Summer is here, and wherever you're spending this season, you might want to grow your portfolio as you go. The best way to build a portfolio that stands the test of time is to steadily invest your cash through methods like dollar-cost averaging, where you regularly invest a set amount of money into multiple stocks and/or asset classes.
If you have cash at the ready that you can leave in stocks for at least three to five years, there are plenty of stocks begging to be bought. Here are two magnificent growth stocks with superior growth stories that look primed to deliver enviable returns for investors not just this summer but in the years to come.
1. Intuitive Surgical
Intuitive Surgical (NASDAQ: ISRG) has dealt with a rapidly evolving environment in recent years. The pandemic and the period that has followed have brought about headwinds for many of its customers, which include hospitals and other large medical providers, as factors including staffing pressures, rising healthcare costs, and inflation have had an impact.
There's also been a recent decline in bariatric procedures with the rise of glucagon-like peptide-1 (GLP-1) receptor agonists, and regulatory challenges in markets like China have been a hurdle that the company has worked to overcome. I mention all these elements not because Intuitive Surgical is faring poorly but because it's important to understand the backdrop of the past few years and how the business has coped with it.
The company remains the global leader in robot-assisted surgery, procedure volume is consistently growing in the double digits, and revenue as well as profits are expanding at healthy clips. Intuitive Surgical's product offerings fall into a few different categories, including its systems, services, and instruments and accessories.
Its flagship da Vinci surgical system, which is approved for multiple types of minimally invasive surgeries (including general surgery, cardiac surgery, and gynecologic surgery), comes in several versions. The company also has a minimally invasive biopsy robotic system called the Ion. The company's services include readiness and maintenance support, as well as consulting and program analytics solutions.
Intuitive Surgical's instruments and accessories include stapling and energy devices, and other key fixtures that accompany its systems. These must be replaced regularly. Not only are they the company's biggest revenue driver, but they also serve as recurring revenue. In addition to instruments and accessories revenue, other recurring revenue sources for Intuitive Surgical include operating leases and revenue from services. Recurring revenue totaled 79% of the company's total revenue in 2022 and 83% of its total revenue in 2023.
In the second quarter of 2024, worldwide da Vinci procedures grew 17% from the year-ago period, with revenue growing 14% year over year to $2 billion. The company finished the quarter with 14% more da Vinci surgical systems in its installed base than the prior-year period. Meanwhile, profits grew 25% year over year to $527 million. Over the last five years, Intuitive Surgical has grown its revenue by around 60% while its net income has increased to the tune of about 30%.
The stock is up about 150% in that time frame. The adoption of surgical robotics is still in the early stages in various surgical specialties, and Intuitive Surgical's resilient recurring revenue model gives it plenty of room to derive growth from various sources in the years ahead. Healthcare investors who stay with the stock not just this summer but in a multi-year buy-and-hold position could have some generous returns in store.
2. Crocs
Crocs (NASDAQ: CROX) may or may not be a company at the top of your wishlist. However, it is one worth watching or considering a position in if you're looking for a profitable, fast-growing company in the cyclical retail space. Shares of the shoemaker have soared about 40% from the start of 2024 as investors have experienced a renewed interest in the maker of that unmistakable foam footwear.
Broad awareness of the Crocs brand among consumers, as well as a preference for the comfortable and unique design of its foam clogs, continue to drive sales. The company has also made it part of its business model to enter into a series of limited edition launches and collaborations with well-known brands both in and outside of the retail industry.
Past collaborations have featured partnerships with both individuals and companies. A few examples have ranged from Levi's (owned by Levi Strauss & Co.) to Taco Bell and KFC (owned by Yum! Brands) to rapper and songwriter Saweetie to Vera Bradley.
In 2023, Crocs delivered record revenue of about $4 billion, up 12% year over year, with Crocs brand revenue growing 13% and HeyDude revenue up 6%. The company also delivered a net income of about $793 million, up 47% from 2022.
Fast-forward to the first quarter of 2024, and consolidated revenue rose 6% year over year to $939 million, while direct-to-consumer revenue jumped about 12%. HeyDude revenue was down double-digits from one year ago, but Crocs brand revenue soared 15%. The company delivered net income about 2% higher than the prior year's quarter, totaling $152.5 million, with an exceptional gross margin of 55.6%.
Crocs has faced some financial headwinds from fluctuating sales in its HeyDude division, a purchase it made back in 2022. This hasn't stopped the company's financial momentum, though, which has translated to strong movements from investors and its impressive share price performance of late. While consumer spending patterns are in flux, Crocs is showing marked strength on the fundamentals.
It also shaved its inventory down by about 18% in the recent quarter, so the company is working to ensure operational efficiency in a fluctuating spending environment. Its growth story could keep delivering outsized gains to investors, who might want to consider even a small slice of the business.
Should you invest $1,000 in Intuitive Surgical right now?
Before you buy stock in Intuitive Surgical, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intuitive Surgical wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $657,306!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of July 29, 2024
Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends Crocs. The Motley Fool has a disclosure policy.
These 2 Magnificent Growth Stocks Are Set to Soar This Summer and Beyond was originally published by The Motley Fool