3 Brilliant Growth Stocks I’m Loading Up On

With the market heating up, growth stocks are starting to look more attractive to investors, especially with some potential interest rate cuts on the horizon. However, you can’t just buy any growth stock, as the market is full of extremely overvalued ones.

So, if you’re looking for stocks that offer growth at a reasonable price, check out this list.

These companies have attractive growth prospects

UiPath (NYSE: PATH) is a leader in robotic process automation (RPA). This software allows users to automate repetitive tasks, freeing them to do work that requires creative and original thinking.

It’s also a big user of artificial intelligence (AI), as it uses technology to mine information for the processes it automates. While RPA isn’t a big trend yet, it’s slated to be, with Polaris Market Research projecting the total addressable market to be around $66.1 billion by 2032 compared to $2.7 billion in 2022. With UiPath’s $1.38 billion annual recurring revenue (ARR), it’s already a big player.

Procore Technologies (NYSE: PCOR) is a leader in the construction management space. Until recently, using technology wasn’t feasible at construction sites because they lacked the infrastructure to access the internet. Now that limitation is no longer present and companies can use technological solutions like Procore to ensure everyone is on the same page.

Utilizing Procore’s software reduces expensive reworks and gives project owners better insight into progress and budget. It’s also in the early innings of its expansion, as Procore estimates less than 12% of U.S. construction volume has been captured. Globally, this figure is less than 2%, so Procore has a long way to go before maximizing its market.

Lastly, dLocal (NASDAQ: DLO) gives commerce companies access to countries that were previously inaccessible. Digital payment infrastructure isn’t standardized globally, so retailers would have to take the time to understand the ins and outs of each country’s practices and currency exchanges. For many companies, it’s not worth the effort to develop a payment system for each country.

But if one company has already done that for many emerging market economies, it makes sense to use their platform to make this area accessible. This is exactly what dLocal did with countries like Indonesia, Nigeria, and Egypt, attracting customers like Amazon, Shopify, and Nike to its platform.

Revenue has rapidly grown for dLocal, with 47% growth in the third quarter. There are still thousands of potential dLocal clients, making this a great growth story.

All trade at a reasonable level

Buying growth companies is great, but you must purchase them at the right price for the investment to make sense. Even the most successful company purchased at a high price can become a disaster investment.

Fortunately, all three of these companies trade for reasonable valuations.

UiPath and Procore are unprofitable, but their operating margins have improved over the past year.

PATH Operating Margin (TTM) Chart

PATH Operating Margin (TTM) Chart

As a result, I’ll use their price-to-sales ratio to value these two. With both stocks trading around 11 times sales, they’re not overvalued.

PATH Operating Margin (TTM) Chart

PATH Operating Margin (TTM) Chart

It’s not uncommon for software companies to achieve profit margins of around 30% when fully mature. While both companies are far from reaching that point, if they hit that profitability level, their price-to-earnings ratios would be 37. That’s a forward projection, but it shows they are reasonably valued now if they were fully profitable.

Factor in that both companies are growing their revenue at more than 20% year over year each quarter, and they start to look like great deals.

Unlike the other two, dLocal is fully profitable. In Q3, it had a profit margin of 24%. This means investors should look at its price-to-earnings ratio, which makes the stock look cheap, especially considering its rapid growth rate.

DLO PE Ratio Chart

DLO PE Ratio Chart

All three of these stocks are attractively priced for their growth prospects. Investors should snag some of these top-tier growth stocks before the market catches on, as they are slated to become long-term winners.

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Keithen Drury has positions in DLocal, Procore Technologies, and UiPath. The Motley Fool has positions in and recommends Procore Technologies and UiPath. The Motley Fool has a disclosure policy.

3 Brilliant Growth Stocks I’m Loading Up On was originally published by The Motley Fool

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