Some investors gravitate toward growth stocks because the results can be impressive and the returns can be rewarding. However, not all growth stocks have what it takes to be long-term winners that can lead to decades of success for investors. Knowing what to look for in a growth stock is essential to achieving positive returns.
Here are three growth stocks you can buy right now that can potentially be long-term winners. Best of all, you can buy all three of these stocks for less than $500.
Toast
Technological advancement has impacted every aspect of life, and the restaurant experience is no exception. If you've seen more QR code menus and innovative ways to pay, you've likely participated in this shift as well. Toast (TOST 3.42%) is positioning itself to be a major player in this space by offering multiple technology solutions to all aspects of running a restaurant.
Considering it operates in a very competitive market, Toast has been putting up impressive results. Revenue growth over the last five quarters has hovered between 37% and 55% and the company now has its products in 99,000 locations. This metric grew by 34% in the third quarter of 2023 compared to the year-ago quarter.
Even with this impressive growth, Toast has room to grow. The company estimates its products are only in approximately 10% of the total possible locations in the United States.
Celsius Holdings
It may come as a surprise that one of the best-performing stocks over the past few decades has been an energy drink company. Monster Beverage has posted a total return of more than 66,000% over the last 20 years. Now, Celsius Holdings (CELH 2.12%) is trying to replicate those results. Recently it has looked like it's on its way, with a total return of 279% over the past three years.
Celsius' success is due to several factors. It has found a product-market fit with revenue growth that has consistently been above 45% over the past three years and has hit triple-digits on several occasions as well.
In 2022, Celsius signed an agreement with PepsiCo to utilize its global distribution network. This has already made a large impact as PepsiCo now accounts for nearly two-thirds of the total revenue for Celsius. For perspective, PepsiCo only accounted for 31% of revenue in the third quarter of last year.
Roku
As more consumers cut the cord and switch to streaming for their television and movie entertainment, Roku (ROKU -10.29%) stands front and center as a major player in this transition.
While the company is mostly known for its streaming hardware devices, the majority of its revenue comes from advertising on its platform. After a wild ride of results and expectations during the pandemic, the stock has struggled as the company has seen its growth normalize.
Throughout the ups and downs of the last few years, two of Roku's three main operational metrics have remained strong. In Q3, active accounts grew by 16% and streaming hours increased by 22%; however, average revenue per user decreased by 7%.
These metrics are important because they demonstrate the strength of Roku's business. More accounts lead to more streaming hours, which means more ads that can be served to viewers, which translates to more revenue for Roku. Roku is going to need to see its average revenue per user reaccelerate but this is partially tied to the overall advertising market, which has seen some recent challenges.
One of the bright spots from Roku's Q3 2023 earnings report was its guidance for the fourth quarter, which included an expectation for the net loss to be $85 million. That may not sound good, but it would be a vast improvement over the Q4 2022 net loss of $237 million. The company also expects positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024 with continued improvement beyond that.
