Last year was a great one for a lot of stocks, with growth players leading the way. The three major indexes, after wandering into bear territory in 2022, climbed -- offering investors reason to believe a bull market may be right around the corner. And since bull markets tend to favor growth stocks, investors prioritized buying these sorts of players.
But that doesn't mean every promising growth stock took off and reached a high point. Plenty of opportunities remain. In fact, certain fantastic growth stocks ended last year as stock market losers. However, they could take off as soon as this year, thanks to their management of tough times and long-term growth potential. Let's check out three stocks that may be set to soar.
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1. Etsy
Etsy (ETSY 0.34%) slid more than 30% last year as investors continued to shy away from companies linked to discretionary purchases. This e-commerce player brings together sellers and buyers of handmade goods. Generally, the items on Etsy aren't "essentials" but items like jewelry or collectibles. So, sales could suffer when consumers watch their budgets.
But here's why Etsy shares have what it takes to advance. Despite this pressure, the company is profitable, is seeing a rebound in revenue and gross merchandise sales (GMS) today, and has reached a record level of active buyers. At the same time, the company has kept the growth it gained earlier in the pandemic, when people favored shopping online.
We can see evidence of Etsy's progress in the most recent quarterly earnings report. The company reported increases in consolidated revenue and net income as well as gains in Etsy Marketplace GMS. At the same time, active buyers reached a high of 92 million.
Etsy's financial strength, with more than $1 billion in cash and a capital-light business model that favors free-cash-flow growth, are other reasons to be confident in the company's future. And that's why Etsy might not stay at the dirt cheap valuation of 14 times forward earnings estimates for very long.
2. Chewy
Chewy (CHWY 2.99%) also sank more than 30% last year despite a lot of good news. The e-commerce shop for pet supplies reported its first annual profit in 2022 and showed strength from quarter to quarter last year, even amid a difficult economy.
For example, in the most recent quarter, Chewy reported gains in net sales and sales per active customer. Importantly, Chewy has also demonstrated that it keeps customers coming back. This is great because it offers us reason to be confident about future revenue. Customers clearly love Chewy's Autoship service, which automatically reorders and delivers your favorite products to you, as it continues to grow and makes up more than 75% of the company's total sales.
Chewy also has some key catalysts for growth ahead, which could lift the stock out of the doldrums. Last year, the company began its expansion into Canada, a market it says offers the potential of the U.S. when it comes to profit and market share. So, this could be a huge growth driver over time.
Chewy already got its feet wet in the area of pet healthcare, offering pet health insurance and filling prescriptions, but now the company is also launching veterinary practices. It's starting with one in South Florida this year.
Together, these elements should help Chewy stand out and grow over the long haul. And that's reason to be optimistic about share performance over time, too.
3. Teladoc Health
Teladoc Health (TDOC -2.40%) is a leader in the high-growth market of telemedicine. The company serves more than half of the Fortune 500 and continues to gain new members for its services, thanks to its focus on "whole-person" care. This means Teladoc offers members a wide variety of programs for all their healthcare needs -- from chronic illness to mental health.
The telemedicine giant faced challenges in recent times, though, as investors worried about its ability to turn revenue growth into profitability. So, about a year ago, Teladoc shifted its focus to balance its quest for revenue gains with its aim to become profitable. This plan has been bearing fruit, with Teladoc delivering results that have met or beat its estimates in recent quarters.
Now, the company is taking things one step further by launching an operational review of its entire business to ensure it's maximizing efficiency and investing only in areas that promote its goal of whole-person care. This could serve as a catalyst for earnings gains and share price performance in the coming months.
Meanwhile, Teladoc's purchase of chronic care specialist Livongo a few years ago was costly, but it could pay off over time. Chronic care is a key growth area, with nearly half of Americans suffering from a chronic condition, and has already driven Teladoc's revenue gains.
Teladoc shares have dropped over the past few years, but they've rebounded in recent months -- and this could be just the beginning of a recovery and growth story.
