2 Fast-Growing Stocks to Buy in 2022 and Beyond

 

After experiencing a strong rally last month, the U.S. stock market has once again shifted into bear market territory in early September, marked by the S&P 500 index declining by 18%. Many high-growth companies are facing even more substantial declines, with the Nasdaq 100 index plummeting by 27%, and the popular Ark Innovation ETF witnessing a staggering 53% decline. For those who have cash reserves and are planning for their retirement, this moment might present an ideal opportunity to invest in some of these rapidly expanding firms and hold onto them for the long haul.

Here are two hypergrowth stocks that warrant consideration for purchase in 2022, with a view to holding onto them for several years:

1. Revolve Group First on the list is Revolve Group (NYSE: RVLV), an online retailer specializing in apparel and fashion. As an e-commerce-centric enterprise, Revolve, alongside its subsidiary Forward, has excelled in social media marketing, effectively targeting its audience of younger women who spend considerable time on these platforms. The company has struck deals with popular celebrities such as Kendall Jenner and operates a brand ambassador program, allowing influential social media figures to promote Revolve’s fashion items while earning referral commissions. Despite being primarily an online business, Revolve faced challenges during the pandemic, given its focus on higher-end items designed for social gatherings like weddings and parties. For instance, in Q2 2020, at the height of the pandemic, Revolve Group witnessed a 12% year-over-year decline in revenue. However, as the United States and many other regions emerged from COVID-19 lockdowns, Revolve’s business rebounded significantly. In Q2 2021, revenue surged by 60% YoY to $228.6 million, followed by a 27% increase in Q2 2022, reaching $290 million for the period. Taking a longer-term perspective, Revolve achieved $1 billion in revenue over the trailing 12 months in the last quarter. Excluding the pandemic, annual revenue has consistently grown since 2016 when Revolve generated only $312 million in annual sales. With just 2.17 million active customers, the online fashion retailer appears to have ample room for expansion, especially as it continues its international growth. With the stock down by 56% this year, the current juncture could be an opportune moment to acquire shares of Revolve Group.



2. Remitly Global The second hypergrowth stock on this list is Remitly Global (NASDAQ: RELY). The company, which went public through an IPO in late 2021, is focused on disrupting the remittance and international money transfer market, primarily serving immigrants. Traditional services like Western Union historically imposed high fees for international money transfers. However, Remitly has been able to undercut legacy providers, offering a superior customer experience at a lower cost through its digital and mobile-first platform. This enhanced value proposition has fueled Remitly’s rapid growth as it takes on the $700 billion global remittance market. In Q2 2022, the company witnessed a 40% YoY increase in send volume to $7 billion, with revenue climbing by 42% to $157.3 million. While Remitly has yet to achieve profitability, it boasts $429 million in cash on its balance sheet, providing substantial firepower to sustain its hypergrowth trajectory. Since 2019, Remitly’s revenue has expanded at a remarkable 71% YoY rate. With just 3.4 million customers globally, the company has substantial growth potential with its disruptive platform throughout this decade. Despite its thriving business, Remitly’s stock has declined by 42% this year and over 75% since going public. Currently boasting a market capitalization of $2 billion, the stock trades at a price-to-sales ratio (P/S) of 3.2 based on management’s 2022 revenue guidance. With robust gross margins and a vast market opportunity ahead, this could be an excellent moment to acquire shares of Remitly at an attractive valuation.

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