Growth Stocks Drop: Long-Term Opportunities Present

The latest report highlights significant declines in growth stocks such as Kura Sushi, Xometry, and Celsius Holdings, ranging from 35% to 65%. While each company faces challenges, there are long-term growth potentials that investors might find compelling.

Date: 20-09-2024

AI Rating: 6

The report discusses the recent sharp decline in growth stocks, particularly highlighting three companies: Kura Sushi, Xometry, and Celsius Holdings. Each has seen significant drops in their stock prices, with Kura Sushi down 35%, Xometry down 51%, and Celsius down a staggering 65% from their respective 52-week highs.

Starting with Kura Sushi, the company is facing operational difficulties, with a net loss of $3.6 million in the first three quarters of the fiscal year compared to $1.4 million in the previous year. Despite this, Kura Sushi's management believes the company can scale profitably due to its innovative use of technology, achieving a strong Q3 restaurant-level operating margin of 20%. The long-term vision includes expanding to 290 locations, providing potential upside for investors.

Xometry is experiencing drastically slowing growth, with revenue guidance at only 14% to 16% for Q3, compared to 22% growth in 2023. However, the company saw a 27% increase in active buyers, which could indicate long-term demand stability. Xometry's gross margin also improved to 33.5%, indicating better profitability relative to last year.

Finally, Celsius Holdings has had tremendous growth over the past five years but is currently dealing with inventory overhang that is impacting revenues. However, the company remains debt-free and has plenty of cash flow. Notably, Celsius's operating income for Q2 2024 was up to $94 million from $65 million year-over-year, showcasing improving profit margins.

In summary, while all these companies face headwinds, the underlying financial metrics such as operating margins and gross margins present a case for potential upside in the long term, providing investors with compelling entry points despite the current stock declines.

Stocks: KRUS XMTR CELH