Bumble

What it does: Bumble is an online dating platform that sets itself apart from competitors as women make the first move.

By Muhammad Cheema. It’s easy to be pessimistic about Bumble (NASDAQ:BMBL) shares. They’ve declined by 92% since going public in 2021 and have fallen by 60% in the last year alone. This is mainly because of the slower-than-expected growth. Recently trimming its growth forecast from 8-11% to 1-2% didn’t help.

Don’t get me wrong, there are risks of it fading out if growth doesn’t pick up. But I’m betting it will, so I’ve recently added to my position.

I truly believe that online dating is the future of dating. It’s not my preference, to be honest, but it’s the way the world is trending. Many people are glued to their phones, and meeting people online is becoming more common.

Let’s not forget the company is still growing and is profitable. In fact, in its recent quarterly results, net earnings increased by 306% year-on-year.

Finally, Bumble shares seem oversold to me. They’re now trading at a forward price-to-earnings (P/E) ratio of 8.9. This represents a potential bargain.

Muhammad Cheema owns shares in Bumble.

Hilton Food Group

What it does: FTSE 250 member Hilton Food is a leading “multi-protein” producer with a core focus on meat production.

By Roland Head. Shares in Hilton Food (LSE: HFG) look good value to me after a recent share price correction.

The company’s recent half-year results revealed a mixed picture. Although adjusted pre-tax profit rose by 25% to £33m, sales only rose by 1% on a comparable basis.

What interested me was the improvement in Hilton’s profitability in the UK. Margins in the group’s home market were boosted by its growing seafood business and sales of premium meat products.

Looking further ahead, the firm is set to expand into North America with the opening of a new facility in 2026/27. This is backed by a contract with Walmart Canada.

Hilton has disappointed before and the group’s profits could be hit by consumer downtrading or the loss of a major contract.

However, broker forecasts have been upgraded recently and I think the shares look reasonably valued at current levels. I’ve recently added Hilton Foods to my portfolio.

Roland Head owns shares in Hilton Food.

iShares Edge MSCI USA Quality Factor UCITS ETF

What it does: iShares Edge MSCI USA Quality Factor UCITS ETF invests in US companies that enjoy strong and stable earnings.

By Royston Wild. With an average annual return of 14.72% since it started eight years ago, the iShares Edge MSCI USA Quality Factor UCITS ETF (LSE:IUQA) has been near the top of my shopping list for some time. In recent days I pulled the trigger and finally added it to my portfolio.

As its name implies, the fund provides me with exposure to the strongly performing US stock market. Major holdings here include tech giants Apple and Nvidia, soft drinks maker Coca-Cola, and payment card services providers Visa and Mastercard.

This selection illustrates the ETF’s focus on companies with solid profits records. More specifically, it targets companies that have “[a] high percentage of company earnings allocated to shareholders; low levels of debt; and low variability of year on year company earnings.”

On the downside, a high concentration of cyclical stocks may leave the fund vulnerable during economic downturns.

Information technology, financial services and consumer discretionary companies alone make up more than 52% of the fund. However, a proven ability to deliver a strong return over time still makes it an attractive investment in my book.

One final thing: with an ongoing charge of just 0.2% per annum, it’s also extremely cost effective.

Royston Wild owns iShares Edge MSCI USA Quality Factor UCITS ETF.

Norfolk Southern

What it does: Norfolk Southern is one of the US Class 1 railroads. It operates on the Eastern side of the country.

By Stephen Wright. Warren Buffett used to own shares in US railroad Norfolk Southern (NYSE:NSC). And since I think there are reasons why this company can do well, I’ve been buying it for my own portfolio. 

Since 2014, the US transportation market has shifted from roughly even between truck and rail to now being 64% trucking. That’s despite trains being cheaper and less carbon-intensive.

The reason is that railroads almost across the board have focused on margins and provided a poor service. But Norfolk Southern is looking to change that, and I expect this to continue even after Alan Shaw’s departure. 

