Are you looking for lots of growth potential with just a little bit of money? Contrary to a common assumption, not every great stock sports a three-figure -- or even four-figure -- price tag. Plenty of growth stocks cost less than $100 per share. Here's a closer look at three of them if your current budget is relatively modest.
Alibaba
Recent headlines regarding China's economy have seemed somewhat discouraging. Its unemployment rate among young people, for instance, reached a record-breaking 21.3% as of the end of the second quarter, while July's retail sales growth of 2.5% not only fell short of the expected 4.5% but also slowed from June's pace of 3.1%. The country's targeted economic growth of 5% for the full year is looking increasingly out of reach. Shares of most of China's most prolific companies have been struggling in the wake of this and related news.
As the old cliché goes, though, don't throw the baby out with the bathwater. A handful of Chinese companies have been doing just fine despite the wobbly economic backdrop.
E-commerce powerhouse Alibaba (BABA 0.59%) is one of them. Last quarter's top line was up an impressive 14% year over year, leading to a 70% improvement in operating income. Net income was up 48% year over year. Although this pace of progress is unsustainable, analysts are calling for top- and bottom-line growth on the order of 10% this year and next year. Not bad.
The underpinning of this progress obviously isn't China's robust economy. It's the Chinese consumers' continued shift from offline to online shopping, in step with expanding access to the internet and the growing proliferation of smartphones. The country's online retail sales jumped 13.1% during the first half of this year with online sales growth in rural regions improving a healthy 12.5%.
Similar growth is in the cards, too. Numbers from Insider Intelligence indicate that e-commerce still accounts for less than half of China's retail spending, setting the stage for growth of more than 9% this year -- and next -- for the country's entire e-commerce industry. Alibaba's sheer size and ability to innovate and introduce new products mean it's due to keep winning more than its fair share of this growth.
Uber Technologies
Ride-hailing outfit Uber Technologies (UBER -0.38%) may have suffered a slow, unprofitable start after its launch back in 2009. Then, just when it looked like it might reach a much-needed critical mass, the COVID-19 pandemic rattled the world and Uber with it.
A long-awaited turning point may be upon us, though. Boosted by top-line growth of 17% (on a constant-currency basis), Uber finally swung to an operating profit during the three-month stretch ending in June.
OK, it was the tiniest of profits. After removing the tax benefit linked to unrealized gains on an equity investment, Uber only booked operating income of a few million dollars in the second quarter of 2023. That's not the point, though. The point is Uber has proven its business model is viable. More scale will make it even more viable.
And that scale is on the horizon.
Although plenty of people still prefer owning their own automobiles, attitudes regarding personal mobility are evolving. In its recent report on the matter, consulting firm McKinsey & Company notes: "The traditional business model of car sales will be complemented by a range of diverse, on-demand mobility solutions, especially in dense urban environments that proactively discourage private-car use."
The report goes on to explain that "As a result of this shift to diverse mobility solutions, up to one out of 10 new cars sold in 2030 may likely be a shared vehicle, which could reduce sales of private-use vehicles. This would mean that more than 30% of kilometers driven in new cars sold could be from shared mobility [ride-hailing]."
In other words, Uber's ride-hailing market is set to grow for a long, long while.
Monster Beverage
Last but not least, add Monster Beverage (MNST 0.41%) to your list of great growth stocks you can own for less than $100 per share. The energy drinks market is neither new nor underserved. And Red Bull is the market leader, but plenty of smaller up-and-comers, like Celsius Holdings, are perpetually chipping away at Red Bulls' dominance.
Monster Beverage is in between, simultaneously competing with the industry's biggest player and many smaller ones aiming at any sliver of the market they can get ahold of. And yet, it seems to be thriving in its position as the industry's second-biggest name.
Last quarter's revenue grew 12.1% year over year to a record-breaking Q2 figure of $1.85 billion. The top line was higher, to the tune of 14.4%, when stripping out the impact of currency exchange rates. Operating income improved 40%, growing to nearly $524 million. Analysts are looking for similar growth for the remainder of this year and next.
The key to the company's surprising strength is a combination of savvy and innovation.
For instance, Monster acquired CANarchy early last year, bringing hard seltzer and craft beer into the fold. It's doing well with the additions, too. Monster Beverage's alcohol segment saw its sales grow 88% year over year last quarter, with CANarchy's products now being backed by greater promotional firepower. Last month's acquisition of energy drinks outfit Bang Energy offers similar growth potential ... once Monster figures out exactly how to get the most out of Bang's unique selling points and production facilities.
To this end, HSBC recently initiated coverage of Monster Beverage at a decidedly bullish buy rating. Analyst Carlos Laboy writes, "We forecast revenue growth for Monster in the U.S. ahead of industry growth, achieved through more targeted marketing and brands." He adds, "The energy beverage category, specifically Monster, is the most investable growth story in the beverage industry, we believe."
Mordor Intelligence says this still-fragmented energy drinks market is poised to grow at an annualized pace of 8.5% through 2028, perhaps led by companies like Monster with a proven penchant for aggregating and then improving its smaller brands.
