Sunday, February 25, 2024
Stocks To Buy

3 Growth Stocks to Buy on the Dip: February 2024

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Dips offer wonderful opportunities to pick up shares of your favorite companies at a discount. The stock market experiences many fluctuations, and equities can go down even if there isn’t any news tied to them.

A stock isn’t necessarily a buy just because it is more than 10% below its all-time high. However, some stocks only have valuation as a concern. When these stocks dip, they offer investors a greater margin of safety. If these growth stocks to buy dip down, you may want to consider accumulating shares.

E.l.f. Beauty (ELF)

E.l.f. Beauty (NYSE:ELF) is a beauty brand experiencing rapid growth and healthy profit margins. The company reported 76% year-over-year (YoY) net sales growth in the second quarter of fiscal 2024 while increasing net income by 184% YoY.

E.l.f. Beauty closed out the quarter with a 15.4% net profit margin. The corporation also raised its outlook for fiscal 2024. This context comes as the company achieved 19 consecutive quarters of net sales growth, with fiscal 2023 representing a significant takeoff in the company’s revenue growth rate.

The company is gaining market share, while many of its competitors are losing ground. This data point comes from Nielsen XAOC and is displayed on the 10th page of e.l.f. Beauty’s Q2 FY 2024 Earnings Webcast Presentation.

ELF makes itself different from the competition by avoiding unethical ingredients. Consumers can use e.l.f. Beauty products without wondering if an animal had to suffer to get the ingredient. Unfortunately, many beauty firms overlook this practice in exchange for the ingredients they seek.

This beauty company’s differentiation and product line resulted in the equity gaining 1,684% over the past five years. Shares are up by 130% over the past year.

Celsius Holdings (CELH)

Celsius Holdings (NASDAQ:CELH) omits many of the unhealthy ingredients common in other sports drinks. The company’s beverages do not contain high fructose corn syrup, sugar, artificial colors, gluten or aspartame.

The drink continued to fly off shelves and resulted in 104% YoY revenue growth in the third quarter of 2023. Net income also more than doubled YoY. The stock has delivered a 76% gain for investors over the past year and recorded a 5-year gain of over 4,244%.

Despite the high growth rates, Celsius Holdings is still in its early innings. The company makes the overwhelming majority of its revenue from North America. Its global footprint is very small, and the company is investing in international expansion.

Celsius Holdings’ entry into international markets will allow it to tap into a vast addressable market. Strong demand in North America suggests consumers are looking for healthier alternatives. Celsius Holdings can deliver on this sentiment while rewarding long-term shareholders.

Fortinet (FTNT)

After a few bad quarters, Fortinet (NASDAQ:FTNT) shares are rallying. The stock is up by 20% year-to-date and has gained 330% over the past five years. Fortinet offers cybersecurity solutions in secure networking, security operations and universal SASE.

These three segments have a total addressable market of $125 billion in 2023. TAM is expected to reach $199 billion by 2027. Universal SASE has the highest projected compounded annual growth rate at 20% from 2023 to 2027.

Most of Fortinet’s billings are in the Secure Networking segment. The segment made up 70% of Fortinet’s total billings, while Security Operations and Universal SASE made up 10% and 20% of Q3 2023 billings, respectively.

The firm’s main weakness is a deceleration in billings growth. The growth rate only came in at 5.7% YoY in the third quarter compared to 30%+ in previous quarters. Lower billings growth accompanied lower revenue growth, but profit margins remained elevated.

Other cybersecurity stocks have soared past Fortinet, but the firm now has a more reasonable valuation. FTNT stock has more to gain when growth reaccelerates.

On this date of publication, Marc Guberti held long positions in ELF, CELH and FTNT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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