The stock market has given investors a lot to keep up with over the last few years. From market highs during the early days of the pandemic to the market doldrums that followed, long-term investors have dealt with regular bouts of volatility. In the early days of 2024, the market has clocked numerous fresh highs, a sign that investors are feeling more optimistic than they were a year ago, even though worries about the global economy persist.
No matter what the market does in the coming months, consistently building stock positions that can deliver long-term portfolio growth can help you construct a basket of holdings that can weather many market storms. Here are two top growth stocks to consider adding to your portfolio right now.
1. Intuitive Surgical
Intuitive Surgical (ISRG 2.09%) dealt with a tough time earlier in the pandemic as changes in procedure volumes occurred in key markets, as many people put off surgeries. Throughout that time, the company continued to report steady revenue growth and consistent profitability.
In 2023, the company had a banner year on multiple fronts, a testament to the strength of its business and core revenue model. Intuitive Surgical manufactures and sells surgical robotics systems, and they cost a pretty penny. Its flagship da Vinci surgical system costs anywhere from $0.7 million to $2.5 million. However, the company makes even more money from recurring revenue sources.
Given the intricacy and cost of these surgical systems, once a hospital or other medical provider acquires one through a purchase, sales-type lease, or usage-based agreement, there's a significant incentive to maintain these systems. That's due to the intensive capital investment involved, and the time required to learn how to use them. And Intuitive Surgical provides just about every service and solution imaginable to meet the needs of its customers, from replacement tools to customer support solutions to training courses to software.
NASDAQ: ISRG
Key Data Points
The single-largest source of revenue for Intuitive Surgical -- and recurring revenue at that -- is from the instruments and accessories it sells to go with these systems. Any surgical instrument or accessory has a limited usage period, which means that the company earns anywhere from $700 to $3,600 of instruments and accessories revenue for every surgery performed using one of its da Vinci systems.
Recurring revenue -- which is derived from sales of instruments and accessories, as well as other sources such as operating leases -- comprised 83% of total revenue in the full-year 2023. Last year, Intuitive Surgical generated overall revenue of $7.1 billion, a 14% increase from 2022. It also reported net income of $1.8 billion, a 35% growth rate.
Demand for robotic surgical systems is only growing, thanks to the benefits for patients across a wide range of surgical types. Given Intuitive Surgical's market leadership in this space and continued financial strength, this looks like a company that can continue contributing steady growth rates to a long-term investor's portfolio.
2. Fiverr
Fiverr (FVRR 2.64%) became a favorite with many investors in the earlier days of the pandemic when the work-from-home surge occurred and the gig economy witnessed explosive growth. However, this space continues to see steady gains, even as macroeconomic difficulty continues.
A 2023 report released by the World Bank found that an astonishing 12% of the entire global labor market could be attributable to the gig economy. Everyone from small mom-and-pop businesses to large global brands is using freelancers.
In turn, there's a significant opportunity for workers across a range of skill sets to earn a primary or secondary income in a flexible online setting. These are value propositions that are hard to pass up for both buyers or sellers of freelance services, and Fiverr is one of the platforms at the forefront of this explosive space.
NYSE: FVRR
Key Data Points
The company is focusing heavily on growing its base of skilled freelancers and enterprise buyers of freelance services. It's also made steady progress in increasing its take rate of transactions, driven by rising adoption of its programs like Seller Plus and Promoted Gigs.
Seller Plus offers tiered subscription options for sellers that give them access to benefits like advanced analytics and faster payouts for completed gigs. Promoted Gigs is essentially a paid ad program that allows certain qualifying freelancers to heighten the visibility of their freelance services to buyers. Fiverr's take rate of 31.3% by the end of the third quarter of 2023 was a notable step up from its take rate of 27% three years ago and 26.6% four years ago.
The company brought in a revenue of $353 million over the trailing-12-month period. It's also proven to be a cash-flow machine, with operating cash flow in that period totaling $65 million and levered free cash flow coming in at $41 million for the trailing 12 months. If you want to capitalize on the future growth of the gig economy, Fiverr looks like a smart place to park some cash as part of a well-diversified portfolio.
