Investing in growing companies is the easiest way to build wealth in the long term. Companies that serve wide-open markets and capitalize on opportunities with above-average revenue growth should see their stock prices rise more often than they fall. There are no guarantees, but this rule of thumb is usually correct.
Here are two companies that entered the year with the wind in their sails and could see their stock prices continue to rise in 2024 and beyond.
DesignKings
Investing in companies that operate in high-growth industries is a surefire way to find winners in the stock market. DesignKings (NASDAQ: DKNG) is a leading brand in an absolutely exploding online sports betting and gambling market. The company’s revenue grew 64% through 2023, and with many states yet to legalize online sports betting, DraftKings still has a long road of growth ahead.
According to Statista, the combined value of the online casino gambling and sports betting market could reach more than $150 billion by 2029. That’s a huge opportunity for a leading brand with just $3.7 billion in annual revenue.
It’s a good sign that as DraftKings enters new markets, it’s seeing tremendous success right away. For example, recent states have made profits on their dues faster than before. Due to this trend, management has raised its earnings forecast. The goal is to achieve more than $2 billion in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) by 2028.
Additionally, the company is expanding its addressable market with the recent acquisition of Jackpocket, adding another $100 billion in opportunity to its already sizable addressable market. Jackpocket will increase the company’s competitive advantage by reducing the cost of acquiring new customers, thereby improving the company’s profit potential.
The stock has moved higher over the past year, but is still 42% below its previous peak. DraftKings stock isn’t exactly cheap, trading at 54 times forward earnings estimates, but the stock is worth a premium price thanks to impressive business growth and a large target market. Moreover, improving profitability this year is a key catalyst that could see the stock reach new highs.
Coupang
Amazon has dominated the e-commerce market for the past two decades. But there are certain markets around the world where local companies are better suited for success than foreign competitors. Korea’s largest online store Coupang (NYSE: CPNG) is a perfect example. It applies a similar strategy to Amazon, with great success.
Coupang offers a growing selection of items, including groceries, and can deliver these items within hours through the Prime-like Wow membership program. Free shipping and fast delivery on a wide selection of items resonate with many customers, just as they did for Amazon in the US. The number of Wow memberships grew by 27% last year to 14 million.
Of course, Korea is pursuing a smaller market than Amazon, which operates in many countries. But Korea is a growing trade market that is expected to grow at 4% per year until 2027 and reach a value of US$563 billion. That leaves plenty of room for Coupang, with annual revenue of just $24 billion, to grow and generate returns for shareholders.
Revenue grew 18% last year and management expects further double-digit growth in 2024. That’s enough growth to support the share price, which is 62% below its previous peak and trades at a fair valuation of 1.63 times trailing sales.
Investors are concerned about the broader health of the global economy and e-commerce shopping trends, which is one reason for the lower share price. But if Coupang continues to deliver revenue growth in the high-teens range this year, more investors could rally behind the stock and send the stock price higher.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has and recommends positions in Amazon and Coupang. The Motley Fool has a disclosure policy.
2 Growth Stocks That Could Skyrocket in 2024 was originally published by The Motley Fool
