It paid to bet on hypergrowth stocks in 2024. As the page turns to 2025, what will the market have in store for investors in these fast-moving companies? While I have no clue whether artificial intelligence (AI) focused stocks will do well again this year, I do know that expectations have risen for these companies and that they mostly trade at nosebleed valuations.
Perhaps it is time for growth investors to change their gaze and look for other growth stocks to buy in 2025. I think these two hypergrowth stocks -- one beaten down and one just beginning a share price turnaround -- can make investors rich if they buy in 2025 and hold on for the long term. Here's why Remitly Global (RELY +1.65%) and Celsius Holdings (CELH 1.57%) are buys for your portfolio in 2025.
1. Celsius: Primed for an energy drink comeback
The start of 2024 looked promising for Celsius and its upstart energy drink brand. Revenue growth was close to 100% in the fourth quarter of 2023, leading to a new all-time high for its share price. Then, revenue began a massive slowdown. Celsius stock is now in a 75% drawdown 12 months later. Last quarter, the third quarter of 2024, revenue fell 31% year over year.
Why did this happen? One major factor explains it above all else. A few years back, PepsiCo made a large investment in Celsius. In return, Celsius was able to hop on the Pepsi distribution network in North America, which helped the energy drink brand get on more shelves in retail locations across the United States. This helped supercharge Celsius' growth and market share gains in the United States.
However, in late 2023 Pepsi began to over-order Celsius inventory to try to catch up with customer demand, which caused a revenue growth acceleration for Celsius. Now, Celsius is in the midst of this inventory hangover.
Even though Celsius end-market demand is growing, the company is reporting negative revenue growth as Pepsi balances inventory levels. This is obviously frustrating for shareholders, but it has no bearing on the popularity of Celsius beverages among consumers. Healthier energy drinks that are sugar-free are taking market share in the sector, with Celsius leading the way. It now has around 12% market share of the energy drink category in the United States and is expanding to new international markets.
Over the next few quarters, Celsius will finally get to the other side of this Pepsi inventory debacle. Once that occurs, revenue growth will flip back to positive, and I think the stock will get back on an upward trajectory.
At its current stock price, the stock has a market cap of $6 billion. Even with this Pepsi revenue hole, trailing revenue was $1.37 billion over the past 12 months. I think it can get to around $2 billion in a few years with international expansion, pricing power, and market share gains in the energy drink category.
NASDAQ: CELH
Key Data Points
2. Remitly Global: Taking market share in remittance payments
The second stock has a more attractive chart than Celsius Holdings. Remitly Global is up 75% in the last six months, but the stock is still down 50% from all-time highs set in 2021.
Remitly Global is a modern remittance company. Remittances are a transfer of money across borders, historically dominated by cash pick-up options such as Western Union. Remitly has attacked this market with a sleek mobile application that gives remittance senders and receivers a plethora of options for sending money abroad. It focuses on key immigrant populations in the United States and have many people sending money to family back home.
Over the last decade, Remitly has consistently taken market share from Western Union with lower fees and a better customer experience. In the last three years, Remitly's revenue rose 134% cumulatively while Western Union's is down 16.2%. I would expect this to continue with Remitly gaining market share in the United States and increasingly new markets around the world.
Last quarter, Remitly's send volume grew 42% to $14.5 billion, active customers grew 35% to 7.3 million, and revenue grew 39% year over year to $336.5 million. Even so, the company estimates it is only at 3% market share of remittances. There is plenty of room for Remitly to grow all these metrics in the years to come. With positive operating margins, Remitly looks like a great buy and hold for investors in 2025. The growth party for this stock is just getting started.
Investors should note that these two stocks look promising, but are not guaranteed to work in 2025. There could be a bear market crash or a change in their respective industries. When looking at high-growth stocks you will inherently be investing in riskier companies. Keep this in mind when sizing up these positions for your portfolio.
