If you're not looking to invest a lot of money, there are plenty of promising growth stocks to consider that trade at less $100 per share. By growth stocks, we're not referring to the share price but the growth of the business itself, since that is what creates lasting value for shareholders.
The Swiss athletic wear brand On Holding (ONON 2.66%) and live entertainment company Live Nation Entertainment (LYV 1.51%) are demonstrating the fundamental business growth to become long-term winners. On Holding shares trade at less than $30 right now, while Live Nation is more expensive at $85, but both are still under the $100 mark.
Here's why both of these companies have a bright future ahead.
1. On Holding
Nike is the top brand in footwear with about $33 billion in annual shoe sales, but the strong growth from brands like Deckers Outdoor's Hoka and On Holding shows there is a lot of demand for alternatives to the big sneaker companies.
On's revenue has more than doubled since the end of 2021. For over a decade, this Swiss brand has been disrupting the footwear market, relying on customer feedback to inform product innovation. The company's strong growth points to a potential multi-bagger investment for shareholders.
We can see the tremendous growth opportunity ahead by comparing On's brand awareness in its home market with the rest of the world. Not surprisingly, the company has very high brand awareness in Switzerland, with Austria and Germany not far behind. But there's still a huge opportunity in other countries like the U.S., U.K., and France where it has less than 10% brand awareness.
What should get investors' attention is that On is already seeing explosive growth in North America, where revenue has tripled since 2020. Revenue from North America already generates the majority of the company's sales. This shows the brand is not having a problem competing against Nike on its home turf.
The athletic apparel industry is an attractive market to invest in since it taps into two major megatrends -- athleisure and the shift to healthier lifestyles, especially with younger generations. Gen Z has been found to be particularly attentive to healthy choices, according to Ernst & Young.
The proof is in the numbers as On Holding's growth is impressive considering the recent macroeconomic headwinds that have taken a toll on consumer spending. When consumers are in a better position to spend money, the company's growth could explode. This is why buying shares of On Holding while it's still a relatively small brand could be a rewarding move.
2. Live Nation Entertainment
Live Nation Entertainment doesn't get a lot of attention, but it's an outstanding business that could grow your savings. It has delivered market-beating returns for many years, which stems from its lucrative position as the leading operator of live music concerts. It's already sold 140 million tickets across all shows this year, and the company sees an important trend driving more growth over the long term.
Revenue from concerts came to $6.9 billion in the third quarter, with a small amount of revenue coming from the Ticketmaster business, in addition to sponsorships and advertising. It's having a record year with revenue across the business up 36% year to date compared to this time in 2022.
The stock is up 352% over the last 10 years, almost doubling the return of the broader market, as measured by the S&P 500 index. The good news is that the stock is still undervalued. Using its trailing-12-month free cash flow -- an important measure of a company's profitability -- the stock trades at a modest 16.8 times free cash flow, which seems too low considering Live Nation's record of profitable growth and opportunities in a growing industry.
The live music industry has grown 8% annually for more than 20 years, but company executives believe it will grow somewhat faster than that going forward. One reason is the increasing demand for experiences that build memories, as opposed to plunking down cash on more stuff. Live Nation management believes this will continue to be a tailwind for ticket sales.
On that note, 2024 is expected to see even higher ticket sales. In the company's third-quarter update, it disclosed that roughly half of expected show count for next year is booked for large venues, representing a double-digit increase year over year.
Investing in stocks that are positioned to benefit from societal trends, whether it's active lifestyles or live music, is one way you can find long-term winners in the stock market. Live Nation is another growing business that can deliver market-beating returns.
