Two Exceptional Expansion Stocks to Invest in with a $500 Budget Immediately
Growth stocks have faced conflicting feelings from investors in recent years despite the extended bull market. Economic concerns and their influence on various sectors have persisted as many have anticipated interest rates and inflation to gradually decrease.
Leading companies have been evolving past the pandemic era, and long-term investing in top-notch businesses can expand your portfolio in numerous market circumstances. If you have $500 to invest right now, consider these two growth stocks for part or all of that amount.
1. PayPal
PayPal Holdings' shares (PYPL -5.92%) slightly dipped following the company's most recent financial report, but still possess an approximately 30% increase since January 2024. The stock has taken a substantial hit off its all-time highs, with shares currently valued at about one-third of their 2021 worth.
PayPal has confronted some challenging years following its pandemic highs, which were then followed by a series of difficult quarters. A few factors contributing to some investors' decision to sell the stock included tough year-over-year comparisons to unusual growth periods and a slowdown in user growth.
Numerous businesses encounter fluctuating periods of growth, and PayPal is no exception. The company has been delivering notable improvements in recent quarters, which has certainly boosted share prices in 2024. Examining the firm's third-quarter results, several notable accomplishments stand out.
Revenue surged 6% from the prior year to $7.8 billion, and operating income based on generally accepted accounting principles (GAAP) increased 19% to $1.4 billion. Although the number of active accounts on PayPal's platform only grew by roughly 1% from the previous year, total payment volume rose 9%.
Transactions per active PayPal account also increased 9% over the past 12 months. The company successfully turned a profit in the quarter, earning $1.1 billion in net income, a minimal 1% decrease from the prior year. It also generated over $1.6 billion in operating cash.
These are not financial figures from a faltering business, but rather one that has adapted to a rapidly altering spending environment affecting both consumers and businesses utilizing its platform. If you're an investor aiming for a minimum three to five-year holding period, there's still much to appreciate about this stock and its potential progression.
2. Chewy
Chewy's shares have soared approximately 67% over the last six months, as investors seem to have rekindled their interest in the stock once popular during the pandemic. The e-commerce platform specializes in pet food and toys, but also offers a wide range of other products.
Chewy has been continually enhancing its product and service offerings over the past few years to bolster its competitiveness across various pet spending categories. Its offerings include pet health insurance, in-house compounding pharmacies, and a lineup of pet wellness products, in addition to its telehealth service allowing pet owners to connect with a vet via chat or video call.
Recently, Chewy surprised some investors by announcing plans to open brick-and-mortar veterinary locations nationwide. However, investigating further reveals that this aligns with the company's long-term strategy.
Chewy has been working closely with veterinary clinics and providing software solutions, simplifying the shopping experience on its e-commerce site for years. Its first veterinary clinics were established in South Florida, where the company is headquartered. By the time of its second-quarter earnings call, it already had six locations in operation, including one in Colorado.
CEO Sumit Singh offered the following update during the call:
Although it's still early, the initial indicators are promising. First, Chewy Vet Care has served as a significant customer acquisition tool, with the proportion of new customers acquired via the clinics surpassing our expectations. Second, clinic engagement is accelerating our customer spending curves, supported by both veterinary services spending and robust cross-category shopping behavior.
In clinic, many customers are strengthening their commitment to the Chewy ecosystem by purchasing pharmacy or food products for the first time. Similarly, we have observed a highly favorable impact on Chewy.com visits following a clinic appointment. Most importantly, the veterinarian community has shown strong interest in the Chewy Vet Care value proposition, recognizing the strength and positive reputation of the Chewy brand.
Overall net sales reached $2.86 billion in the second quarter, while net income skyrocketed beyond $299 million, representing a substantial 1,380% increase from the previous year. Its Autoship sales - recurring deliveries that customers arrange for their preferred products - accounted for 78% of all net sales. This was a 6% increase from the previous year.
Additionally, it's worth noting that nearly 85% of Chewy's net sales stem from consumables and health categories, which represent non-discretionary sources of consumer spending.
This enterprise is yet to fully exploit its market potential in the United States and boasts plans for global expansion. Recently, it extended its services to pet owners in Canada, offering a lucrative opportunity for investors who purchase its stocks and maintain a long-term investment strategy. Such individuals might stand to gain substantially from this company's ongoing growth trajectory.
After considering the potential growth of top-notch businesses, investing $500 in PayPal or Chewy could yield significant returns in the long term. PayPal's shares, despite a dip, have shown resilience with a 30% increase since January 2024, indicating that finance-savvy investors might find value in the company's recent struggles and long-term potential. Similarly, Chewy's online platform for pet food and supplies has seen a surge in interest, with shares increasing by 67% in the last six months, making it another viable option for those willing to invest money in the finance sector.
