2 Growth Stocks That May Grow in 2023

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2022 is finally over, and many investors won’t miss it. But now may be a good time to sift through the debris to trade quality stocks at a discount. Let’s discuss why Crocs (Croix 3.32%) And Dollar General (Dg -0.37%) May be poised for success in 2023 and beyond.

Crocs

If you were around in the mid-2000s, you probably remember Crocs. Comfortable and unashamedly silly, these foam clogs quickly rose in popularity before hitting the fashion dustbin. However, under the leadership of CEO Andrew Rees, the brand has enjoyed a revival that could create long-term value for shareholders.

Crocs regained its spotlight during the Covid-19 pandemic when stay-at-home orders encouraged shoe consumers to prioritize comfort over aesthetics. But resurrection wasn’t just about luck. Management set the stage for the comeback by heavily targeting Generation Z through celebrity endorsements and targeted advertising on platforms like TikTok. The company has diversified its revenue streams by buying casual shoe brand HeyDude for $2.5 billion in 2022.

The effort is paying off in a big way. Third-quarter revenue jumped 63% year-over-year to $985 million, helped by the stellar performance of HeyDude, which grew revenue 87% to $269.4 million in the period. With a price-to-earnings (P/E) ratio of just 10, Crocs stock is surprisingly cheap for a fast-growing company; Its bottom line valuation is only half S&P 500 Average P/E is 20.

Dollar General

When most stocks fell in 2022, Dollar General bucked the trend. Shares of the deep-discount retail chain are up 5% over the past 12 months. And the stock may continue to perform well due to its safe business model.

A magnifying glass shows a bar chart that suggests rising stock prices

Image source: Getty Images.

According to a Bloomberg poll, 70% of economists expect the US economy to fall into recession this year. Historically, economic downturns are bad news for most businesses because they lead to a decline in consumer spending. Dollar General is an exception. While its low-cost products sell well in good times, they become indispensable when money is tight. The company is already seeing this story play out.

According to Dollar General, one of its fastest-growing customer segments is people making $75,000 to $100,000 a year, as inflation erodes their spending power. Dollar General enjoyed a slight uptick with third-quarter revenue up 11.1% to $9.5 billion. And the forward P/E of the stock is in line with the market average of 20.

Which stocks are best for you?

Crocs and Dollar General are excellent stock picks for 2023, but they serve different investment strategies. With its rapid expansion and surprisingly low valuation, Crocs appears to have long-term growth potential. Dollar General, on the other hand, is the safer pick, as its discount-focused business model makes it more likely to hold up and even grow revenue in this uncertain economic environment.


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