Despite earlier predictions of a recession, the economy has demonstrated remarkable resilience. This is particularly evident in the United States, where GDP expanded at its quickest rate in two years during the last quarter. While inflation has retreated from four-decade highs, it continues to exceed the Federal Reserve’s 2% target. Additionally, yields on 10-year treasury bonds have surged to levels not seen in 16 years. This is indicating shifting dynamics in the financial landscape. The market shift has led us to create a list of sleeper stocks to buy.
This buoyancy in economic indicators is anticipated to be beneficial for the stock market. We anticipate that this will foster an environment conducive to growth as businesses capitalize on improved consumer confidence and increased investment opportunities. In particular, three three sleeper stocks are set to grow in the long term.
Roku Incorporated (ROKU)
Roku Incorporated (NASDAQ:ROKU) is a world-leading entertainment and communication services company with streaming services and smart home products. Yahoo! Finance has 26 analysts predicting a one-year price range on ROKU. The analytics expect it to be between $50.00 and $115.00, with a mean of $81.31.
Roku boasts healthy financials. For Q3 2023, $912 million in revenue grew at a 19.7% 1-year CAGR. Strong signs of profitability are evident in a $355 million FCF margin that grew 168.9% YoY. Cash from operations grew 1608.8%, and cash from financing grew 288.2% YoY.
Roku’s growth comes from new partnerships and the launching of a branded TV product line. Roku has partnered with Formula E to become the official streaming service of Formula E. With the new rights to live-streamed races and commentary programs, millions of new Roku subscription users will be evident. Roku has also partnered with Spotify for CTV advertisements. Furthermore Pixalate revealed that Roku has captured 51% of the CTV market this year.
Roku launched its new branded TV product line in January this year. Momentum from this product release made Q3 device revenue increase by 33% YoY. With Black Friday and the holiday season, Roku is offering its TVs at discounted prices. The company hopes to drive device revenue and gain shares of the consumer electronics market.
Roku is a buy stock for investors because of its healthy financials, key partnerships, and more mentioned above. This is one of the sleeper stocks to buy that you should grab now.
Visa Incorporated (V)
Visa Incorporated (NYSE:V) is a payment card service that facilitates electronic funds transfers worldwide from credit, debit and prepaid cards.
V stock is up 18.04% YTD, and 33 analysts project a 12-month price forecast of medium to high of $278 to $325, or a 13.4% and 32.5% upside.
The digital payment technology industry is valued at $94.34 billion as of 2022 and is projected to grow at a 20.60% CAGR to $317.27 billion by 2030. Key catalysts behind this growth include urbanization, digitalization, and the transition from cash to card.
Revenue grew 8.17% YoY, P/S ratio grew by nearly 7.21%, and EBIT growth reached 13.30% which is 220.72% more than the sector median of 4.15%.
Visa maintains its industry leadership by strategically integrating AI into its products. The company has adeptly leveraged AI to enhance payment experiences and elevate customer service, positioning itself as a trailblazer in the industry. At the core of Visa’s competitive edge is its globally recognized and trusted brand. With a well-established reputation, Visa has successfully cultivated partnerships with esteemed vendors and financial institutions. This extensive network not only reinforces its market position but also provides a substantial advantage over emerging competitors in the dynamic and expanding field.
Overall, due to its competitive advantage paired with its use of AI, V is a stock worth buying that will grow in the years to come.
Starbucks Corporation (SBUX)
Starbucks Corporation (NASDAQ:SBUX) is the largest coffee chain in the world with 35,711 stores in 80 countries providing food and beverages to consumers worldwide.
SBUX’s stock is up 5.17% YTD, and 26 analysts project a 12-month medium to high price target of $110 to $128, or a 5.4% and 22.7% upside.
The retail coffee and snacks store industry is valued at $64.4 billion as of 2023 and is projected to grow at a CAGR of 3.7%. Catalysts for this growth include recent urbanization, the demand for more convenient food and drink, premiumization and expanding coffee consumption in emerging markets.
Starbucks revenue went up 9.3% from 2022 to 2023 seeing it rise from $32.91 billion to $35.97 billion. Forward Operating Cash Flow growth reached 20.45% which is 176.08% more than the sector median of a measly 7.41%. EBIT margin also reached 15.30% which is 105.76% more than the sector median of 7.43%.
Overall, due to steady growth and seasonal items, SBUX’s stock price will soar in the coming years. If you are looking for sleeper stocks to buy, start here.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.