The year is drawing to a close, and what a year it has been for the stock market. As of this writing, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are up 26%, 28%, and 19%, respectively.
That said, there are many growth stocks that have far outpaced the benchmark indexes and could be worth considering for the long term. Here are three investors should know about.
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First up is streaming giant Spotify (NYSE: SPOT).
The company, which operates the most popular music-streaming app in the world, continues to impress markets with its growth. In its most recent quarter (the three months ending on Sept. 30), Spotify reported 640 million monthly active users (MAUs), up 11% from 574 million MAUs one year ago.
In addition, the company’s number of paid subscribers jumped 12% to 252 million. Arguably, paid subscribers are an even more important figure to Spotify, as subscription fees account for 88% of the company’s total revenue.
At the same time as the company has ramped up its conversion of overall MAUs into paid subscribers, management has also cut costs. Accordingly, Spotify’s profitability has soared. The company reported operating income of 454 million euros, compared to only 32 million euros one year earlier.
In summary, Spotify is giving growth-oriented investors what they want to see. The company’s user base, revenue, and profits are all expanding, as Spotify continues to tap into new markets and grow its subscriber count. That’s a recipe for continued success, which is why investors should consider it as a long-term buy and hold stock.
Next, there’s Reddit (NYSE: RDDT).
Reddit only debuted via an initial public offering (IPO) less than a year ago. Yet, as of this writing, the stock is up a remarkable 180%.
It’s all thanks to Reddit’s big three financial metrics:
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Robust revenue growth
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Strong user growth
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Sky-high gross margin
Starting with revenue, Reddit has grown its quarterly revenue (for the three months ending on Sept. 30) to $348 million — an increase of 68% year over year. Similarly, the company’s daily active uniques (DAUqs) rose 47% to 97 million.
That’s rapid growth, and, best of all, the company is capitalizing on the growth by increasing its profitability. Gross profit margin increased to 90% in its most recent quarter — the best ever for the company, and more than 200 basis points higher than the same period one year ago.
