Best Growth Stocks To Buy

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Best Growth Stocks To Buy

2 Best Growth Stocks To Buy

The stock market is trading close to all-time highs, and the valuations are now sky-high. Despite this, there are still many growth stocks with attractive valuations.

With that in mind, we have picked Dutch Bros and the E.l.f. Beauty as the best growth stocks. They are in the consumer space, and that's the one sector which remains resilient even in uncertain times.

Dutch Bros

Dutch Bros is one of the best growth stocks you can buy at a bargain. Its P/S ratio is 3.3 times, which is similar to that of Starbucks. Now, that's a big thing, as the Dutch Bros is expected to have a longer growth runway than Starbucks.

The average unit volume of Dutch Bros and Starbucks is also similar. However, the restaurant-level contribution margins of Dutch Bros are way better than those of Starbucks in the North American market.

In simple words, each Dutch Bros shop is more profitable than a Starbucks shop. That's the biggest benefit for Dutch Bros, and it can easily become massive once Dutch Bros expands with new locations.

E.l.f. Beauty

Another growth stock available at a bargain is E.l.f. Beauty. It is also in the consumer space, and one of its biggest strengths is its product distribution.

For consumer brands, the product distribution is vital as that's the only way to reach more customers. E.l.f. Beauty has done a good job at gaining a good share of the market through smart distribution. That's why it is normal to see the E.l.f. Beauty products on the shelf space along with other big names.

E.l.f. Beauty has recently acquired Rhode and is now planning to apply the same formula. Once the Rhode's distribution is increased in the coming years, it will lead to more revenue for E.l.f. Beauty.

Also, the forward P/E of E.l.f. Beauty is only 15.5, which is very reasonable. With all things considered, E.l.f. Beauty is a very reasonable growth stock to consider.

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