The new bull market has sparked renewed interest in investing among many individuals. Despite concerns about buying in at the wrong time due to fast-rising share prices, there are still great businesses to be found in any market environment, especially for those with a long-term investment mindset.
If you are looking for compelling businesses that appear to be attractive investments at the moment, here are two top stocks to consider adding to your portfolio.
1. Duolingo (NASDAQ: DUOL) has tapped into the vast language learning market by providing a wide range of courses through a comprehensive platform to millions of users globally. The company’s focus is on assisting language learners with personalized lessons and interactive exercises that can be completed at their own pace, anywhere they choose.
Duolingo utilizes artificial intelligence, machine learning, and data analytics to track each individual’s learning progress and customize lessons to suit their needs. The company operates on a freemium model, offering free access to learning content with additional features and perks available through a subscription.
With revenue streams from advertising, subscription fees, and in-app purchases, Duolingo also earns money from its Duolingo English test, widely accepted by numerous higher education programs as proof of English proficiency. The company’s flexible model attracts learners across various budgets and learning goals, with a total addressable market estimated to be around 2 billion people.
In the first quarter, Duolingo reported total bookings of $197.5 million, a 41% increase year over year, with subscription bookings up 47% to $161.5 million. The company boasted 7.4 million paid subscribers by the end of the quarter, a 54% increase from the previous year. Furthermore, its daily active users surged by 54% to reach 31.4 million.
Duolingo reported net income of $27.0 million on total revenue of $167.6 million, showing a significant improvement from the $2.6 million loss reported a year ago, with a 45% increase in revenue. The company also demonstrated positive cash flow, with operating cash flow and free cash flow at $83.5 million and $79.6 million, respectively, for the quarter.
2. Toast (NYSE: TOST) is a cloud-based technology platform tailored for restaurants, offering a comprehensive suite of services to manage various aspects of restaurant operations, from delivery and takeout to payroll and inventory management.
Through its point-of-sale (POS) software, Toast enables restaurants to streamline order-taking and payment processing, while its multi-location management tool allows users to manage menus across multiple restaurant locations. The company also helps restaurants expand their businesses through loyalty programs and email marketing initiatives.
Toast generates revenue from service subscriptions, hardware device sales, and financial technology solutions, with a significant portion of its revenue derived from transaction-based fees from payment processing. In the first quarter, Toast’s revenue grew by 31% year over year to $1.1 billion, processing $34.7 billion in gross payment volume for the quarter.
Although Toast is currently operating at a loss, it generated $125 million in free cash flow over the past year. Despite early shareholders facing losses, the stock has gained 40% year to date. With its platform serving 112,000 locations, Toast is a leading player in the industry and a worthy candidate for a long-term investment.
In conclusion, both Duolingo and Toast represent promising investment opportunities in the 2024 bull market. Duolingo’s strong financial performance and broad market appeal make it an attractive growth stock, while Toast’s comprehensive platform and significant market presence position it as a solid choice for investors looking to capitalize on the restaurant industry’s growth potential.