Companies with potent growth catalysts can deliver sizable gains to their investors. Here are three businesses with intriguing expansion prospects, both in the short and long term. If you're looking to invest in the stock market this month, consider buying all three stocks today.
1. Visa
The shift from cash to digital transactions is a powerful and persistent megatrend. As the leading payment-processing network, Visa (V -0.23%) is positioned to profit from this long-term progression more than, perhaps, any other company.
Several near-term developments are also fueling Visa's growth. As the pandemic subsides, demand for travel is rising. This is a boon for the credit card giant's high-margin cross-border business. Cooling inflation, and a corresponding rebound in demand for entertainment and higher-priced goods, are also welcome shifts.
All these trends are evident in Visa's financial results. The payments-titan's revenue rose 12% year over year to $8.1 billion in its 2023 fiscal third quarter ended June 30, driven by a 9% rise in payments volume, to $3.2 trillion. Visa's net income and earnings per share, in turn, jumped 22% and 25%, respectively, to $4.2 billion and $2.
Visa's incredible scale and consumer mindshare -- including its 4.2 billion credit and debit cards in circulation -- make it improbable that competitors will knock it from its perch atop the steadily expanding payments industry. That makes Visa's stock a low-risk but potentially high-reward investment.
2. Caterpillar
Macroeconomic trends are also driving Caterpillar's (CAT 1.59%) growth. Government incentives, including roughly $1 trillion in infrastructure investments, are fueling a construction boom in the U.S. At the same time, higher commodity prices -- combined with surging electric-vehicle-driven demand for lithium and rare earth metals -- are boosting sales of mining and industrial equipment.
Caterpillar is thus enjoying strong results across its major business lines. In the second quarter, the heavy-machinery maker's sales in its construction, resource, and energy and transportation segments were up 19%, 20%, and 27%, respectively. All told, Caterpillar's revenue leaped 22% year over year to $17.3 billion, while its adjusted profit per share soared 75% to $5.55.
Better still, Caterpillar received more orders for its equipment, even as it hiked prices. Its backlog swelled by $2.2 billion from the prior-year period to $30.7 billion. With demand for its products and services assured, buying Caterpillar's stock is a great way to claim your share of the global construction industry's growth.
3. Mattel
Like Visa and Caterpillar, Mattel (MAT -0.60%) boasts both near- and long-term growth catalysts. The toymaker is hot off the heels of the fantastic success of Barbie, one of the biggest blockbuster movies of the year.
Barbie is breathing new life into Mattel's storied doll franchise. Mattel has formed more than 165 consumer product partnerships to drive excitement around the film and rake in more profits. The toymaker also stands to collect a production fee for the movie.
Yet Mattel believes the massive success of Barbie is just the start of its new growth strategy. CEO Ynon Kreiz envisions a "Mattel universe" similar to that of the Marvel Cinematic Universe -- an array of characters and storylines that are at the heart of many of Disney's most popular films. Mattel has plans for 14 new movies based on its other brands, including a live-action Hot Wheels film, in addition to potential Barbie sequels and spinoffs.
Since becoming CEO in 2018, Kreiz has hunted for new ways to monetize Mattel's properties and broaden their appeal across a wider variety of age groups. He struck gold with the company's Barbie blitz.
Mattel is expected to generate a bounty of high-margin licensing revenue from its partnerships with retailers, TV networks, publishers, and even rival toymaker Hasbro.
Kreiz intends to use the same playbook with Mattel's upcoming films. That could create a profit bonanza for Mattel -- and for investors who buy its shares today.