The company has been working on improving its reliability and efficiency in ways that benefit its customers. And I think this means it has a good chance of regaining market share over time. 

The risk is that this approach is going to result in lower margins, which could offset revenue growth. But I think its strategy is the right one and that’s why I’ve been buying the stock.

Stephen Wright owns shares in Norfolk Southern.

Rolls-Royce

What it does: Civil aerospace giant Rolls-Royce manufactures aircraft engines, marine propulsion systems, and power-generation system. It also makes engines for military aircraft, ships and submarines.

By Harvey Jones. When a stock goes gangbusters like Rolls-Royce (LSE:RR.), I get whipped up into a frenzy of fear and greed, just like everybody else.

I was lucky in one respect. I spotted the FTSE 100 group’s recovery potential in October 2022, and bought right at the start of its index-smashing run. Unfortunately, I only invested a small sum, and was left with the sticky decision of whether to buy more as the Rolls-Royce share price flew ever higher.

I held back, knowing sod’s law would strike and the stock would fall as soon as I piled in. I finally gave into FOMO on 1 August, after Rolls-Royce beat first-half guidance and announced the return of its dividend. 

I paid 495p and the stock fell the moment I clicked the ‘buy’ button, exactly as I feared. I averaged down on 6 August at 455p. So far I’m down 3.16% on those trades. Which is a bit rubbish given that Rolls-Royce shares are up 503% off over two years and 113% over one. Timing the market never works. I should stop.

The rapid recovery phase is over but I still expect a steady stream of growth and income over the years. If Rolls-Royce shares dip in the short run, I’ll buy more.

Harvey Jones owns shares in Rolls-Royce.

Taylor Wimpey

What it does: Taylor Wimpey is one of the UK’s largest home builders. In 2023, it completed 10,848 homes. 

By Charlie Keough. I’ve had FTSE 100 housebuilder Taylor Wimpey (LSE: TW.) on my watchlist for some time now. I recently decided to snap up some shares. 

There are a few reasons for this. Firstly, the stock has been soaring. It has climbed 8.6% in 2024 and a whopping 41.6% in the last 12 months. I’m confident it can keep this form up. 

That’s because the current housing shortage should benefit the firm. To fix the issues we’re currently facing, the Labour government has promised to build 1.5m new homes over the next five years. 

That’s not to say I don’t see potential risks with Taylor Wimpey. The housing market has struggled over the past couple of years and any further setbacks would impact its share price. For example, a delay in further interest rate cuts would have negative implications for the business. 

Yet despite potential issues in the months ahead, I couldn’t resist its meaty 5.9% dividend yield. That’s considerably above the Footsie average of 3.9%. 

Charlie Keough owns shares in Taylor Wimpey. 

TripAdvisor

What it does: TripAdvisor runs a digital platform offering a range of travel-related services such as hotel reviews and experiential travel bookings.

By Christopher Ruane. In August, I wrote that I was eyeing buying more TripAdvisor (NASDAQ: TRIP) shares for my portfolio in September. That is exactly what I ended up doing.

The share has lately been trading close to its one year low. As well as a potential bid that never materialised, investors have been concerned about whether a weak economy could dampen travel spending, hurting revenues and profits at TripAdvisor.

But does the company, with strong cashflows, really merit a market capitalisation of under $2bn?

Its brand is unique and ubiquitous, the experience booking offering has seen strong growth and, for now at least, travel demand remains robust.

Yes, it operates in a cyclical business. But I think the business has a strong competitive position for the long term that means it looks cheap at the current price.

So, even though my existing holding showed a loss on paper, I used the price weakness to buy more shares.

Christopher Ruane owns shares in TripAdvisor.

Uber Technologies 

What it does: Uber Technologies is a leading global rideshare and food delivery company.

By Ben McPoland.I recently became a shareholder in Uber Technologies (NYSE: UBER). The previously loss-making firm has reached a point where its massive scale and cost-cutting efforts are translating into profitable growth.

