Amidst the bearish storm that raged through last year, there’s a lot of money to be made with growth stocks to buy.
Growth stocks took a hammering last year, navigating choppy waters of record-high inflation and interest rates. Down significantly from their historical highs, it’s perhaps the right time to revisit the best growth stocks to buy.
The stock market this year has been building a decent head of steam, with hopes of a more dovish policy from the Federal Reserve from now on.
Following multiple rate hikes last year and encouraging inflation data, it seems the worst is over for the equity market. That said, investing in relatively risky growth stocks could promise exceptional returns.
Let’s look at three growth stocks poised to deliver hefty returns over the long run.
| DDOG | Datadog | $70.34 |
| FVRR | Fiverr International | $35.85 |
| SQM | Sociedad Quimica y Minera de Chile | $80.27 |
Datadog (DDOG)
Datadog (NASDAQ:DDOG) is essentially a trailblazer in the cloud monitoring and analytics space, offering a robust platform that allows companies to delve deep into their IT infrastructure, applications, and logs.
Its SaaS solutions allow for the effective gathering, correlation, and scrutinizing of data from various sources.
Datadog has experienced meteoric revenue growth over the past few years, with sales growing from $198 million in 2018 to a spectacular $1.7 billion last year.
In its most recent quarter, customers with annual sales over $1 million were up 47% from the prior-year period. Also, customers with $100,000 were up 38% in the same period.
Analysts expect the firm to surpass the $2 billion mark this year, making it a standout player. Its stock is trading at more than a 60% discount to its historical price-to-sales ratio of 12.6 times.
Fiverr International (FVRR)
Fiverr International (NYSE:FVRR) is a leading online freelancer marketplace that has soared in tandem with the burgeoning gig economy.
Its top-line growth has surged over 50% over the past five years and still has a massive growth runway ahead. Estimates suggest that the global freelancer marketplace could reach a staggering $18.3 billion by 2031.
Fiverr is just scratching the surface with its $337 million revenue base.
Fiverr’s recent results have taken a hit following cost-cutting measures in professional services. However, the resurgence of the gig economy over the long term is in line with the pandemic-driven step-changes.
Despite a relatively tough fourth quarter, its spending-per-buyer rose to $262 from $242 last year. With a low churn rate and relentless marketing efforts, expect Fiverr to continue expanding its market share and amplifying its presence in the gig economy.
Sociedad Quimica y Minera de Chile (SQM)
Sociedad Quimica y Minera de Chile (NYSE:SQM) is a leading Chilean specialty chemicals player that has effectively positioned itself as a lithium giant. It operated a hyper-growth business, having grown its sales from $1.9 billion in 2019 to a dumbfounding $10.7 billion last year.
Lithium sales have grown by double and triple-digit margins in recent quarters, making it a force to be reckoned with in its sector. SQM boasts an A-graded profitability profile, with EBITDA growth at roughly 70% over the past five years.
SQM benefited from a robust pricing environment last year, which led to a jaw-dropping 585% increase in earnings per share. Also, it posted an eye-watering 730% increase in free cash flows. With Chile’s abundant lithium reserves and a business-friendly environment, SQM remains in a pole position to continue its remarkable performance over the long run.
Also, SQM stock trades at just two times forward sales estimates, more than 50% lower than its 5-year average. Analysts at Tipranks forecast a 44% upside in the stock’s value from current levels.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
