Have you thought about your investing goals for this year? It's a good time to get into the market. The average bull market lasts nearly five years and posts an average cumulative total return of 178%, so if the current one turns out to be close to average, investors are about halfway through it right now.
Investors building up their portfolios should be on the lookout for great growth stocks that have the potential to supercharge their returns. If you're looking for some candidates, consider On Holding (ONON 3.40%) and Toast (TOST 3.39%).
1. On Holding: The new name in premium activewear
If you have heard of or seen On's footwear, you probably know that this brand is capturing a lot of attention in the elite athleticwear market. Its sneakers have a distinctive look, with a sole constructed with holes and the recognizable On logo on the side. It's an expensive, premium brand that targets an affluent (and economically resilient) clientele. This cohort's wallets haven't been impacted as much as others' have, and they haven't stopped spending on their new favorite brand.
On has expanded to a full line of activewear, but footwear remains its core product. The company recently rolled out a new innovation in its LightSpray shoes, which are literally manufactured by being sprayed onto a mold, and are meant to offer a new standard in comfort.
NYSE: ONON
Key Data Points
On is building its global brand presence and has several celebrity endorsers like Iga Swiatek and Helen Obiri, as well as many local athlete ambassadors. It's still a relatively small brand in its space, with $2.5 billion in trailing 12-month revenue, but it's growing quickly.
In 2024's third quarter, sales increased 33% year over year. Direct-to-consumer sales increased 50% in the quarter, growing to 38.8% of the total.
The company is also becoming highly profitable. It has an industry-leading gross margin, which expanded from 59.9% in Q3 2023 to 60.6%, its highest since becoming a public company. It charges high prices for its premium products, and its loyal fans pay full price.
On stock is up 108% over the past year, but don't let that deter you from buying today. There's so much more to expect from the company.
2. Toast: A niche restaurant management platform
The best restaurant stock to buy right now may not be a restaurant chain at all. It would be more accurate to categorize Toast as a fintech stock, but the company serves the restaurant industry. It offers a comprehensive and connected cloud-based platform for managing the operations of restaurants of every stripe, and clients are joining by the tens of thousands.
The benefits are clear, especially compared to older modes of operation. Toast's platform streamlines complex restaurant management with fully integrated, end-to-end services. Supplier relationships, menus, and accounting are all linked, so that every move on any end goes into the system, and things like kitchen operations are immediately connected with ordering and payments. The platform is also powered by a machine learning model that provides data analysis and helps management make strategic decisions.
NYSE: TOST
Key Data Points
But Toast thinks it's better than its real competition, too. It boasts 24/7 customer service for all pricing plans, and it claims that since it's built for restaurants and not other kinds of small businesses, it has a better and broader list of features for its target clientele. For example, it touts its wide assortment of digital ordering capabilities.
The company has demonstrated robust growth as more restaurants come to recognize how this can save them time and money. Toast added 7,000 new locations in 2024's third quarter, a 28% increase year over year, bringing its total to 127,000. Its annualized recurring run rate was up 28%, and operating income switched from a $59 million loss in the prior-year period to positive $35 million in the most recent one. Free cash flow increased from $37 million to $97 million.
Management estimates that it now has about 13% of the U.S. market share in its category, and it's growing its addressable market through global expansion and new feature releases.
Toast stock is up 125% over the past year, but there's more to come for investors. Toast has a wide opportunity and leading position, and it's becoming profitable at scale. 2025 could be another solid year.
