The whole world seemed to screech to a halt last year during the worst of the pandemic. Investors worried about how companies would fare during the crisis — and about growth afterward.
Fast-forward to right now: Many companies are on the road to recovery. Even better, some are heading for major growth in the years to come.
The keys to these positive growth prospects? There are a few: solid relationships with customers, online strength, innovation, and providing much-needed products. Let’s take a look at three future winners that have a lot of these qualities — and will offer you major growth over the coming 10 years.
lululemon athletica (NASDAQ:LULU) managed to increase net revenue 11% to more than $4 billion last year. Gross profit also rose 11% — to $2.5 billion. That’s even as the retailer of yoga-inspired apparel was closing stores temporarily in certain locations due to the pandemic.
Lululemon successfully managed the crisis due to its digital strength and its online connection with fans. The company encouraged shoppers to stay connected through its “Sweatlife” online community. And they did — gaining access to exercise tips, classes, and inspirational stories. Lululemon also ramped up investment in its digital platform. The result? Digital revenue made up 52% of total revenue last year.
But here’s what’s most exciting: The best is yet to come. Lululemon outlined its “Power of Three” growth plan two years ago. The plan calls for a doubling of revenue from the men’s collection, a doubling of digital revenue, and the quadrupling of international revenue…all by 2023. Lululemon is on track to meet two of the goals — and ahead on the digital goal.
Lululemon shares have already rewarded investors; they’ve climbed more than 200% over the past three years. If Lululemon indeed meets its Power of Three goals, count on higher profit down the road — and lasting share-price gains as well.
Starbucks‘ (NASDAQ:SBUX) plan for growth is all about catering to the needs of today’s and tomorrow’s customers. And to do that, the coffee shop giant is transforming its store portfolio. This means closing shops in formats and locations that aren’t working, and focusing on how and where customers want to drink their next cup of joe.
The plan includes setting up Starbucks Pickup stores or similar small formats in busy metro locations, and keeping traditional cafe formats in suburban areas. Starbucks announced the plan last June; it’s already completed 70% of the necessary store closures.
Starbucks’ focus on digital in its two biggest markets — the U.S. and China — also should drive growth. The company said mobile orders made up 26% of U.S. transactions in the most recent quarter; that’s compared to 18% a year ago. And mobile orders in China made up 34% of sales — a record high.
I also expect Starbucks’ relationship with customers to drive sales into the future. Purchases by Starbucks Rewards members represented more than half of total U.S. sales in the most recent quarter. Ninety-day active members increased by 1 million to total 22.9 million — another record.
Starbucks shares are trading near a record high:
But the company’s plan for its stores and its digital efforts will bring business to the next level — and offer room for more share-price gains over the long term.
Moderna (NASDAQ:MRNA) has the product everyone wants: a coronavirus vaccine. The U.S. Food and Drug Administration authorized the vaccine — Moderna’s first commercialized product — in December. Now, Moderna has orders that represent a whopping $18.4 billion in product sales this year.
The concern has been whether this kind of revenue will be recurrent. That’s looking more and more likely: Experts say that SARS-CoV-2 will be around well into the future. And the CEO of fellow vaccine maker Pfizer recently said that vaccinations probably will be needed annually.
Moderna is also working on a booster shot that could be used between full vaccinations. The biotech company expects to have it ready for use in the fall.
Moderna shares have soared more than 280% over the past year. But even at today’s level, they’re trading at only about 8 times forward earnings estimates. It looks like we’re just at the beginning of Moderna’s share-price story.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.