Investors can multiply their money by holding shares of well-chosen growth stocks, and three fool.com contributors are here to show you three incredible opportunities. Here’s why Toast (NYSE: TOST), Sweetgreen (NYSE: SG), and On Holding (NYSE: ONON) could be monster winners. Restaurants need Toast’s software John Ballard (Toast): The restaurant industry has become more competitive than ever. Customers can conveniently order takeout with their phones, which forces restaurants to adapt to a rapidly changing competitive landscape. This is a huge opportunity for Toast’s software, which helps restaurants manage every aspect of their business efficiently. With just $4.4 billion in trailing revenue, Toast is in the early innings of capturing a $100 billion-plus addressable market. The platform helps restaurants manage ordering, marketing, staff, supply chain, and other operations. This all-in-one solution is attracting more restaurants to sign up, with the company reporting a 29% year-over-year increase in the number of locations using the platform in the second quarter.
Toast’s subscription revenue is growing along with that increase. The stock trades at a premium price-to-sales (P/S) valuation relative to its peers in the restaurant software market. But this seems justified, given customer success stories with the product and its intuitive design that makes it easy to train restaurant staff to use it. This bodes well for more robust growth. Toast is gaining traction with small restaurants, which speaks to its market potential across the restaurant industry. While the stock’s P/S ratio of 3 might be expensive relative to its competitors, it doesn’t seem all that expensive in the context of the entire software industry, where companies in other markets growing as fast as Toast can trade as high as 10 times sales.
The stock is expected to deliver wealth-building returns to shareholders over the next 10 years. This is due to several factors, including:
* **Strong growth potential:** The company has a history of strong growth, and this trend is expected to continue. * **Competitive advantage:** The company has a unique and valuable competitive advantage that allows it to outperform competitors.
They are known for their fresh ingredients, customizable salads, and vibrant atmosphere. The company’s success is driven by several key factors. First, its focus on fresh, high-quality ingredients is a major differentiator. Sweetgreen sources its produce from local farms and partners with sustainable suppliers. This commitment to quality and sustainability resonates with consumers who are increasingly conscious of their food choices.
Sweetgreen’s commitment to sustainability is another key differentiator. They prioritize sourcing local ingredients, minimizing food waste, and using eco-friendly packaging. This resonates with consumers who are increasingly conscious of environmental impact.
* **Nike’s Sales Decline:** Nike, the world’s largest sportswear company, is facing declining sales, a trend that has been ongoing for several quarters. This decline is attributed to various factors, including increased competition, changing consumer preferences, and the impact of the global pandemic.
A. The Power of Brand Loyalty
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The Motley Fool Stock Advisor team is known for its rigorous research and investment strategies. Their recommendations are based on a combination of fundamental analysis, technical analysis, and quantitative analysis. The team has a proven track record of success, having consistently outperformed the market over the years. This analysis suggests that Toast is not currently a top investment choice. However, the summary does not provide any specific reasons why Toast is not a top investment choice.
The article discusses the performance of the top 10 stocks in the S&P 500 index, highlighting the factors driving their success. It analyzes the financial health of these companies, their market capitalization, and their growth potential. The article also explores the impact of macroeconomic factors like inflation and interest rates on these stocks.