4 Overlooked US Growth Stocks to Buy and Hold for the Long Term
In the rush to find solid growth stocks, it’s no surprise that some may slip through the cracks and be neglected.
The universe of growth stocks is very large and many investors tend to gravitate towards the larger and more popular companies.
Investor should look out for these overlooked stocks as they may present a great opportunity to buy a solid business on the cheap.
Here are four growth stocks that are flying under the radar that look suitable for a long-term buy and hold strategy.
Deckers Outdoors (NYSE: DECK)
Deckers designs, markets, and distributes footwear, apparel, and accessories for casual use.
The company owns a portfolio of brands including UGG, HOKA, Teva, Sanuk, and Koolaburra.
Deckers has demonstrated solid growth over the years.
Sales increased from US$3.2 billion in fiscal 2022 (ending 31 March) to US$4.3 billion in fiscal 2024.
Net profit shot up from US$443.7 million to US$747.9 million over the same period.
The apparel manufacturer also saw its operating cash flow soar from just US$172.4 million in fiscal 2022 to US$1 billion by fiscal 2024.
Free cash flow stayed strong at US$943.8 million for fiscal 2024.
The momentum carried on in the first quarter of fiscal 2025 with revenue rising 22.1% year on year to US$825.3 million.
Net profit doubled from US$55.3 million to US$111.8 million.
Just this week, Deckers launched its lifestyle brand UGG in partnership with Grammy award-winning Post Malone.
The partnership features a global campaign which features men’s Weather Hybrid Collection that should see enthusiastic uptake.
Wingstop (NASDAQ: WING)
In the universe of food and beverage stocks, many investors tend to stick with larger names such as Yum! Brands (NYSE: YUM) or McDonald’s (NYSE: MCD).
Many investors would have missed out a fast-growing food and beverage company such as Wingstop.
Wingstop serves authentic American food and offers classic and boneless chicken wings, tenders, and sandwiches and operates and franchises more than 2,350 locations worldwide.
From 2021 to 2023, Wingstop saw its revenue rise from US$282.5 million to US$460 million.
Net profit shot up from US$42.7 million to US$70.2 million over the same period.
Free cash flow shot up close to fourfold from US$20.9 million in 2021 to US$80.8 million in 2023.
The first half of 2024 saw more of the same strong performance from the chicken wing specialist.
Revenue climbed nearly 40% year on year to US$301.5 million while net profit surged 76.6% year on year to US$56.2 million.
In line with the strong results, management upped the food and beverage player’s quarterly dividend from US$0.22 to US$0.27.
For the second quarter of 2024, Wingstop opened 73 net new stores and saw domestic same store sales growth of 28.7%.
For company-owned same store sales growth, it also came in strong at 14.1% for the quarter.
Workday (NASDAQ: WDAY)
Workday offers an enterprise platform to help organisations manage their people and money.
The company uses artificial intelligence (AI) to enable business insights and Workday is used by more than 10,500 businesses across the world from different industries.
Workday recorded steady growth from fiscal 2022 (ending 31 January) to fiscal 2024.
Total revenue improved from US$5.1 billion to US$7.3 billion while net profit leapt from just US$29 million to US$1.4 billion.
Free cash flow also increased from US$1.4 billion to US$1.9 billion over the same period.
For the first half of fiscal 2025 (1H FY2025), Workday continued its impressive performance as revenue rose 17.4% year on year to US$4.1 billion.
Net profit soared 202% year on year to US$239 million.
The company continued its free cash flow generation streak with US$807 million generated during 1H FY2025, up 41.6% year on year.
Management believes that the company is looking at a total addressable market of US$142 billion, giving it ample opportunities for further growth.
In the middle of September, Workday acquired Evisort, an AI-native document intelligence platform, for an undisclosed amount.
A few days later, the company announced Workday Wellness, an AI-powered solution providing companies with a real-time view into the benefits and wellness that employees want and use.
These AI-driven recommendations will provide a more personalised wellness experience for these employees.
Fiverr (NYSE: FVRR)
Fiverr operates a platform that matches freelancers to organisations that are looking for freelance workers.
Fiverr has served more than four million customers looking for freelance talent and offers more than 700 skills on its platform.
The business reported decent growth over the past three years, with revenue rising from US$297.7 million in 2021 to US$361.4 million in 2023.
Net profit came in at US$3.7 million for 2023 versus net losses for both 2021 and 2022.
The company also generated consistent free cash flow, going from US$35.5 million in 2021 to US$82 million in 2023.
The good performance has carried on in the first half of 2024 (1H 2024).
Fiverr reported revenue of US$188.2 million, up 6.1% year on year.
Net profit stood at US$4.1 million for 1H 2024, reversing the US$4 million that the business incurred in 1H 2023.
Free cash flow jumped 31.5% year on year to US$41.5 million.
Fiverr estimated that the US addressable market for its services stands at US$247 billion in 2021 and that the majority of freelancing still occurs offline.
These facts give the company ample opportunities to grow its top and bottom lines in the coming years.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
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