Growth stocks can generate significant profits for their shareholders. The challenge, of course, is knowing which stocks to buy — and when to buy them.
If you’re looking to invest some money in this wealth-building asset class — one you don’t need for living expenses or to pay off debt — read on to learn about two great growth stocks. You can buy shares in both companies today for less than $100.
Growth Stock to Buy #1: DraftKings
Profitable investments are often found in fast-growing markets with huge potential for continued growth. Sports betting is one such industry — and DesignKings (NASDAQ: DKNG) is the best bet on the megatrend around legalization.
Increasing budgetary needs are driving more governments to increase tax revenues by legalizing sports betting. DraftKings operates sports betting in 27 states. It is also establishing beachheads in promising international markets such as Canada, where its sports betting platform is live in Ontario, and the United Kingdom, where it offers daily fantasy sports products.
With potentially lucrative markets like Texas and California yet to legalize sports betting, DraftKings has a long way to go to expand. The global sports betting industry could surpass $245 billion by 2033, up from $92 billion in 2023, according to Future Market Insights.
DraftKings has mastered the process of launching its business in recently legalized territories and quickly acquiring new customers. Revenue grew 26% year over year to $1.1 billion in the second quarter, driven by a 50% increase in the number of monthly unique payers on its platform, to 3.1 million.
Better yet, DraftKings becomes more profitable as the company grows. When it enters a new market, DraftKings spends a lot of money advertising its offerings and acquiring new customers. But within two to three years, those markets start generating profits because the company’s marketing pays off and it starts to scale back its ad spending.
Management expects DraftKings to generate adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of as much as $1 billion in 2025, up from the expected $420 billion in 2024.
With earnings skyrocketing, DraftKings stock seems like a smart investment. The company’s leadership team seems to agree. DraftKings’ board of directors approved a $1 billion share buyback program on July 30.
Growth Stock to Buy #2: Palantir Technologies
Artificial intelligence (AI) is another clear and powerful growth trend. Palantir Technologies (NYSE: PLTR) has some of the best machine learning and AI technologies in the world, and business is booming.
Palantir helps businesses and government agencies make better decisions by mining massive amounts of data in real time. By enabling its customers to quickly discover important patterns in their data, the analytics specialist can unlock valuable insights at breathtaking speed.
The U.S. military has long relied on Palantir’s technology. The Central Intelligence Agency was an early backer, and Palantir’s software was reportedly used to locate Osama bin Laden. The deals are still in high demand. The Department of Defense is licensing Palantir’s AI-driven operating system to enhance its decision-making capabilities. That contract alone could be worth up to $480 million to the AI software vendor.
Companies are also using Palantir’s Artificial Intelligence Platform (AIP). British oil giant BPFirst, Palantir uses AI-driven simulations to make its oil and gas production operations more efficient. Second, Wendy’s uses AIP to eliminate waste and automate the ordering process in thousands of its restaurants.
In addition, the tech giant Oracle recently made AIP available to users of its fast-growing cloud computing services.
“Oracle’s powerful and flexible cloud infrastructure, combined with Palantir’s decision acceleration platforms, helps customers quickly scale AI capabilities across their operations,” Oracle Vice President Rand Waldron said in a statement announcing the deal in July.
It is notable that Palantir will be added to the list. S&P 500 index on Sept. 23, a nod to its impressive profitability and financial strength. The AI leader’s revenue and adjusted earnings per share rose 27% and 80%, respectively, in the second quarter to $678 million and $0.09. That helped Palantir grow the cash reserves on its fortress-like balance sheet to $4 billion by the end of June.
Should You Invest $1,000 in Palantir Technologies Now?
Before you buy shares in Palantir Technologies, you should consider the following:
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BP, Oracle and Palantir Technologies. The Motley Fool has a disclosure policy.
2 No-Brainer Growth Stocks to Buy Now with $100 was originally published by The Motley Fool
