The stock market continues to deliver growth opportunities for investors across a range of sectors. If you have cash to invest in great companies, you can consistently put it to work through market highs and lows as you work toward your long-term financial goals.
Even if you have a modest amount to invest, strategies like dollar-cost averaging can help you grow your positions in your favorite stocks with time. You should only ever invest cash that you won't need in the near future, not what you could otherwise use for financial obligations such as bills or paying your rent.
On that note, if you're looking for top growth stocks to buy right now, here are two names to consider.
1. Hims & Hers Health
Hims & Hers Health(NYSE: HIMS) offers subscription-based services that allow users to access prescription as well as over-the-counter products online for easy delivery to their home. Users can also conduct telehealth visits with medical providers across a range of specialities, including dermatology, sexual health, weight loss, and mental health concerns.
The company has been doing incredibly well, and revenue as well as profits have skyrocketed in recent quarters. Shares of Hims & Hers Health have popped by more than 180% over the trailing 12 months alone.
While that nosebleed valuation might seem high for a telehealth stock, the company is demonstrating the strength of its valuation proposition to customers and deriving significant profitability from its core business model. Hims & Hers make most of its money from recurring subscriptions, and it controls much of the distribution of products ordered through its platform. It operates several of its own facilities that feature dedicated, licensed mail-order pharmacies, and also works with some third-party partners that facilitate fulfillment and distribution of specific prescription as well as nonprescription products.
In the second quarter of 2024, Hims & Hers Health reported revenue of $315.6 million, up 52% from the prior year. Operating cash flow in the three-month period totaled $53.6 million, a 219% year-over-year increase, and free cash flow rose 377% to $47.6 million. The company is working toward consistent profitability, and generated net income of $13.3 million in the three-month period, compared to a net loss of $7.2 million in the same time frame last year.
On the basis of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), Hims & Hers Health brought in $39.3 million in the second quarter. That was a 270% increase from one year ago.
The company's subscriber base is also growing at a considerable clip. Hims & Hers ended the quarter with 1.9 million subscribers. That was a 43% increase from its subscriber base just one year ago.
Management remains firm in their conviction that each of the company's core health specialty segments are on track to deliver $100 million in revenue or more in 2025. Given its recent and ongoing financial performance, that doesn't seem like an unrealistic goal by any means. Hims & Hers generated about $594 million in revenue in the first half of 2024 alone, up 49% from the same time frame last year. Investors who want to get in on the action and follow this company's growth story may want to consider even a modest investment in the top healthcare stock.
2. Mastercard
Mastercard(NYSE: MA) accounts for approximately 24% of all credit card transactions processed globally. The company is also the second-largest credit card processor in the U.S. by market share, with a footprint of around 25%.
Given the fluctuating state of consumer spending in the last few years, as well as the shifts in consumer savings against a volatile consumer backdrop, this company could present a high-risk investment if it made its money from sources like issuing credit. Mastercard makes its money in a completely different way.
In fact, most of Mastercard's revenue comes from fees that get charged every time one of its branded card gets swiped (either with a brick-and-mortar merchant or via a digital transaction). These fees are paid by Mastercard's customers, which are financial institutions that issue debit and credit cards with the company's brand. So Mastercard isn't dependent on whether a consumer pays off their credit card balance each month.
The company's bread and butter comes from fees it charges to banks and other financial entities connected to gross dollar volume of activity on its branded products. Mastercard also derives a smaller portion of its revenue from data analytics solutions, consulting, and other services it provides.
Looking at the most recent quarter, the second quarter of fiscal 2024, Mastercard reported net revenue of $7 billion, up 11% from one year ago. It also delivered net income of $3.3 billion, with operating income of $4 billion. Those two figures represented respective increases of 15% and 10% in the second quarter of 2023.
Gross dollar volume rose 9% in the second quarter, while purchase volume was up 10% from one year ago. Mastercard's resilient business model hasn't just led to immense financial strength -- it's also enabled it to continue supporting a generous dividend payout.
While Mastercard's dividend yield is less than 1% at the time of this writing, its forward annual dividend is $2.64 per share. The company has increased its dividend every year for 13 consecutive years at this point, and its dividend payout has risen 100% over the trailing-five-year period alone. The company also maintains a payout ratio of approximately 19% of earnings. Mastercard had more than $7 billion in cash on hand at the end of the most recent quarter.
Investors searching for a business with a penchant for steady growth, returns, and income may find a lot to like about Mastercard for a long-term buy-and-hold position.
Should you invest $1,000 in Hims & Hers Health right now?
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.
