3 Soaring Stocks That Are Screaming Buys in August
August has been a rocky month for investors thus far, with a sell-off induced by economic fears and a tough earnings season for a number of popular AI stocks.
However, some stocks have passed the earnings test with flying colors and look poised for further gains. Without further ado, keep reading to see these three stocks that look like screaming buys today.
1. MercadoLibre
One of the strongest stocks in the e-commerce sector in recent years has been MercadoLibre (NASDAQ: MELI), the Latin American leader in online retail and digital payments through MercadoPago.
MercadoLibre has been a top stock since its IPO in 2009, jumping roughly 2,000% since then. And unlike nearly every other e-commerce stock, the company showed no signs of slowing down in the post-pandemic period as consumers returned to their pre-pandemic offline shopping habits.
That pattern continued in the second quarter, as MercadoLibre’s revenue jumped 42% to $5.1 billion and 36% growth in total payment volume to $46.3 billion, showing that its two core businesses continue to expand rapidly.
While MercadoLibre is facing challenges in Argentina, which is mired in an economic crisis, it’s thriving elsewhere and is taking advantage of a large whitespace opportunity in Latin America. Growth in Brazil, its biggest market, was strong, with GMV up 36% on currency-neutral terms, while Mexico was up 30%.
The company also reported its biggest growth in unique buyers in three years, at 19%. After years with minimal profit, MercadoLibre’s bottom line has also expanded significantly with a 10.5% operating margin and $531 million operating income.
MercadoLibre put together an Amazon-like combination of businesses, including its third-party marketplace, fintech, logistics, and financing, and profit is scaling up as it grows. That pattern should continue in the coming years as MercadoLibre’s competitive advantages only seem to be getting bigger. The stock is up 14% in August.
2. The Trade Desk
Like MercadoLibre, The Trade Desk (NASDAQ: TTD) is another longtime winner on the stock market and an industry leader that just delivered an impressive earnings report.
The Trade Desk is the largest independent demand-side platform in the ad tech industry. It helps brands optimize their ad campaigns across a wide range of platforms, and it also put up solid growth during a challenging time in the industry.
Revenue in the second quarter jumped 26% in the quarter to $585 million, with continued gains in connected TV (CTV), or ad-based streaming, retail media, and cookie-less targeting through Unified ID 2.0 and European Unified ID.
That top-line growth delivered a strong jump on the bottom line, with generally accepted accounting principles (GAAP) net income more than doubling from $33 million to $85 million. The Trade Desk has a stellar track record with its customers, as customer retention has been greater than 95% every quarter for 10 years in a row.
The Trade Desk also invested heavily in its new Kokai AI platform, empowering advertisers more and increasing its competitive advantages. The stock is up 8% so far this month and looks poised to keep moving higher.
3. Sweetgreen
Sweetgreen (NYSE: SG), the fast-casual salad chain, posted strong results in its recent earnings report, continuing an impressive streak of growth.
Revenue in the quarter increased 21% to $184.6 million, driven by an impressive same-store-sales jump of 9%. The company continued to report average unit volumes of $2.9 million, a similar level to Chipotle Mexican Grill.
Sweetgreen continues to make progress on the bottom line as restaurant-level operating margin improved from 20% to 22%, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) up from $3.3 million to $12.4 million.
Sweetgreen also raised its guidance for the full year, as it continued to benefit from a large growth opportunity with less than 300 locations across the country and strong same-store-sales growth. The fast-casual chain also has something of a wild card with its Infinite Kitchen robotic assistant that can help expedite food prep and orders, increasing revenue and saving the company on costs.
Shares of the restaurant chain are already up 25% this year, but its product is clearly resonating with customers, and there’s a significant growth opportunity in front of the company. Sweetgreen is a good be to keep moving higher.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon, Chipotle Mexican Grill, MercadoLibre, and The Trade Desk. The Motley Fool has positions in and recommends Amazon, Chipotle Mexican Grill, MercadoLibre, and The Trade Desk. The Motley Fool recommends Sweetgreen and recommends the following options: short September 2024 $52 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
3 Soaring Stocks That Are Screaming Buys in August was originally published by The Motley Fool
