When the stock market goes through a volatile patch, a season that investors who have stayed with the market have contended with regularly over the last few years, you can easily get caught up in the moment and make rash decisions about your portfolio.
No investor can say with exact certainty what the market will or won't do next. And the market's cyclicality is an inevitable reality to face if you're investing in stocks for years at a time. The good news is the stock market not only has a track record of rising with the passage of time but has also recovered from every single historical bear market.
If you're investing for decades rather than the short term, you don't have to try to predict the best and worst days. Instead, you can steadily build your portfolio through the ups and downs and, with time, compound your returns from quality businesses.
If you have $1,000 to invest in top growth stocks right now, here are two companies to consider for your portfolio as 2024 dawns.
1. Fiverr
Fiverr (FVRR 3.74%) isn't just a platform where small business owners can find freelancers to perform one-off gig tasks. Management is building a business that increasingly caters to highly skilled freelancers and larger enterprises, all while boosting its take rate of transactions. This strategy is driving rapid improvements to Fiverr's top and bottom lines.
For example, the most recent quarter saw Fiverr bring in revenue of $93 million, a 12% increase from one year ago. That quarter also saw the company rake in operating cash flow of $23 million, about four times higher than the same quarter in the prior year. The company's take rate totaled 31.3% at the end of the third quarter. That's a sizable increase from its take rate in the same quarter three years ago, which was 27%.
Fiverr has introduced a range of new services lately to expand its cohort of enterprise clients, which translates to larger projects that drive revenue upward. These include its artificial intelligence (AI) matching service, Fiverr Neo, which uses generative AI technology to help businesses find freelancers for specific tasks.
The company is also seeing increased adoption of its premium freelance service, Fiverr Pro, which connects businesses with vetted freelancers, a trend that pushed average spend per buyer to jump $6 in the most recent quarter compared to the prior quarter. Then, there's the company's recent rollout of Fiverr Certified. This program allows tech clients to build a network of freelancers certified by that company and provide tailored customer support services.
Fiverr is still trading down slightly over the trailing-12-month period despite its business continuing to grow steadily, revenue is on the upswing, cash is flowing in, and profitability is improving. One could attribute the stock's performance to a few factors, including concerns about overall business spending in a still-struggling global economy and the general apathy toward some growth-oriented stocks. However, that could be a golden opportunity for long-term investors with a moderate risk appetite.
2. Intuitive Surgical
Intuitive Surgical (ISRG 0.59%) isn't one of those stocks that will bring in lightning returns overnight or be the most exciting company in your portfolio. The enticing aspect of this company is its steady history of raking in successive returns for investors on the back of a business that faces consistent, if not growing, demand.
The stock has delivered a total return of 132% for investors over the trailing-five-year period alone and is up about 30% from the start of 2023 to the time of this writing.
The company has been in the business of developing and selling robotic surgical systems for more than two decades and counting. Use of these systems ranges from minimally invasive surgeries to lung biopsies. Its flagship da Vinci system is approved for a wide range of procedures, including thoracic, cardiac, kidney, and gynecological surgeries.
Intuitive Surgical had 8,285 da Vinci systems installed globally as of the end of the third quarter of 2023. That's 27% more than its installed base of systems just two years ago. While these systems can generate millions of dollars in revenue for the business from a single sale or sales-type lease, Intuitive Surgical makes even more money selling software and accessories to go with these products than from the systems themselves.
The company raked in revenue of $1.7 billion in the third quarter of 2023, up 12% from the third quarter of 2022. Of that total, $379 million was derived from system sales, $1.1 billion came from sales of accompanying instruments and accessories, and $293 million was derived from accompanying services (e.g., software, customer support).
The company is steadily growing and remains profitable. However, growth has slowed in recent financial reports compared to past years -- a combination of poor growth comparisons to the height of the pandemic, COVID-19 resurgences in key markets, and financial pressure that clients (like hospitals) continue to face in this environment.
Between 2019 and 2022, Intuitive Surgical saw procedures performed expand at a healthy compound annual growth rate of 15%. The adoption of surgical suites to perform both minimally invasive and traditional open surgery is on the rise, and Intuitive Surgical continues to dominate a formidable slice of this market. Investors should take a second look at this stock heading into the new year.
