Investing doesn't have to be complicated. If you can find companies with solid long-term growth prospects, you can make a lot of money in the stock market.
If you're searching for some top stocks to buy, here are two promising businesses with clear and exciting expansion potential. Their bargain-priced shares likely won't stay this cheap for long, but today, you can pick up both growth stocks for less than the price of a large pizza.
Redfin
The Federal Reserve's moves to tame inflation have taken a toll on the housing market. Interest-rate hikes have led to higher mortgage rates, reducing the affordability of homes for buyers. Meanwhile, many sellers, not wanting to exchange a mortgage with a 3% rate for a new one that charges 7% interest, have decided to sit tight, rather than list their homes for sale.
Fortunately, inflation appears to be subsiding, and Fed officials have indicated their intentions to begin cutting rates later this year. If you'd like to position yourself to profit from an imminent housing rebound, consider buying shares of Redfin (RDFN +0.00%). The technology-powered brokerage and real estate services provider is well-situated to benefit from a potential surge in home-sale transactions.
NASDAQ: RDFN
Key Data Points
Redfin's popular website and salaried agents let it offer a unique value proposition to its customers. With listing fees as low as 1%, Redfin often saves sellers thousands of dollars in home-sale costs. Typical agent commissions at competing brokerages are 2.5 times higher or more.
Unsurprisingly, given these cost savings, Redfin has increased its share of the colossal $126 billion U.S. existing-home-sale market to 0.78%, up from 0.42% in 2017. With increasingly cost-conscious consumers placing a greater emphasis on reducing fees wherever and whenever they can, investors can expect Redfin to continue to win more market share in the coming years.
Better still, the housing downturn drove management to strip costs out of Redfin's business. After exiting its money-losing home-flipping segment and refocusing on its core brokerage operations, the newly streamlined company is reducing its net losses and is better equipped to deliver long-term gains to shareholders.
SoFi Technologies
SoFi Technologies (SOFI +0.66%) is another company that's using technology to disrupt a huge industry. The digital bank and financial services upstart is growing quickly within the $1.4 trillion U.S. commercial-banking market -- and more gains lie ahead for investors.
NASDAQ: SOFI
Key Data Points
SoFi's checking and savings accounts are popular among consumers who value high yields, expanded Federal Deposit Insurance Corp. coverage, and convenient online access. The company gained nearly 585,000 new members in the fourth quarter alone. The fintech ended 2023 with more than 7.5 million members, a 44% jump from the prior year.
Image source: SoFi Technologies.
Sofi's deposit base is growing alongside its customer count. The online bank added $2.9 billion in deposits in the fourth quarter, which brought its year-end total to $18.6 billion.
These relatively low-cost funds are fueling the growth of the company's booming loan business. Sofi's total origination volume in its lending segment leaped 45% year over year to $4.3 billion in the fourth quarter. The gains were broad-based -- origination volumes in its home, student, and personal loans segments surged 193%, 95%, and 31%, respectively.
All told, SoFi's revenue climbed 35% to $2.1 billion in 2023. Better still, the company delivered a net profit for the first time in the fourth quarter.
Management sees SoFi's net income rising to as much as $105 million in 2024. Looking further ahead, the company projects that it will increase revenue by more than 20% annually through 2026. Sofi expects these impressive revenue gains to drive its earnings to as high as $0.80 per share by that time.
Today, SoFi's shares can be had for about 10 times the high end of its earnings-per-share forecast for 2026. That's a bargain price for a fast-growing digital-banking leader.
