3 Red-Hot Growth Stocks to Buy in 2025

Accenture’s business boasted an excellent return on invested capital exceeding 20% over the past eight quarters, signaling a high-quality business that can compound for many years to come. The business is also growing through acquisitions where management purchases companies to increase Accenture’s breadth of service offerings and augment its suite of capabilities. In December, Accenture made two acquisitions: Aox, a German company specializing in embedded software for carmakers and their suppliers, and IQT Group, an Italian company providing engineering-managed services for large infrastructure projects. Accenture in January also acquired a digital twin technology platform developed by Percipient, a Singapore-based fintech, to enhance its core modernization capabilities. These bolt-on acquisitions will provide a further boost for Accenture and help accelerate its growth while making its services even more attractive to current and potential clients.

Grab Holdings (NASDAQ: GRAB) developed a super-app that provides mobility, delivery, and digital financial services. Founded in 2012, the company serves over 700 cities in eight southeast Asian countries. Grab grew its business by leaps and bounds over the past several years as it expands its presence in major cities. The business started out reporting a negative gross margin in 2021 as it pushed through rebates and freebies to attract users to its super-app. By 2023, gross margin turned positive while revenue nearly quadrupled in just two years.

Data source: Grab Holdings.

Along the way, Grab also saw its cash-flow generation improve dramatically. 2021 saw an operating cash outflow of $954 million, which reversed to an operating cash inflow of $86 million by 2023.

Grab’s financials continued to improve in the first nine months of 2024 as monthly transacting user (MTU) numbers continued rising. Revenue climbed 19% year over year to $2 billion while gross profit stood at $842 million, up 44.2% year over year. Grab’s gross margin improved to 41.4% for the first nine months of 2024, up from 34.2% in the previous corresponding period. The business also began generating positive free cash flow of $530 million, up more than tenfold year over year from just $43 million in the prior year. Operating metrics showed growth all around with on-demand gross merchandise value rising 15% year over year to $4.7 billion for the third quarter. MTUs climbed from 36 million to 41.9 million over the same period, registering 16% year-over-year growth. The total loans disbursed by Grab’s digital financial services division surged 38% year over year to $567 million, mainly attributed to its digital bank, GXS Bank. Bank deposits more than tripled year over year to cross $1 billion.

The company’s momentum looks set to continue as management boosted its earnings forecast for 2024 amid cost cuts. Revenue is projected to end last year at $2.78 billion, up from the previous forecast of $2.75 billion. There is still significant room for expansion in the southeast Asia region of around 650 million people as MTUs hit just close to 42 million in the third quarter. Grab is also raising its platform fees for both food and grocery deliveries and ride-hailing from Jan. 1, a move that should bring in higher levels of revenue for the business. With the company firing on all its three cylinders, investors should expect continued increases in revenue and free cash flow in the coming years.

Miniso Group (NYSE: MNSO) is a retailer offering a wide variety of trendy lifestyle products. The company has a large network of Miniso stores offering affordable goods with aesthetically pleasing designs in both mainland China and other countries. Miniso saw steady growth in its top line and also saw its losses turn into profits from 2021 to 2023.

Data source: Miniso Group. Fiscal years end June 30. RMB = Renminbi; 1 RMB is worth about $0.14 at current exchange rates.

The business not only generated healthy earnings from 2022 onward, but also consistently churned out positive free cash flow. Free cash flow went from RMB 736 million in 2021 to RMB 1.5 billion by 2023, a more than doubling and a sign that the business has not neglected the importance of generating operating cash flow to sustain its expansion plans.

Miniso’s growth has continued unabated in the first nine months of 2024 with revenue rising 22.8% year over year to RMB12.3 billion. Operating income increased by 14.3% year over year to RMB2.3 billion while net income stood at RMB 1.8 billion, up 12% year over year. As of Sept. 30, 2024, Miniso had a total of 7,186 stores in both China and internationally, with its total store count rising by 17.5% year over year from 6,115 a year ago.

Management has laid down an ambitious strategic roadmap to grow the business further, with the vision of becoming the world’s No. 1 intellectual property design retail group. Miniso’s goal is to open 900 to 1,100 net new stores each year from 2024 to 2028 and to double its store base by 2028. The target is to grow revenue by more than 20% per year over the same period with a focus on product innovation and expansion in overseas markets. Last September, Miniso acquired a 29.4% stake in Yonghui Superstores, a leading retail chain in China that operates around 850 supermarkets as part of its expansion strategy. Investors can look forward to further growth in Miniso’s top and bottom lines as the retailer executes its long-term plan.

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Royston Yang has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc. The Motley Fool recommends Grab and recommends the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool has a disclosure policy.

3 Red-Hot Growth Stocks to Buy in 2025 was originally published by The Motley Fool