Singapore will get even larger versions come 2025.
The third catalyst doesn't have a launch date, but it should be bigger than the other two events. Nintendo has raised the bar whenever it launches a new console. It happened with Wii, Wii U, and Nintendo Switch. There was a five- to six-year gap between the new console generations, and we're now six years removed from the Switch debut. Nintendo should have something out sooner rather than later, igniting a new wave of growth that typically peaks in the third or fourth year of a console's timeline.
In the meantime you can pick up Nintendo for 13 times trailing earnings, packing a healthy 3.3% dividend yield. It's a game worth playing.
3. Rover
People are pampering our pets these days, and that's good news for Rover. The leading website and app for folks seeking pet sitting, walking, or boarding is making the most of the new normal. You can't always take your pet with you, and Rover's platform connects reviewed service providers with dog and cat owners.
Business slowed during the early days of the pandemic when people were sheltering in place. Revenue was nearly cut in half in 2020, but more than doubled in 2021 to get back above where it was before the COVID-19 crisis. Rover's top line surged 58% last year, and while current guidance calls for the top-line gains to slow to 20% to 22% in 2023, things could be even better.
Pets are royalty now, and what do you think will happen as more people get called to come back to the office? What do you think will happen as corporate travel and even leisure travel picks up? Rover's popularity should continue to grow, and as the top dog with a scalable and asset-light model its recent profitable turn should accelerate from here.
