It has not been an easy time for growth investors as markets shudder under the weight of high inflation and surging interest rates.
However, it’s important to differentiate between sentiment and fundamentals.
These two headwinds have generated pessimism over growth prospects amid the heightened cost of borrowing, but there are still businesses that managed to grow their revenue and earnings.
The key is to focus on companies that maintain steady growth despite these challenges because their share prices will eventually track business performance.
Here are four growth stocks that can, over time, deliver good returns for your investment portfolio.
Mercadolibre (NASDAQ: MELI)
Mercadolibre is the largest e-commerce player in Latin America and provides digital and technology tools for individuals and businesses to trade products and services.
The company reported a sparkling set of earnings for 2022, with net revenue climbing 49.1% year on year to US$10.5 billion.
Operating income more than doubled year on year from US$441 million to US$1 billion while net profit soared more than fivefold year on year to US$482 million.
Free cash flow also improved by leaps and bounds, with US$2.5 billion generated last year, a nearly sevenfold increase from US$356 million in 2021.
Meanwhile, unique active users on Mercadolibre’s platform have increased from 140 million in 2021 to 148 million in 2022.
Gross merchandise volume rose by 21.5% year on year to US$34.4 billion while total payments volume jumped nearly 60% year on year to US$123.6 billion.
There were other impressive operating metrics that the company disclosed for its fourth quarter – its managed logistics network penetration touched 94%, up from 89% a year ago.
On the payments side, unique digital wallet active users nearly touched 44 million, up 27% year on year.
Mercadolibre looks well-positioned to deliver continued growth as it executes its multiple strategic initiatives.
Roblox (NYSE: RBLX)
Roblox is a software company that provides tools to create immersive 3D environments to allow users to interact with one another (read: the metaverse).
The company also allows users to collaborate and create different experiences on its platform which is accessible via desktop, laptop or mobile.
Roblox reported continued growth in 2022 with revenue touching US$2.2 billion, up 16% year on year.
The average daily active user (DAU) stood at 56 million, up 23% over the prior year, while hours engaged rose 19% year on year to 49.3 billion.
DAU has hit 58 million in the fourth quarter of 2022, up more than threefold from 19.1 million just three years ago.
Roblox also recorded bookings of between US$243 million to US$247 million in February 2023, representing a 18% to 19% year on year increase.
Texas Roadhouse (NASDAQ: TXRH)
Texas Roadhouse is a casual dining restaurant chain that owns 700 restaurants in 49 states in the US and also has a presence in 10 other countries.
The company posted a commendable set of financials for 2022 with total revenue rising by almost 16% year on year to US$4 billion.
Operating profit increased by 7.7% year on year to US$320.2 million while net profit improved by 10% year on year to US$269.8 million.
For 2022, comparable restaurant sales increased by 9.7% at company-owned locations and 9.4% at its domestic franchises.
A total of 23 restaurants and seven international franchise restaurants were opened last year.
For this year, management expects positive comparable store sales and plans to open 25 to 30 Texas Roadhouse restaurants.
Home Depot (NYSE: HD)
Home Depot is the world’s largest home improvement retailer and operated 2,322 retail stores across all 50 US states, 10 Canadian provinces, Mexico and a few other regions as of 31 December 2022.
For its fiscal 2023 ending 29 January 2023 (FY2023), the company reported a 4.1% year on year increase in sales to US$157.4 billion despite high inflation.
Operating profit increased by 4.3% year on year to US$24 billion.
Net profit inched up 4.1% year on year to US$17.1 billion, and Home Depot bumped up its quarterly dividend by 10% year on year to US$2.09 per share.
The home improvement specialist has seen its dividend rise over 15 consecutive years since 2009.
How do you decide if a growth stock is worth your money? There is no shortage of stock ideas today, but is a particular stock suitable for you? Find out more in our latest FREE report, How To Find The Best US Growth Stocks For Your Portfolio. Click HERE to download the report for free now!
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
