Many growth stocks were crushed over the past year as rising interest rates drove investors toward more conservative investments. It's tempting to follow that exodus and load up on fixed-income plays right now -- but that could be the wrong move for investors who can afford to ride out the near-term volatility for a few more years.
Instead of shunning all growth stocks, investors should simply be more selective with the ones they choose. These three high-growth plays -- Celsius(NASDAQ: CELH), Symbiotic(NASDAQ: SYM), Grab(NASDAQ: GRAB), and Monday.com (NASDAQ: MNDY) -- could still generate massive gains for long-term investors. Let's find out a bit more about these four buy-and-hold growth stocks.
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1. Celsius
Celsius sells sugar-free energy drinks that are made with natural ingredients like green tea and ginger. It provides an energy boost through a mix of caffeine and amino acids in its beverages, and it's been growing rapidly in the shadow of larger energy drink makers like Red Bull and Monster Beverage.
Between 2017 and 2022, Celsius's revenue grew at a compound annual growth rate (CAGR) of 78%. Analysts expect its revenue to rise another 92% to $1.25 billion in 2023, thanks to its new distribution deal with PepsiCo. They also expect Celsius to post a net profit of $145 million in 2023, compared to its net loss of $199 million in 2022 (mainly due to a one-time termination fee it paid its U.S. distribution partner as it switched over to PepsiCo).
Celsius' stock isn't cheap at 12 times this year's sales, but its enterprise value of $15 billion still looks tiny compared to Monster's EV of $56 billion. Therefore, Celsius could still have a lot of upside potential if it disrupts the energy drink market.
2. Symbiotic
Symbiotic, which went public by merging with a special purpose acquisition company (SPAC) last year, produces AI-powered automated robots for warehouses. It claims a $50 million investment in just one of its modules will generate $250 million in lifetime savings over a period of 25 years, and it already servers big retailers like Target, Walmart, and Albertsons.
Symbiotic's revenue already rose 136% in fiscal 2022 (which ended in September 2022), and analysts expect 83% growth in fiscal 2023. It also expects to turn profitable on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis in the fourth quarter of fiscal 2023 and stay profitable on that basis in fiscal 2024.
That's a promising outlook, yet Symbiotic trades at just 2 times this year's sales. That low valuation makes it an attractive bet on the AI-driven evolution of big fulfillment centers.
3. Grab
Grab owns the largest ride-hailing platform in Southeast Asia. It also runs a thriving food delivery business and an expanding digital payments platform called GrabPay. Grab's growth kicked into high gear after its acquisition of Uber's Southeast Asian business in 2018, and it made its public debut in 2021.
Grab's revenue and gross merchandise volume (GMV) grew 44% and 29%, respectively, in 2021. In 2022, its revenue and GMV grew another 112% and 24%, respectively, driven by robust growth of its mobility, delivery, and fintech segments.
Grab expects its revenue to grow another 54% to 61% in 2023. It's still unprofitable -- mainly due to its dependence on loss-leading incentives to expand its market share -- but it's reining in those promotions and aims to narrow its adjusted EBITDA loss from $793 million in 2022 to $30 to $40 million in 2023. Grab's stock is still reasonably valued at 4 times this year's sales, so it could still have a lot of upside potential if it maintains its high growth rates.
4. Monday.com
Monday.com, which went public two years ago, enables companies to develop their own custom work management and automation apps on its cloud-based platform. Those apps can either be built from scratch or created through pre-built recipes.
Monday's revenue rose 91% in 2021 and 68% in 2022, and it expects 37% to 38% growth in 2023. That slowdown spooked some growth-oriented investors over the past year, but the ongoing digital transformations of large businesses, the expansion of its AI platform for developing AI apps, and a warmer macro environment could all stabilize its long-term growth.
Monday.com's free cash flow (FCF) also turned positive over the past year, and analysts expect it to generate its first full-year profit on a non-GAAP (adjusted) basis this year. Its stock might not initially seem like a bargain at 10 times this year's sales, but its long-term growth potential justifies that higher valuation.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celsius, Grab, Monday.com, Monster Beverage, Target, Uber Technologies, and Walmart. The Motley Fool has a disclosure policy.
