3 growth stocks to buy before a big rally


It’s certainly no secret that the last few weeks have been tough on the market. the S&P500 is now down 6% from its peak in early January, but remains vulnerable to further selling after the mostly unhindered gains seen in 2020 and 2021.

As the cliché goes, however, investors have been throwing babies out with the bathwater. That is to say, profit taking has been rather indiscriminate, dragging down some stocks that did not deserve such a beating.

They will bounce back, of course – quality is always (eventually) reflected in the price of a stock. The thing is, it makes sense to get into the best of these names when their stock prices haven’t rebounded yet, before other investors notice and then correct their mistakes. Here’s a look at three of the best growth stocks poised for a rebound after a sell-off.

Image source: Getty Images.

Etsy

Amazon may be the dominant name in the e-commerce arena, but its size lends itself to mass marketing. Unique, handmade, and vintage product listings just don’t work well there. Because consumers still want to buy these types of items online, Etsy (NASDAQ: ETSY) entered the important niche and took it over. The Etsy website now has 5.2 million active sellers serving 89.4 million active buyers; these numbers continue to rise even after their pandemic-induced surges.

There’s a reason the company achieved this unlikely growth – two reasons, in fact.

The first of these reasons is that the company is still refining a relatively young product. In September, for example, the company unveiled an interactive platform called The Etsy House that allows consumers to virtually browse a home showcasing some of the site’s best home products. In May last year, Etsy announced a collaboration with pop culture personality Nicole Richie, which spotlights some of the star’s favorite designers selling their wares on the site. These are just a few examples of how the company continues to expand its network by creating a more engaging platform for its users.

The second reason is that, as important as e-commerce is, most purchases still happen offline. The US Census Bureau reports that during the third quarter of last year, only 13% of retail consumption in the country took place online. The remaining 87% is still up for grabs, and consumers are still getting used to the idea of ​​buying more than just the basics using the internet.

Between these two factors, it’s no surprise that the Wall Street analyst community thinks Etsy’s revenue will grow more than 20% this year, leading to a similar increase in revenue. What is surprising is the fact that the stock’s value is down more than 50% from the November peak.

Reserve credits

Just when it looked like the pandemic was ending, pow! The omicron variant of COVID-19 has spread across the planet, causing more infections than we saw in 2020 and early 2021, when many believed the pandemic was at its worst. New lockdowns and travel restrictions – even self-imposed ones – dashed hopes that we would go on vacation again, and subsequently rattled most of the budding rebounds in travel and tourism stocks. online travel agent Reserve credits (NASDAQ: BKNG) was no exception, losing more than 20% of its value between the November highs and lows.

There’s a reason Booking Holdings shares have recouped the majority of their recent selloff, though. It turns out that the world has mostly decided to move on with life despite the fact that the coronavirus is clearly still with us.

Industry analyst firm Destination Analysts reports that as of last week, 63.1% of people in the United States believe that “life should return to normal despite the pandemic.” That’s up from 60.3% two weeks earlier. To that end, Destination Analysts says 92.1% of Americans will take at least one trip this year. Competing travel booking site Expedia backs up the sentiment, adding that the average US resident has budgeted $2,300 for their next trip. The United Nations World Tourism Organization further estimates that the international travel sector is on track to reach 2019 levels as early as 2024, with most of this recovery still to come.

Booking Holdings’ extensive portfolio of online travel services is of course well positioned to be the first stop as consumers begin to put those plans into action.

Pool Corp.

Finally, add Pool Corp. (NASDAQ: POOL) to your list of growth stocks to buy ASAP, because they’re ripe for a rally. In this case, the rally will be augmented by the fact that stocks are down 17% year-to-date.

Yes, as the name suggests, Pool Corp. offers pool supplies. It would be an overstatement to say that the company is in a recession-proof, non-cyclical industry. Overall, however, once someone owns a pool, they do whatever it takes to maintain it. If nothing else, the pool supply market is resilient, and perhaps even more so than it has ever been in the wake of the pandemic.

Yes, Booking Holdings can be a buy now that the world is getting back to normal and people are traveling again. At the same time, however, COVID-19 has caused consumers to appreciate making their homes ultra-comfortable “nests” worthy of investment. In that vein, Pool’s revenue grew 23% in 2020 despite the challenges other industries faced during this time, and the company will likely report a revenue improvement of more than 32%. % over the full year once the final 2021 results are published. Growth is expected to decelerate to around 10% this year given the tough comparison.

However, there is no reason to think that we won’t see more of this momentum as industry competitors consolidate and market share is won by the bigger players. IMARC Group estimates that the global swimming pool construction market will grow at an average annual rate of 4% through 2026, with the United States (where Pool Corp. does most of its business) expected to lead this growth.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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