In case you weren't paying attention earlier, the stock market can be wildly unpredictable from one year to the next. After the dismal year of 2022, few were predicting big gains, but the Nasdaq Composite index ended up surging an unimaginable 43% in 2023.
Trying to time major market moves will always be guesswork, but it's a game that individual investors don't need to play. Buying shares of great businesses at fair prices and simply holding them over long periods is a nearly surefire way to build wealth over time.
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Of course, most high-profile growth stocks are backed by businesses that can't grow fast enough to justify their prices. These two stand out because expectations are relatively low when you consider the opportunities ahead of them.
If you have just $100 to invest and you won't need this cash to pay bills or cover unforeseen emergencies, you could buy a share of both of these stocks. Here's why they look like no-brainer buys to scoop up in March and hold for the long run.
1. PubMatic
Shares of PubMatic (PUBM 1.75%) recently shot higher after management reported fourth-quarter earnings that outperformed Wall Street's expectations. The company's advertising technology helps content creators get top dollar for their available ad inventory.
Ad buyers who come to PubMatic looking for ad inventory include Alphabet's Google subsidiary and The Trade Desk. The ad inventory it manages for publishers takes many forms, including connected television ads that streaming services increasingly rely on for revenue.
The demise of third-party cookies makes ad buyers more dependent on multiple sell-side technology partnerships. With a well-established focus on transparency, advertisers are coming to PubMatic to optimize their supply paths. In the fourth quarter, 45% of activity on PubMatic's platform was through a supply path optimization agreement.
Generally gloomy economic predictions made 2023 a lousy year for the ad industry as a whole. To make matters worse, PubMatic lost a big client when Yahoo closed its supply-side ad platform last year. Despite the challenges, PubMatic grew fourth-quarter revenue by 14% year over year, or 19% once adjusted for the loss of Yahoo-related inventory.
Despite the fourth quarter being a generally weak one for the ad industry, PubMatic maintained profitability. Fourth-quarter net income came in at $18.7 million, which worked out to a very healthy 22% of revenue.
PubMatic's recent market cap of about $1.1 billion makes it a relatively small player in a market for digital advertising that's expected to reach $740 billion in 2024. The stock has been trading for 21.4 times the amount of free cash flow its operation generated last year. That's a nice price to pay for a company that could consolidate a large chunk of its fractured market.
2. TransMedics Group
TransMedics Group (TMDX 3.17%) is another growth stock you could regret not buying in March and holding over the long run. The company is single-handedly changing the solid organ transplantation process in the U.S. with two items any would-be competitors are unlikely to have in the foreseeable future.
TransMedics Group's first big advantage is an organ care system (OCS) that keeps donated hearts, lungs, and livers fresh by pumping them full of warm blood. Warm perfusion of donated organs isn't anything new, but TransMedics Group's OCS is the only one approved by the FDA to maintain multiple organs.
The second big advantage TransMedics has over potential competitors in the transplant organ space is a fleet of jets it acquired last August. With an OCS that significantly extends the amount of time an organ remains viable outside a body, the number of transplant centers an organ can reach expands exponentially. As a result, the company was constrained by a lack of charter flight operators.
Now that TransMedics Group doesn't have to rely on third parties for transportation, it can offer a more reliable service, at prices that any potential competitors will have a hard time matching.
TransMedics still doesn't have significant earnings to report, but its losses are rapidly shrinking. At recent prices, you can buy the stock for 11.4 times trailing-12-month sales. That's a fair price to pay for a company growing so quickly.
Last February, management predicted total sales would grow by 48% to 55% in 2023. The company pleasantly surprised us with total revenue that rocketed 159% higher to reach $241.6 million.
This year, TransMedics is predicting another total sales gain of 49% to 53%, which seems more than reasonable, given its recent performance and lack of competition. Adding some shares of this stock to a portfolio in March to hold for the long run looks like a smart move for most growth-minded investors.
