Investing Wisely in Today's Market
You don't need to have a ton of cash on hand to invest effectively. Steadily investing even modest amounts of money and distributing that capital across various stocks during different market conditions can help you compound your returns over time. Understanding the fundamentals of any stock you are looking to buy is crucial for making informed investment decisions.
Despite recent market volatility that has caused some investors to hesitate, individuals with smaller amounts, such as $200, can still gain exposure to attractive businesses without jeopardizing their financial well-being. Long-term investors should be on the lookout for quality businesses to invest in across various market environments, whether it's during a bull market, bear market, or anything in between.
Growth Stocks to Consider
Here are two growth stocks that are highly recommended for investors with around $200 to allocate right now.
1. Hims & Hers
Hims & Hers (NYSE: HIMS) has shown some volatility recently, but shares are trading up significantly, more than 116% over the trailing 12-month period. This virtual care company operates on a recurring subscription model that patients utilize for both prescription and non-prescription product deliveries.
Customers can access a multitude of healthcare resources as well as one-on-one telehealth consultations with medical providers in various specialties, such as dermatology, mental health, weight loss, and sexual health.
Recently, Hims & Hers launched a subscription service for GLP-1 (Glucagon-like peptide-1) injections at $199 per month, aiming to capitalize on the growing demand for these treatments for various health concerns, including chronic weight management. The subscription model provides patients with not only quality medical care but also essential medications delivered directly to their homes.
Financially, Hims & Hers is rapidly expanding. In the second quarter of 2024, the company recorded 1.9 million subscribers, a substantial 43% increase from the previous year. With profits of $13.3 million on $315.6 million in revenue during this period, Hims & Hers experienced remarkable growth—52% more than the same quarter last year. The free cash flow almost reached $48 million, reflecting the company’s strong financial foundation and potential for attractive long-term investor returns.
2. Shopify
Shopify (NYSE: SHOP) has faced challenges due to the changing dynamics of consumer and investor sentiment over the past few years. After experiencing rapid growth during the pandemic, Shopify's momentum slowed, prompting some investors to withdraw their stake.
Despite recent layoffs, fluctuating profitability, and the surprising divestment of its logistics business shortly after expanding its fulfillment network, Shopify is making commendable progress financially and continues to be a leading player in the global e-commerce sector.
In the second quarter of 2024, Shopify reported a 22% year-over-year increase in gross merchandise volume, bringing the total to $67 billion, with revenue advancing by 21% to $2 billion. This growth was driven in part by a 27% rise in subscription solutions revenue, supported by new merchant acquisitions and price increases for their subscription plans.
The company's free cash flow soared to $333 million, more than tripling the previous year’s figure for the same quarter. At the end of this period, Shopify held cash and investments totaling $5 billion. Over the last 12 months, Shopify has generated net income of $1.3 billion on revenues of $7.8 billion, reinforcing its position as a strong contender in the e-commerce market with substantial long-term growth potential.
Is Investing Right for You?
Before purchasing stock in Hims & Hers or Shopify, it's vital to evaluate your investment strategy and the risk you're willing to take. Consider if these growth stocks align with your investment goals, whether they are short-term or long-term.
The financial landscape is ever-evolving, and while Hims & Hers and Shopify are popular choices right now, it's essential for investors to conduct thorough research and consider various factors before committing to stock purchases. The potential for high returns often comes with increased risk, so understanding both the market conditions and the specific companies involved can aid in making the best investment decisions.
Frequently Asked Questions
What are the main growth stocks to consider investing in?
The primary growth stocks discussed are Hims & Hers and Shopify, both of which have demonstrated significant potential in their respective sectors.
Why is Hims & Hers considered a strong investment?
Hims & Hers has shown considerable growth in subscribers and revenue, highlighting its successful subscription-based service and increasing market demand for healthcare solutions.
What challenges has Shopify faced recently?
Shopify has dealt with market fluctuations, layoffs, and restructuring but continues to demonstrate strong financial performance and growth capabilities.
How can I invest in these stocks?
Investing in Hims & Hers and Shopify can be done through brokerage accounts that provide access to stock exchanges where these companies are listed.
Is it advisable to invest with a modest amount like $200?
Yes, investing modest amounts can allow investors to gain exposure to valuable stocks without risking significant financial resources. It’s essential to choose investments wisely.
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