Growth stocks are an important addition to any investor’s portfolio. They offer massive potential for share price appreciation. They are great picks for investors who aren’t risk-averse and enjoy the roller coaster ride. Companies that are focused on growth rather than, let’s say, value are focused on the rapid expansion of the business, which may involve heavy reinvestment into the company itself, and they may also engage in financing for various endeavors in hopes of a greater return on investment.
Below, I discuss three growth companies that still haven’t reached their full potential and have plenty of room to grow.
Opendoor Technologies (OPEN)
Opendoor Technologies (NASDAQ:OPEN) operates as an e-commerce platform that revolves around residential real estate transactions; Opendoor allows their customers to connect with either a buyer or seller of a residential property through their platform.
On Nov. 2, Opendoor Technologies announced its third-quarter earnings for 2023, which stated that its revenue dropped by 71% and its net loss shrank by 89% compared to the previous year. Opendoor Technologies sold 2,687 homes in the third quarter of 2023. In the third quarter of 2022, they sold 8,520 homes. The number of homes that have been purchased is in line with the number of homes sold. Their inventory has fallen by approximately 78% within the same time period. The revenue guidance for the fourth quarter of 2023 is expected to be reduced by approximately 15% quarter-over-quarter.
Even following some of the company’s recent headwinds, they still have seen their share price more than quadruple, with the economic environment of anticipated interest rates cut in 2024. Investors are anticipating that companies like Opendoor Technologies will begin to increase their shrinking inventory of homes, which will be a revenue builder for them next year.
LI Auto (LI)
Li Auto (NASDAQ: LI), headquartered in Beijing, China, produces electric vehicles for customers in China. Li Auto also sells its vehicle products and provides its customers with maintenance services. Li Auto has a range of vehicles, including the Li L7, which is a family SUV; Li L8, which is a large luxury version of the Li L7, Li L9, another luxury SUV; and the Li Mega, which was recently unveiled and is a large family multi-purpose vehicle.
On Nov. 9, they announced their earnings result for the third quarter of 2023, which stated that their vehicle deliveries nearly quadrupled compared to the year before. Their total revenue nearly quadrupled within the same time period.
Their Li Mega vehicle on Nov. 17 was unveiled at the Auto Guangzhou 2023. Deliveries are expected to start in February 2024.
Over the past year, their share price has risen by 63%. This is mainly due to the company’s large jump in overall deliveries within 2023, its continued outpacing of its competitors, and its growing market share of electric vehicle purchases within China.
Toyota Motors (TM)
Toyota Motors (NYSE:TM) They are a large vehicle manufacturer in Toyota, Japan, offering sedans, trucks, SUVs, vans, and other specialty vehicles for their customers globally. They also own Lexus, the luxury car brand, and financial and maintenance services for their customers.
Toyota has seen its share price grow with this last year by 30%. This is due to improved sales and operating margin numbers this year. On Nov. 1, Toyota Motors released its earnings report for the second quarter of the 2024 fiscal year. It stated that its total sales increased by 24% in the first half of fiscal year 2024 compared to FY 2023. And within the same time period, their net income more than doubled.
Within December, news surrounding Toyota’s Daihatsu models and their recent production halt following a safety testing scandal. Multiple models that may not have been adequately tested were sold by Toyotas. It will be interesting to see how Toyota will handle this situation and what their mitigating factors are going forward.
As of this writing, Noah Bolton held a LONG position in TM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
