Growth stocks are currently unsupported on Wall Street. With the prospect of a recession in 2023, investors are worried about lower sales. Rising interest rates could also put pressure on the earnings of companies that have not yet self-financed.
But long-term investors can look beyond these concerns and look for companies that set new sales and earnings records in five years or more.So let’s take a closer look at some profitable growth stocks that are likely to thrive in whatever sales environment unfolds in 2023 and beyond. Read on for some reasons to consider. Please give me pepsico (PEP 0.55%), lululemon athletica (Lulu 1.73%)When crunchy (Blow -0.41%) Share now.
If you thought PepsiCo was a boring, slow-growing stock, 2022 performance should help you change that mindset. % increase, we raised our outlook for the fiscal year. A combination of cost reductions and price increases has resulted in revenues growing at about the same rate, up 14%. Consumers won’t shy away from their favorite brands as they try to cut overall spending across franchises like Frito-Lay, Quaker Foods and Pepsi’s dozens of popular beverages.
Pepsi is now on track to boost its organic earnings this year by 12% from its previous forecast of 10%. This boost will mark an acceleration above the impressive 10% sales increase in 2021. Coupled with a steadily expanding dividend, these gains should provide solid returns for investors going forward.
2. lululemon athletica
Investors have short-term concerns that the apparel industry is creating an attractive buying opportunity for lululemon stock. Yes, in the niche he could do worse in late 2022 and he in early 2023. Nike Aggressive promotion in the U.S. market was predicted recently as companies worked to bring back inventory levels to meet slowing demand.
But lululemon isn’t overly exposed to these challenges. Management said in a recent earnings call that inventory levels are in line with demand forecasts through early December. Sales also showed a blazing 28% increase, adding to his 31% growth a year ago. Finally, lululemon shows its pricing power as gross margin in the third quarter was down only 1.3 percentage points from his, at 56% of sales.
Investors should be rewarded for that performance, but instead, lululemon’s stock fell 20% in 2022, roughly the same as the market as a whole. For investors, this downturn looks like an opportunity willing to weather some short-term volatility.
Chewy’s nearly 40% decline in 2022 doesn’t make sense given the company’s strong performance during a difficult time for e-commerce specialists. The pet-supply company has grown its sales by double-digit clips even as consumers tend to push their spending back to face-to-face retailers. In early December, Chewy reported increased profitability. This suggests that there is room for price increases to be slightly faster than costs are growing.
Chewy isn’t at as much recession risk as you might think. Although it is a retail business, more than 80% of sales are necessities such as pet food. Most of its revenue comes from customers who are also committed to services like subscriptions to these consumables.
Taking into account the fact that Chewy is highly profitable and generates positive cash flow, we have a recipe for market-beating returns over time. The pet supply industry is likely to expand significantly over the next five years, during which time Chewy’s sales should expand even faster. These are the big picture indicators worth following for this attractive growth stock.
Demitri Kalogeropoulos has a position at Nike. The Motley Fool U.S. headquarters recommends Chewie, Lululemon his Athletica, and Nike. The Motley Fool U.S. headquarters recommends the following options: Nike’s January 2025 Long His Call of $47.50. The Motley Fool’s U.S. headquarters has a disclosure policy.