In the first six months of the year, it generated $968m in operating profit. This was a 15-fold increase over last year. Earnings per share growth is expected to exceed 100% over the next couple of years then rise by double-digits after that.

This year, the company partnered with Instacart in the US, enabling the latter’s customers to order from hundreds of thousands of Uber Eats’ restaurant partners.

Looking ahead, the rise of autonomous vehicles (AVs) might pose challenges. Uber has partnered with over 10 AV players, including Waymo and Cruise (subsidiaries of Alphabet and General Motors, respectively). But there remains a long-term risk that these firms use their own consumer apps to poach some of Uber’s customers.

As things stand though, the company appears to have solid growth potential in countries like Spain, Germany, Japan, India and South Korea. It notes that in these places, ‘Uber’ isn’t yet used as a verb.

Ben McPoland owns shares in Uber Technologies.

The post 8 shares that Fools have been buying! appeared first on The Motley Fool UK.

Well-known brand with unique position

Here is a question: what is fhe first website you think of when it comes to hotel reviews?For a lot of people, the answer is TripAdvisor (NASDAQ: TRIP).

In fact, one of the things I like about the company is the fact that it has such a strong position in its market. That is a market with a network effect, meaning the more reviews that are posted, the more useful the platform becomes, in turn hopefully driving further growth.

But while TripAdvisor has a strong reputation for reviews, it has not always monetised that well. It has a market capitalisation of $2bn. That pales compared to the $130bn market-cap of rival Booking Holdings. By offering a range of travel agency services like hotel booking, it has been able to monetise reviews far more effectively than TripAdvisor.

Still, I think TripAdvisor’s brand and user base is valuable. Its business is more than just the core reviews offering. For example, it also owns experience platform Vlator, where revenues in the first quarter grew 13% year-on-year and are now close to that of the core TripAdvisor-branded business.

Attractive valuation

It has been a tough five years for the business, but in the past several years it has shown signs of shaking off the pandemic-era blues.

Last year saw record revenues of $1.8bn. Net income was just $10m, implying a very tight profit margin. But cash flows from operations were $235m. Given its unique brands, I think the company has pricing power that can help it increase profit margins in coming years and hopefully generate sizeable cash flows too.

At less than nine times last year’s operating cash flows, I see the valuation as attractive.

Risks on the road

Still, a share does not halve in value in a matter of months for no reason. I think concerns about the revenue risks posed by weakening travel demand explain part of the fall. But the bigger cause has been the news that a possible takeover bid for the company did not materialise.

As a long-term investor, that is fine with me. I can now buy more of this growth stock at what I see as an attractive valuation.

What about the risk of weaker travel demand? I am concerned by it. However, I think TripAdvisor could do well nonetheless. Business travel has been coming back and leisure demand remains strong. Even if the economy weakens, demand for more local experiences could increase and I see that as positive for TripAdvisor.

With its strong brand, large customer base and strong growth opportunities, especially for Vlator, I plan to keep holding – and I am thinking about buying more shares in September.

The post One growth stock I’m eyeing for September appeared first on The Motley Fool UK.

But the market turbulence has also opened up buying opportunities for long-term investors.

Here are two growth stocks on my buy list. One I would happily buy at its current price if I had spare cash to invest. I would like to buy the other one too, but only if I can get it cheaper than is the case now.

Tripadvisor

I was excited to buy shares in online travel specialist Tripadvisor (NASDAQ: TRIP) a few months ago. Since then though, they have gone down in value. I see that as a buying opportunity for my portfolio.

Last week’s release of first quarter results did not go down well with investors.

Revenue rose 42% year on year. But costs rose too, with total operating expenses up 37% compared to the same period in the prior year. The company reported a net loss for the period of $73m, more than twice as large as the same quarter last year.

