2 growth stocks to buy in February
Bbuying and holding growth stocks for long periods of time can deliver extraordinary returns to investors. The difficulty lies in the discipline of holding investments for several years or more.
It’s tempting to sell a stock after it’s risen 20-40% in less than a year, but that can remove the possibility of exponential growth over several years. Here are two growth stocks long-term investors can buy in February.
The House of Mouse is making progress in recovering from the devastation caused by the pandemic. Walt disney (NYSE: DIS) temporarily locked the turnstiles of its theme parks. It was a blow for a segment that generated $26 billion in revenue and $6.7 billion in operating profit in 2019. In 2020 and 2021, the segment’s operating profit fell to less than 500 million dollars each year.
Fortunately, at the end of its fourth quarter in 2021, the theme parks were reopened and segment revenues doubled compared to 2020. During the closure of the parks, the company made improvements to improve profitability, such as the implementation of mobile food ordering and a robust ticket reservation system. The changes have given Chief Financial Officer Christine McCarthy the confidence to say theme parks will be more profitable than before the outbreak when they return to full strength.
Additionally, Disney’s streaming segment has flourished since the pandemic began. Overall, it has 179 million paid subscribers, 118 million of which come from its flagship Disney+ service. Although that growth has slowed a bit recently, the company still expects to reach over 300 million subscribers by 2024 – and sees the segment to be profitable by then as well.
With theme parks picking up and the streaming segment growing, now is a great time to buy Disney stock.
Online pet supply retailer Soft (NYSE:CHWY) is already struggling in 2022. The company is struggling to address lingering supply chain issues caused by the pandemic. The costs weigh on profit margins and affect investors. Shortages of everything from employees to products force him to pay higher prices.
The stock is down nearly two-thirds from the high of $120 it hit in early 2021. That could be a bargain for long-term investors, who can now buy Chewy at a discount price. /sales of 2.2, down from 7.2. at the start of 2021 and near the lowest it has ever been.
And despite its struggles with the supply chain, Chewy continues to do well. During its third quarter, which ended October 31, its number of active customers increased by 14.7% compared to the same period a year earlier. It now has 20.4 million active customers. At the same time, revenues increased by 24%.
Looking back, Chewy has grown from $900 million in revenue in 2016 to $7.1 billion in 2021. That’s remarkable. During the same period, gross margins increased from 16.6% to 25.5%.
Indeed, there are high short-term risks with Chewy and the supply chain, but the stock price has fallen significantly to reflect those risks. For these reasons, it is an excellent growth stock for long-term investors to buy in February.
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Parkev Tatevosian owns Chewy, Inc. and Walt Disney. The Motley Fool owns and recommends Chewy, Inc. and Walt Disney. The Motley Fool recommends the following options: January 2024 long calls at $145 on Walt Disney and January 2024 short calls at $155 on Walt Disney. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.