Durable growth is a wonderful thing. It is the baseline for owning 10-bagger stocks. This is why Peter Lynch, the legendary investor who crushed the market when running his mutual fund, Fidelity Magellan, has it as one of his top criteria when evaluating a stock. He wants companies that can grow sales and earnings at a double-digit rate for many years. Valuation can only take you so far.
Monster growers are rare. They are rarer still if they can grow durably for more than a decade. Despite short-term volatility and underperformance since going public, Rocket Lab USA(NASDAQ: RKLB) and Remitly Global(NASDAQ: RELY) have put up monster growth in the last few years. Better yet, you can buy both these stocks with under $100 right now.
Here's why growth investors should consider both Remitly and Rocket Lab for their portfolios.
Rocket Lab: Going to the Moon
Rocket Lab is an ambitious space flight company. Along with SpaceX, it is the only private company regularly sending commercial payloads into orbit.
Like SpaceX, it wants to become an end-to-end space company. This means providing customers with a way to get into space (the rockets), equipment and materials for spacecraft, and data and software services to help improve customer value.
It is a long way from fulfilling this entire dream, but it has made some fantastic progress so far. The small Electron rocket it uses today recently hit 50 launches, while its spacecraft business is growing rapidly.
This is far and away the best execution across space economy start-ups (most competitors have gone bankrupt). Recently, its backlog for customers hit over $1 billion.
Revenue has grown by close to 500% cumulatively since July of 2021, less than five years ago. Last quarter, revenue grew 71% year on year. There is still plenty of room for Electron rocket launches to grow, and the company hasn't even begun its data/software services division.
It is also working on its larger Neutron rocket that will generate much more in revenue per launch than the Electron. This gives Rocket Lab a path to multiply its revenue from just over $300 million today to the billions this decade.
At a market cap of $3.5 billion and share price of just $7 as of this writing, this could make it a cheap stock for those willing to hold shares for a decade. Ride the Rocket Lab growth wave -- this stock has a lot of upside.
RKLB revenue (TTM) data by YCharts; TTM = trailing 12 months.
Remitly Global: Modern international money transfers
Remitly deals with the financial and software world. The company is an upstart in the remittance market, which consists of consumer cross-border money transfers. With legacy competitors such as Western Union not innovating, Remitly saw a lot of ways to improve the customer experience in remittances and lower fees.
Its mobile app now has just under 7 million active customers sending money from places like the United States to India. With $13.2 billion in volume sent last quarter, management estimates that Remitly has a 2.5% share of the remittances market.
Given its better value proposition, it is not unreasonable to expect Remitly to keep gaining market share over the next five to 10 years.
Revenue growth has been fantastic, increasing alongside active users and total send volume. Last quarter, revenue grew 31% year over year to $306 million and recently hit over $1 billion in the trailing 12 months. The company's current market capitalization is about $2.8 billion and the share price just $14. You can buy a share of both Remitly and Rocket Lab for as little as $21 combined.
As Remitly keeps gaining market share, revenue will keep growing at a double-digit rate. The company is now also profitable and expects to generate around $100 million in adjusted earnings before interest, taxes, depreciation, and amortization this year. Add it all together, and I think Remitly -- in addition to Rocket Lab -- is a fantastic growth stock to add to your portfolio today.
Should you invest $1,000 in Rocket Lab USA right now?
Before you buy stock in Rocket Lab USA, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rocket Lab USA wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $710,860!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 16, 2024
Brett Schafer has no position in any of the stocks mentioned. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.