Looking at cash flow

With that sort of result, why am I excited about Tripadvisor? I think its strong brand and unique customer proposition are valuable assets at a time of surging travel demand.

I also think the earnings numbers do not tell the whole picture when it comes to business performance. Free cash flow in the first quarter was $119m. On an annualised basis, that suggests free cash flow could be close to half a billion dollars. The company is sitting on cash and cash equivalents of $1.1bn. Yet its market capitalisation is only twice that, at $2.2bn.

That looks like a cheap valuation to me.

I think Tripadvisor could be a free cash flow machine in coming years as long as it keeps a lid on costs. A weak economy could burst the travel bubble, hurting revenues and profits. But, in the long term, I think travel demand should be significant. Tripadvisor should benefit.

Intuitive Surgical

Medical robotics maker Intuitive Surgical (NASDAQ: ISRG) has an excellent business model.

It operates in a field with robust demand: surgery. By helping to automate processes, it can offer deep-pocketed healthcare providers with cost and consistency benefits.

As well as selling machines, lucrative revenues can come from peripherals such as surgical instrument attachments that are replaced after each operation.

I think competition will increase, possibly hurting profit margins. But with patented technology, a large installed base of machines and a unique library of past operations for training purposes, I think Intuitive has a strong competitive advantage.

This is exactly the sort of growth stock I would be happy to own in my portfolio – if I could buy it at an attractive price. With a price-to-earnings ratio of 82 however, the shares just look too expensive for my tastes.

So for now, although it is on my long-term buy list, I will not be making a move on Intuitive until the share price becomes significantly cheaper.

The post 2 growth stocks on my buy list appeared first on The Motley Fool UK.

So buying them, as I did, might not sound like an obviously smart move. But as a firm believer in long-term investing, I do not focus on what a share is doing in the short term.

However, over the past year, the shares are down 19%. Over five years they have lost almost half their value. So, why did I buy them?

Booming market demand

In short, it is because I think Tripadvisor has the pieces in place to help its shares soar in the coming years.

Last year’s numbers already look great: revenues grew 65% year on year and the company swung to a profit again. But despite the strong growth, revenues still came in 4% below the 2019 level. Net income was 84% lower.

Clearly though, demand for travel is back in a big way. That should bode well for revenues and profits in Tripadvisor’s core business. But what particularly excites me about last week’s results is the surge seen in customer demand for experiential travel.

Tripadvisor’s Viator division offers experiences like a scavenger hunt in Sunderland or self-guided tour of Isambard Kingdom Brunel’s Bristolian legacy. Viator revenues leapt 163% to almost half a billion dollars.

Strong free cash flow

I think the trend here is good: I expect travel demand to stay strong over the long term.

Tripadvisor is well-placed to benefit from that. It has a well-recognised travel brand. A lot of its offering is scalable: selling 100 self-guided audio tours of a city does not require much more work than selling just one. That should be good for profit margins.

But what really exicted me about the results was the firm’s free cash flow. While profits are an accounting term, free cash flows indicate the hard money coming in or going out of a business. One challenge I find when looking for growth shares I can buy is that many businesses have promising prospects — but are bleeding cash here and now.

By contrast, Tripadvisor increased free cash flows more than sixfold compared to the prior year, reaching $344m. With a market capitalisation of $3.1bn, that means the firm is trading for around nine times last year’s free cash flow.

It also ended the year with over $1bn in cash and cash equivalents on its balance sheet, although it also has sizeable debt.

Why I bought

I do see risks here. Travel demand could slow as consumers rein in spending in a weak economy. Some of the recent cash flow was due to non-repeatable items, such as asset sales.

But overall I see TripAdvisor as a company positioned to benefit from surging demand in the travel market. It is throwing off spare cash already. I think 2023 results could well be much stronger than last year’s as travel demand continues to boom globally.

Given that, these growth shares look undervalued to me. That is why I added them to my portfolio.

The post I just bought these growth shares that I think could soar appeared first on The Motley Fool UK.