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Investing requires patience and a long time horizon to generate sizable profits. It’s no secret that the most successful investors are people such as Warren Buffett, who are infinitely patient and hold stocks in their portfolios for decades. Buffett famously said, “The stock market is a device to transfer money from the ‘impatient’ to the ‘patient.’”
While patience is certainly a virtue when it comes to investing, it also helps to identify strong companies when they first come to market and take a position early in their life as a publicly traded concern. This is when companies are experiencing rapid growth and have a long runway ahead of them. Spotting winning overlooked growth stocks, taking a position early and holding on for the long-term is a recipe for success as an investor.
Here are three overlooked growth stocks for patient investors.
Cava Group (CAVA)
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Mediterranean restaurant chain Cava Group (NYSE:CAVA) has only been publicly traded for a year but has enjoyed an incredible run. Since its initial public offering (IPO) in June 2023, CAVA stock has increased 150%. The company is also profitable and has reported financial results that consistently top Wall Street forecasts. This makes Cava Group one of the most successful IPOs of the last five years.
The company’s strong financial results are driven by huge growth, which continues to create an enormous market opportunity. For this year’s first quarter, Cava reported EPS of 13 cents, more than double the 5 cents expected among analysts. Revenue in the quarter totaled $259 million, ahead of Wall Street expectations for $246 million. Sales were up 30% from a year earlier.
Much of the growth came from Cava’s rapid expansion as the company opened 14 new
restaurant locations during the quarter, bringing its national count to 323 outlets. According to management, Cava is now forecasting full-year earnings of $100 million to $105 million. That’s an increase from an earlier forecast of $86 million to $92 million. Many analysts compare Cava to Chipotle Mexican Grill (NYSE:CMG).
Arm Holdings (ARM)
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If there’s one stock that has had an even more impressive market debut than Cava Group, it’s British microchip and semiconductor concern Arm Holdings (NASDAQ:ARM). Since going public in September 2023, ARM stock has risen 200%. And more gains appear likely. The growth trajectory of ARM stock has been so strong that the company was just added to the Nasdaq 100 index, replacing satellite radio provider Sirius XM (NASDAQ:SIRI).
Arm Holdings was added to the Nasdaq 100 due to its explosive market capitalization approaching $200 billion. Like Cava, Arm is already profitable and growing at a brisk clip. The company most recently reported fiscal fourth-quarter revenue of $928 million, a 47% increase from a year ago. Demand for artificial intelligence (AI) chips is powering its sales growth. In terms of profit, Arm earned 36 cents per share, beating forecasts of 31 cents a share.
Viking Therapeutics (VKTX)
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Worried that you’ve missed out on the boom in weight loss drugs with pharmaceutical giants Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO). Not to worry. You can still gain exposure to the weight loss drug trade with Viking Therapeutics (NASDAQ:VKTX), the newest and potentially most explosive entrant in the weight loss drug market. VKTX stock is up 180% this year on reports that its weight loss candidate has shown extremely good results.
However, there’s another reason to consider Viking Therapeutics stock. Rumors that a larger pharmaceutical company such as Pfizer (NYSE:PFE) might acquire Viking Therapeutics to gain access to its weight loss drugs acting as a catalyst for the stock too. Whether Viking remains independent and brings its weight loss drug to market or is acquired by a larger company at a premium price, investors don’t look likely to lose with VKTX stock.
On the date of publication, Joel Baglole held a long position in LLY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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