The stock market has kept investors on a wild ride in recent years. While the healthy bull period that major indices have enjoyed has propelled shares of many top companies upwards, volatility in the markets continues.
The later summer months have historically been a period of slower growth, but investors have dealt with renewed turbulence recently as concerns about inflation persist. Although additional ups and downs may be ahead, investors who maintain a long-term horizon can still find plenty of compelling opportunities to put cash to work.
If you have cash to invest in August and are looking for top stocks to buy, here are two companies that look like screaming buys right now.
1. Hims & Hers Health
Hims & Hers Health (NYSE: HIMS) offers subscription-based healthcare services across a spectrum of needs, including sexual health, weight loss, mental health, and dermatology. By paying for a recurring monthly subscription, users can receive seamless delivery of the prescriptions they need straight to their door. The platform also facilitates virtual care visits between patients and healthcare providers, removing barriers to receiving cost-efficient, quality care.
This business model has been incredibly effective and lucrative for Hims & Hers Health. The company has come a long way from its early days, where it initially focused only on men's wellness solutions such as hair-loss products and treatments for sexual concerns like erectile dysfunction. The company reported 1.9 million subscribers at the end of the second quarter of 2024, an incredible 43% increase on a year-over-year basis. Hims & Hers also brought in revenue of $315.6 million in the three-month period, a whopping 52% hike from one year ago.
The company is currently profitable under generally accepted accounting principles (GAAP). Its net income of $13.3 million in Q2 2024 was a marked improvement from the net loss of $7.2 million it recorded in the same quarter in 2023. Hims & Hers also raked in free cash flow of $47.6 million in the quarter, more than four times higher than the figure it reported in the year-ago period.
Looking ahead, management expects that each of its core specialties -- sexual health, mental health, men's and women's dermatology, and weight loss -- will reach $100 million in revenue in 2025. As of the most recent quarter, over 785,000 of the company's subscribers are using a personalized healthcare solution from the platform, an incredible 164% increase from just one year ago.
Hims & Hers Health recently announced that it would be offering customers access to GLP-1 injections. While the average cost of these injections runs at $1,000 a month, users who opt for a prescription through the virtual healthcare platform and have an annual subscription could access injections for as little as $79 a month.
The company's growth trajectory is in its relatively nascent stages, and its financials reflect the above-average growth that often comes with a relatively new company. While this growth is likely to moderate at some point, Hims & Hers Health benefits from a widening footprint in a vast total addressable market, and it's steadily building a track record of robust cash generation and profits. Long-term investors might find that these are all reasons to scoop up some shares.
2. Duolingo
Duolingo (NASDAQ: DUOL) is known for its language-learning platform and app that allows users to advance their language skills anytime and anywhere. The company has a freemium model, which enables users to learn languages with various free tools, but they can also gain higher perks and learning solutions by paying a recurring subscription.
The dynamic between its free content and paid subscription-based solutions has been incredibly effective at drawing in customers and retaining them. Duolingo hit a huge milestone for the company in Q2 2024, clocking in at over 100 million monthly active users with a total of 8 million subscribers on the platform.
That monthly active user metric was up 40% year over year, while the paid subscriber figure represented a 52% hike from the same quarter one year ago. On top of that, more than 20% of Duolingo's daily active users now have a streak of using the platform for over a year. Daily active users totaled 34.1 million individuals at most recent count, up 59% from one year ago.
Looking at total bookings for Q2 2024, this metric rose 38% year over year to $190.1 million. Subscription bookings in the three-month period came in at $156.5 million, an increase of 47% on a year-over-year basis.
As for the company's top and bottom lines, revenue rose 41% in Q2 2024 to $178.3 million, while net income multiplied by nearly six times its year-ago value to $24.4 million. Prospective investors will also be glad to learn that the company is cash flow positive, with free cash flow increasing approximately 60% year over year in Q2 to $54.9 million.
Duolingo has tremendous room left to run. Management has said that its paid subscriber penetration of monthly active users is less than 9% right now. Given its continued astonishing growth in paid subscribers and active users, Duolingo looks well-positioned to tap into new and existing sources of financial growth in the years ahead. That's a ride long-term investors might want to come along on.
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Duolingo. The Motley Fool has a disclosure policy.
2 Magnificent Stocks That Are Screaming Buys in August was originally published by The Motley Fool