In roughly three weeks, the curtain will close and another year will be in the books for Wall Street. For growth-stock investors, it's been a banner year. After losing 33% of its value during the 2022 bear market, the innovation-driven Nasdaq Composite has rallied 35% as of the closing bell on Dec. 6.
Despite this rally, bargains still abound for opportunistic investors willing to seek them out. The aforementioned Nasdaq Composite remains 12% below its all-time closing high set in November 2021, which means game-changing businesses with bright futures can still be purchased at a discount.
What follows are four unparalleled growth stocks you'll regret not buying for 2024.
Image source: Getty Images.
Mastercard
The first unrivaled growth stock that's begging to be bought for the new year is payment-processing kingpin Mastercard (MA 0.07%). Despite trading near its record-closing high, Mastercard's payment-facilitation operations have shown no signs of slowing.
The biggest "fear" for financial stocks is a U.S. recession. Most financial stocks are cyclical, which means they struggle when the U.S. economy contracts. Since Mastercard's operating model is based on fees generated from merchants, a slowdown in enterprise and consumer spending would be expected to negatively impact the company.
But there are two sides to this story. Although recessions are a perfectly normal part of the economic cycle, they don't last very long. Only three of the 12 recessions since the end of World War II lasted at least 12 months, and none of the remaining three surpassed 18 months. Comparatively, there have been multiple periods of expansion that have lasted between four and 12 years. Mastercard is benefiting from a growing economy far more often than it's playing defense during recessions.
To add to this point, Mastercard's management team has the company solely focused on payment facilitation. While some of its payment-processing peers also act as lenders, Mastercard relies on merchant fees to drive its sales and profits higher. The advantage of lending avoidance is that Mastercard doesn't have to set aside capital to cover loan losses during recessions. This is the company's key to maintaining a 40%-plus profit margin.
Geographically, Mastercard has a lengthy growth runway ahead of it. Aside from being the No. 2 player by market share in the U.S. (the world's No. 1 market for consumption), it can organically expand its payment infrastructure into faster-growing but largely underbanked regions, such as the Middle East, Africa, and Southeastern Asia.
Fiverr International
A second unparalleled growth stock you'll regret not adding to your portfolio prior to opening the curtain on 2024 is online-services marketplace Fiverr International (FVRR 3.74%).
Similar to Mastercard, the most front-and-center potential headwind for Fiverr would be an economic downturn. It's common for the unemployment rate to increase when the U.S. economy contracts, which wouldn't be good news for a company that connects freelancers with businesses using its online marketplace.
But what makes Fiverr special is its three competitive advantages. The first is the permanent shift we've witnessed in the labor market following the COVID-19 pandemic. Though some workers have returned to the office, more people than ever are working remotely. A mobile workforce plays right into the hands of Fiverr's freelancer-driven operating model.
Second, Fiverr's online marketplace does a fantastic job of differentiating itself from the competition. While most competing platforms allow freelancers to price their services on an hourly basis, Fiverr's freelancers are pricing their tasks as an all-in expense. Fiverr's price transparency is clearly hitting home with businesses as evidenced by the fact that spend per buyer has been steadily climbing for years.
However, the top selling point for Fiverr is its take rate -- the percentage of each deal negotiated on its platform, including fees, that it gets to keep. Whereas most online-service marketplaces have take rates in the mid-teens, Fiverr clocked in with its ever-expanding take rate of 31.3% in the third quarter. In other words, Fiverr is netting far more from its users than its competition yet still managing to grow its freelancer and buyer base.
Image source: Getty Images.
JD.com
The third magnificent growth stock you'll regret not adding to your portfolio for 2024 is China-based e-commerce company JD.com (JD 6.12%).
Regulatory uncertainty tends to be the prevailing sore spot for China stocks. Chinese regulators clamped down on Alibaba, the nation's No. 1 e-commerce company, in 2021 by levying a $2.75 billion fine. U.S. regulators had also threatened to remove China-based stocks from U.S. exchanges if they didn't allow access to at least three years of audited financial statements. While these are tangible concerns, JD.com has largely avoided this scrutiny.
The first thing working in JD's favor is that China ditched its stringent zero-COVID mitigation strategy in December 2022. Following roughly three years of unpredictable lockdowns that crippled supply chains, China's economy is slowly but steadily reopening and ramping up. E-commerce is still, arguably, in its early innings in the world's No. 2 economy by gross domestic product, which provides a long runway for sustained growth.
Perhaps more importantly, JD.com has modeled its business similar to Amazon. Whereas Alibaba generates a significant percentage of its sales from third-party providers selling their products on its online marketplace, JD is primarily a direct-to-consumer retailer that handles inventory and logistics. The latter approach gives JD the ability to pull levers and control its expenses better than Alibaba.
Furthermore, JD plans to spin off its Industrial and Property segments and list each of these units on the Hong Kong stock exchange. Spin-offs have a tendency to unlock shareholder value by making it easier to understand how a business grows and generates a profit.
Walt Disney
A fourth unparalleled growth stock you'll regret not buying for 2024 is media stock Walt Disney (DIS -0.04%).
The COVID-19 pandemic was a huge hindrance to Disney's theme park and film operations. More recently, the company's stock has come under pressure because of large operating losses tied to its streaming segment. Though these losses have been, to this point, an eyesore, there are a few clear reasons for opportunistic investors to pile into Walt Disney stock for the new year.
Topping the list of reasons to buy Disney shares is the company's irreplaceability. While there are other film studios, content creators, and theme parks, none have been even remotely as successful as Disney has when it comes to engaging people and creating emotional attachments. Disney rarely struggles for extended periods because it can lean on its unmatched storytelling and unique characters.
To add to the above, Walt Disney's ability to connect with people of all ages has given it exceptional pricing power. Since Disneyland opened in Southern California in 1955, the price of admission tickets has increased by more than 10,000%. That's in the neighborhood of 10 times the U.S. inflation rate over the past 68 years. Consumers are willingly paying more for the experience Disney offers -- and that's traditionally a winning recipe for investors.
Walt Disney is also making meaningful progress toward reaching profitability with its streaming segment. Mindful cost-cutting coupled with monthly subscription-price increases should lift Disney's streaming services segment to its first profit by fiscal 2024's Q4 (Disney's fiscal year ends in September 2024).
