Growth investors have seen their fair share of bumps in the road the last few years, with some great businesses they follow being forced to navigate some real challenges. Several of these growth stocks managed their way through and are again delivering meaningful returns. If you have the investment capital and risk appetite to put cash into growth-oriented stocks, now might be a great time to put money into quality companies.
As you determine which ones to invest in, it's important to only use cash that you won't soon need for monthly financial obligations and to ensure you thoroughly understand any company you buy before you add it to your basket of investments.
With those elements in mind, here are two top growth stocks to consider that look like screaming buys in November.
1. TransMedics Group
TransMedics Group (TMDX -2.52%) is a medical technology and devices company that focuses on organ transplant therapy for end-stage organ failure patients. The company was founded in 1998, and one of the achievements that the company is most known for is its Organ Care System (OCS). The TransMedics OCS is a device that enables the maintenance and preservation of donor organs from storing to transporting those organs to transplant patients.
The device can perform numerous functions, including imitating the temperature of the human body and transmitting nutrients to keep the donor organ healthy. Three types of organs can be preserved and stored in the TransMedics OCS -- lungs, livers, and hearts. The OCS can maintain the health of organs outside of the human body for up to 24 hours in many cases.
With traditional cold storage methods that have historically been used to facilitate organ transplants, numerous complications regularly ensue ranging from ischemia to enhanced complications post-transplant. Ischemia is a common issue with organ transplants that occurs when insufficient blood flow to the donor organ causes damage to the tissue that can deteriorate further after the transplant.
With the TransMedics OCS, the risk of ischemia is greatly reduced, as is the risk of potential complications. Another integral aspect to TransMedic Group's growth strategy is its logistics business, which even includes an air fleet that it uses to transport donor organs. TransMedics had 18 owned aircraft in its fleet at last count.
Management believes that the company is on track to achieve the goal of 10,000 OCS transplant cases per year in the U.S. by 2028. Total revenue in the third quarter of 2024 totaled approximately $109 million, a 64% increase from one year ago. Management noted that this revenue growth was driven by continued adoption of its OCS across all three organs as well as logistics revenue.
Where TransMedics Group reported a net loss of $25.4 million one year ago, the recent quarter saw it generate net income of $4.2 million. Management is also forecasting anywhere from 76% to 84% revenue growth in the full year 2024 compared to 2023. Investors who want to become part-owners in an innovative business disrupting the multibillion-dollar global transplant market might want to take a second look at this healthcare stock.
2. Shopify
Shopify (SHOP -1.62%) has built an explosive global footprint since the company was first founded nearly two decades ago. The company controls about 10% of the global e-commerce software market and is the largest e-commerce software platform in the U.S. with a market share of roughly 30%.
Bear in mind that the U.S. e-commerce market is valued north of $1 trillion. It is the largest e-commerce market in the world second only to China. Shopify's market opportunity is only growing both in its core North American markets and internationally as the global e-commerce industry expands.
In the third quarter of 2024, Shopify reported its fifth consecutive quarter of gross merchandise value (GMV) growth, which is the total value of merchandise sold in a given period. Gross payment volume (GPV) is also accelerating at a rapid clip. Its operating income more than doubled in Q3, while revenue growth accelerated 26% year over year to $2.2 billion.
Shopify's suite of software and hardware solutions are known for integrations with a wide range of offerings from its global partner ecosystem. However, its own in-house solutions, such as Shopify Payments (a payment processing service for merchants) and Shop Pay (a seamless checkout option for customers) are proving to be key growth drivers.
Case in point: The Shopify Payments offering processed $43 billion in GPV in the third quarter of 2024, a whopping 31% increase from one year ago that accounted for 62% of overall GMV. As for Shop Pay, this product offering processed $17 billion in GMV in Q3, a 42% year-over-year increase that comprised 41% of GPV.
Shopify remains very profitable, with Q3 operating income soaring 132% to $283 million and net income rising 15% from one year ago to $828 million. It also delivered a 19% free cash flow margin, with total free cash flow exploding 53% year over year to $421 million. While some investors may shy away from e-commerce given the current growth environment, Shopify is proving that it's a comeback kid. It definitely isn't too late to snag some shares that can compound your returns generously over the next five or more years.
