25 Mar 3 Growth Stocks You Shouldn’t Miss Out On
When there is a crisis, there is opportunity.
This time is no different.
Many companies have successfully responded to the crisis caused by the COVID-19 pandemic and have emerged better.
These companies are either latching on to new trends resulting from the crisis or adapting their business model to grow despite it.
Investors should constantly monitor the changing business environment and be ready to make changes to their portfolios if need be.
And as the world continues its slow but steady recovery, growth will become even stronger for businesses that managed to evolve.
Here are three growth stocks that might interest you.
Home Depot (NYSE: HD)
Home Depot is the world’s largest home improvement retailer with more than 2,200 stores in the US, Canada and Mexico.
Each store takes up around 100,000 square feet and offers more than a million products for customers to choose from.
The pandemic has resulted in more people focusing on their homes, leading to strong year on year growth for the retailer.
For its fiscal year ended 31 January 2021 (FY2021), sales increased by 20% year on year to US$132.1 billion.
Net profit rose by 14.4% year on year to US$12.9 billion.
Meanwhile, free cash flow for the business remained healthy at US$16.4 billion for the year, up from US$11 billion in 2019.
Home Depot’s board has approved an increase in the company’s quarterly dividend to US$1.65 per share, up 10% year on year.
The annual dividend now stands at US$6.60 and the company has now paid out a cash dividend for 136 consecutive quarters (i.e. 34 years).
The company has been an early adopter of an omnichannel approach, which combines both physical locations and digital orders.
Sales on the company’s digital platforms surged by around 86% year on year during the year and around 60% of online orders were fulfilled through a store.
The company’s One Home Depot strategy involves opening supply chain facilities, technology investments, and continued enhancements to its digital platform that helps it to connect with and engage customers more effectively.
DoorDash (NYSE: DASH)
DoorDash is a US-based food delivery company similar to our local Grab or Deliveroo.
The company connects merchants (i.e. food outlets) with customers, acting as a middleman and getting a cut of each transaction.
The pandemic has led to a strong surge in people doing online ordering due to movement restrictions and lockdowns.
In turn, this trend has resulted in strong growth for DoorDash.
For its latest full-year 2020 earnings, revenue more than tripled from US$885 million to US$2.9 billion.
In the fourth quarter, the total number of orders grew from 82 million a year ago to 273 million, while gross order value (GOV) more than tripled to US$8.2 billion.
DoorDash is the market leader in food delivery services in the US and continues to focus on two key areas: increasing sales for merchants and providing them with services to operate a digital business so they can increase sales through their channels.
Beyond restaurants, the company has also launched convenience and grocery store deliveries last year.
Recent additions also include pet supplies and flowers, with DoorDash hoping to become a platform for logistics solutions for a wide variety of categories.
Clorox (NYSE: CLX)
Clorox is a multinational manufacturer and marketer of a wide range of consumer products.
The company has four main divisions: health and wellness, household, lifestyle and international, with cleaning products making up 30% of total sales for the fiscal year 2020.
Some of its well-known brands include Clorox, Pine-Sol, Plumr and Glad.
In fact, over 80% of Clorox’s products occupy the #1 and #2 positions in terms of market share.
The pandemic has led to a surge in demand for cleaning products to disinfect surfaces and locations to provide people with peace of mind.
For its fiscal 2021 second quarter ended 31 December 2020, Clorox reported a 27% year on year increase in sales, with broad-based revenue increases in all four divisions.
For the half-year, sales increased by 27% year on year to US$3.8 billion while net profit soared 73.7% year on year to US$674 million.
In addition to the strong results, Clorox also has an impressive track record of growing its dividends.
The company’s annual dividend has increased every single year since 2000, going from US$0.83 that year to US$4.39 in 2020, for a five-fold increase over 20 years.
The company is forecasting further growth for this fiscal year, with sales growth of around 10% to 13% year on year and profit growth of around 9% to 12% year on year.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.