S&P 500 Hits All-Time High; Growth Stocks Face Challenges

Market Review: The S&P 500 is up 81% and at an all-time high. Growth stocks like Five Below, The Trade Desk, and e.l.f. Beauty face hurdles, yet have potential for recovery as they navigate economic changes and market conditions.

Date: 21-02-2025

AI Rating: 6

Overview of Growth Stocks
The analysis discusses three growth stocks - Five Below, The Trade Desk, and e.l.f. Beauty - and their recent performance amidst a rising S&P 500.

1. Five Below
Five Below is showing promising revenue growth with a 12% increase in net sales for the first three quarters of fiscal 2024, attributed to the opening of 205 new stores. Despite potential challenges from inflation and international sourcing risks, their expected EPS of $4.34 to $4.52 indicates an inexpensive valuation for a growth company. Its strong balance sheet with over $200 million in cash and no debt suggests it is well-positioned to handle market fluctuations.

2. The Trade Desk
The Trade Desk has faced a significant setback, underperforming its financial guidance with Q4 revenue of $741 million against an expectation of at least $756 million. This has led to a more than 40% decline in stock price from its high. However, its historical growth trajectory and the recent company reorganization aimed at scaling suggest potential for future recovery and growth in a $1 trillion market.

3. e.l.f. Beauty
e.l.f. Beauty is facing slower sales growth, with a projected net sales increase of only 2% for Q4. The company has navigated trade tensions due to its reliance on Chinese suppliers. However, its market share gains and impressive 66% growth in international sales in Q3 signal underlying strength and potential for continued market expansion.

Overall, while each company faces challenges, they also exhibit growth drivers that could lead to stock price recoveries.

Stocks: NASDAQ:FIVE NASDAQ:TTD NYSE:ELF