Successful investing requires you to delve into a company’s financials and assess its prospects. This process may sound tedious, but it will give you a better understanding of which growth stocks can do well in the long term. Since research takes time and effort, it’s good to shortlist a few stocks that you feel comfortable buying for long-term capital growth. These stocks should ideally have a solid growth record, command a dominant market share and have catalysts that can ensure their steady and continuous growth.
As you gain more knowledge about companies, you’ll have a collection of solid stock ideas to consider. The next step is to select your best ideas to buy first, as these will be your most attractive purchases. When it comes down to it, here are three stocks I’ll pick above the rest because of their promising prospects and strong business fundamentals.
Hawkins
Hawkins (NASDAQ: HWKN) is a specialist chemicals and ingredients company that manufactures products for the industrial, water treatment and health and nutrition sectors. The company has not only shown steady growth in revenue and net profit over the years, but has also paid dividends for 39 consecutive years.
Hawkins saw revenue increase from $774.5 million in fiscal 2022 (ending March 31) to $919.2 million in fiscal 2024. Net profit rose 46% in the period from $51.5 million to $75.4 million . Most impressive was the company’s free cash flow generation, which increased more than eightfold, from $14.3 million in fiscal 2022 to $119.3 million in fiscal 2024.
Hawkins’ strong performance continued into the first quarter of fiscal 2025. Revenue rose nearly 2% year over year to $255.9 million, but operating income managed to rise 22.5% year over year to $39, 8 million. Net profit improved 23.3% year-on-year to $28.9 million, and the company also generated positive free cash flow of $6.9 million, continuing its track record of generating free cash flow. Coupled with the good results, management increased the company’s quarterly cash dividend from $0.16 to $0.18.
Investors can also look forward to acquisitive growth to drive profits to the next level. Hawkins has demonstrated a solid track record of acquisitions, with an average of two per calendar year since 2020. In June and July of this year, the company completed two acquisitions: Wofford Water Service and Intercoastal Trading, both for its water treatment division. .
Wofford will help Hawkins build a larger customer base in Mississippi, while Intercoastal helps the company expand into the East Coast region. In the industrial and health and nutrition segments, Hawkins will focus on new product development, with a view to growing its specialty branded products, supported by its research and development.
Garmin
Garmin (NYSE: GRMN) is a technology and engineering company that produces products for five key industries: fitness, outdoor, aviation, marine and automotive OEM. The company is known for using GPS (Global Positioning Satellite) technology and integrating it into its various products such as multi-sport watches, smartwatch devices and golf devices. Garmin saw its revenue increase from $5 billion to $5.2 billion between 2021 and 2023, while its net profit rose from $1.1 billion to $1.3 billion. The company also generated average positive free cash flow of $810 million over the period.
Garmin’s robust results have continued into the first half of 2024. Revenue rose 17% year-over-year to $2.9 billion, while operating income rose 33% year-over-year to $640.4 million. Net income rose 17.6% year-over-year to $576.6 million, and the company generated positive free cash flow of $620.3 million. Garmin paid a quarterly dividend of $0.75 per share, bringing its annual dividend to $3. The company has steadily increased its dividend since paying $0.40 per quarter in 2011.
Garmin has raised its full-year revenue guidance and expects revenue to rise 13.8% year-over-year to $5.95 billion for 2024, demonstrating healthy revenue growth for the accessories company. The company continues to release innovative new products across its five divisions, along with Garmin Pay, which supports contactless payments. With its wide range of products that customers are happy with, it looks like the company will continue to do well.
Symbotic
Symbotic (NASDAQ: SYM) is an automation technology company that integrates artificial intelligence (AI) into its platform to solve distribution challenges and supply chain problems. The company helps its customers by deploying solutions to improve the efficiency and accuracy of their product delivery, so they can realize cost savings and a better workflow. Symbotic saw its revenue grow nearly fivefold from $251.9 million in fiscal 2021 (ended September 30) to $1.2 billion in fiscal 2023. Gross profit also shot up sharply from just $10.4 million to $189.7 million in same period. The company also saw its free cash flow more than double, from $97.4 million in fiscal 2021 to $209.5 million in fiscal 2023.
The technology company continued to report strong results for the first nine months of fiscal 2024. Revenue rose 63.6% year-over-year to $1.3 billion, while gross profit rose nearly 39% year-over-year to $181 .7 million. The company also generated positive free cash flow of $18.3 million. Symbotic has 39 systems in use, resulting in a record high turnover in the current quarter. While gross margin was temporarily impacted by implementation delays, CFO Carol Hibbard expects margins to return to historic levels in the fourth quarter of the fiscal year.
There could be more to come for Symbotic. In August, the company invested $8.7 million to acquire Veo Robotics, which provides intelligent security for industrial robots. Veo has developed a FreeMove 3D depth-sensitive computer vision system that Symbotic plans to integrate into its robotic warehouse automation system to increase productivity in line with improved human-machine collaboration. Management sees a large addressable internal supply chain market of $432 billion, implying that there is significant opportunity available for Symbotic to expand its reach and continue to grow for many years to come.
Should you invest $1,000 in Hawkins now?
Consider the following before buying shares in Hawkins:
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Royston Yang has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Garmin. The Motley Fool has a disclosure policy.
If I Could Only Buy Three Stocks in the Last Half of 2024, I’d Choose This One Originally published by The Motley Fool
