In the fast-paced world of investing, it’s rare to find low-cost growth stocks to buy and hold for the long term. Low-cost growth stocks are often found in sectors with high growth potential. For example, in the general tech industry or in more niche sectors like biotechnology. These stocks offer the possibility of substantial returns as the companies expand and a lower entrance fee to get on the ladder to possibly outstanding gains.
However, low-cost growth stocks can come with higher risk as these companies may be more volatile and less established. Careful research and analysis are crucial when investing in low-cost growth stocks. Here are three stellar picks that promise steady growth and robust returns. Each company exhibits sharp financial improvements that signal impressive future potential.
Power Solutions (PSIX)
Power Solutions (OTCMKTS:PSIX) specializes in providing advanced energy and automotive power systems. In Q1 2024, the company’s gross margin improvement of 6.8% indicates a boosted operational edge. An increase in gross margin reflects the company’s leads. These leads include improving its product mix, adjusting pricing strategies and attaining higher operational efficiencies.
Additionally, the reduction in warranty costs by $3.5 million contributed to this margin improvement. This highlights the effective management of product quality and customer satisfaction. A higher gross margin suggests that Power Solutions can profit more from its sales.
Moreover, the company’s operating cash flow has increased by $10.6 million (to $15.6 million). This liquidity is vital for funding working capital and operations, paying down debt and investing in growth moves, all without relying heavily on external financing. Strong operating cash flow also enables Power Solutions to pursue growth opportunities aggressively as it can invest in new projects and markets.
Overall, Power Solutions is on the stocks to buy and hold list due to solid improvements in gross margins and operating cash flow.
Immersion (IMMR)
Immersion (NASDAQ:IMMR) leads in haptic technology. The company’s revenue totalled $43.8 million for Q1 2024, a large increase from $7.1 million in Q1 2023 and an annual growth of 517%. The massive revenue surge comes from Immersion considerably expanding its market share and successfully entering new verticals and segments. Immersion has the fundamental ability to translate its intellectual property into high revenue through smart monetization strategies.
The company generated net income of $18.7 million in Q1. This contrasts with $8.3 million in Q1 2023, a 125% increase. This growth reflects higher revenues and smart cost management with a high operational edge. The increase in earnings per share (EPS) from 25 cents to 59 cents indicates that Immersion is growing its top line and boosting market value potential. This higher EPS indicates the company’s fundamental capability to derive profits and valuations.
In short, Immersion’s solid increase in top line and net income gives it strong potential among stocks to buy and hold.
GoDfgaddy (GDDY)
GoDaddy (NYSE:GDDY) leads in domain registration, web hosting and online business solutions. The annualized Gross Payment Volume (GPV) growth for GoDaddy surpassed $2 billion, highlighting the superiority of its commerce initiatives. The introduction of the GoDaddy Smart Terminal Flex and increases in phased transaction fees emphasizes the company’s focus on boosting its payment offerings while maintaining competitive pricing. The deployment of GABI, GoDaddy’s Guide Assist Bot, across its Care footprint represents another strategic initiative to improve operational efficiency and customer service.
Moreover, GoDaddy had a net income of $401.5 million in Q1 2024, reflecting a 747% annual increase, highlighting its massive boost to profitability. The company’s ability to considerably improve net income while maintaining healthy margins points to its cost management and revenue generation strategies.
GoDaddy’s normalized EBITDA of $313 million, up 25% annually, represented a 28% margin and exceeded initial guidance. This growth in normalized EBITDA reflects the company’s progressive execution of its operational strategies and ability to convert a high portion of its revenue into free cash flow.
Ultimately, GoDaddy’s commerce initiatives and operational improvements signal a capacity for high returns, making GDDY a standout choice among stocks to buy and hold.
On the date of publication, Yiannis Zourmpanos did not hold (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.
On the date of publication, the responsible editor did not hold (either directly or indirectly) any positions in the securities mentioned in this article.