June 19, 2024

The Art of Investment

Mastering the Stock Market Strategies

Buy the Dip: 3 Growth Stocks Poised for a Rapid Rebound Buy the Dip: 3 Growth Stocks Poised for a Rapid Rebound

4 min read

Finding stable investment options is essential for investors looking to grow despite market volatility in today’s unpredictable environment. Three companies emerge as strong contenders for a swift recovery. The first business is growing steadily in the direct-to-consumer (D2C) market, gaining subscribers and broadening its reach internationally. With a strategic expansion into nearly 40 countries and territories and adding millions of new members in a single quarter, the company is almost at the 100 million subscriber milestone. 

In the meantime, the second business is maintaining its position as a leader in the coffee market using its substantial brand equity and cutting-edge product offerings. Despite the industry’s difficulties, the company has a large client base, and cold beverages account for a sizable percentage of its sales. This suggests continued customer involvement and market relevance.

Lastly, the third company has achieved a solid financial milestone in its U.S. healthcare division, as seen by its positive adjusted EBITDA. The company demonstrates resilience and the potential for additional growth in the healthcare sector combined with the growth demonstrated by major participants in its healthcare services portfolio.

Warner Bros. Discovery (WBD)

A close-up of the blue and yellow Warner Bros (WBD) sign.

Source: Ingus Kruklitis / Shutterstock.com

Warner Bros. Discovery (NASDAQ:WBD) is expanding its subscriber base, adding two million new users in Q1 2024. This brings its entire D2C subscriber base very close to 100 million. The company’s D2C footprint grew from one U.S. market to 39 nations and territories, with plans to expand into over 25 more European regions and LatAm shortly.

Additionally, the company has approximately $90 million in positive EBITDA for Q1 despite absorbing launch expenses in LatAm. This indicates the profitability and growth potential of its D2C sector. Moreover, Warner Bros. Discovery increased the average revenue per user (ARPU), with an 8% year-over-year (YoY) growth in the U.S. market and 4% globally. They combined improved subscriber migration experiences, targeted marketing efforts, and content offers. Similarly, churn rates are still higher than long-term goals, but they are declining, having hit a record low in the U.S. at the end of Q1.

Finally, contributing elements include increased content lineups, improved content variety, and user experience. Lastly, the goal of introducing packaged products with Disney+ (NYSE:DIS) and Hulu is to reduce attrition further and boost retention, boosting customer lifetime values.

Starbucks (SBUX)

Learnin' From Luckin, Starbucks Stock Heats Up a Strategy

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Starbucks (NASDAQ:SBUX) continues to have an attached global customer base. This is an unparalleled lead in the coffee industry and solid and robust international brand equity. The company’s brand is strong despite difficulties in Q2 fiscal 2024 because of its distinctive customer experience and emphasis on coffee craft. The company leads the coffee industry, with 63% of beverage sales being cold, delivering great performance driven by innovation.

Further, Starbucks has demonstrated its unique capacity to build storefronts by adding 364 net new locations during Q2, increasing its total number of locations to 38,951 worldwide. The company’s strong store expansion strategy is demonstrated by its capacity to plan and construct more than 3,000 new shops a year while focusing on financial assertiveness. 

Moreover, Starbucks is a leader in consumer interaction and digital innovation, and its Starbucks Rewards program is a key factor in generating value. Nearly 33 million Starbucks Rewards members in the U.S. as of Q2 represent a 6% YoY increase in membership. Finally, 31% of all transactions during the quarter were Mobile Order & Pay (MOP) transactions, demonstrating the effectiveness and uptake of digital efforts.

Walgreens Boots Alliance (WBA)

Landscape Night View of Walgreen's Pharmacy Building Exterior. WBA stock

Source: Mahmoud Suhail / Shutterstock.com

The pharmacy services segment of Walgreens Boots Alliance (NASDAQ:WBA) had sharp top-line growth, which improved the business’s overall performance. In Q2 2024, sales in the U.S. healthcare business reached $2.2 billion, a 33% increase over Q2 2023.

Additionally, eleven micro-fulfillment sites run by Walgreens Boots Alliance sustain more than half its footprint. These centers improve customer service and maximize operational efficiency. Thus, improved NPS ratings, patient retention, and adherence are indicators of these institutions’ increased efficiency.

Further, in the U.S. healthcare sector, Walgreens Boots Alliance had its first-ever positive adjusted EBITDA quarter. This demonstrates the segment’s financial stability and development potential and represents a major advancement. VillageMD, a significant component in Walgreens Boots Alliance’s healthcare services portfolio, showed development despite obstacles. Pro forma sales of $1.6 billion increased by 20% YoY, indicating a solid market position and room to grow.

Lastly, the international segment of Walgreens Boots Alliance continuously increased income. For instance, overall sales at Boots UK increased by 3%, while wholesale sales in Germany increased by 5.3%. Therefore, this steady performance demonstrates the segment’s resilience and room for growth.

As of this writing, Yiannis Zourmpanos held long positions in WBD, SBUX and WBA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Yiannis Zourmpanos is the founder of Yiazou Capital Research, a stock-market research platform designed to elevate the due diligence process through in-depth business analysis.

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