arden'sPreferred High-Growth Share to Purchase with a $1,000 Budget at the Moment
Rapidly growing companies often see their share prices skyrocket to seemingly exorbitant levels. However, many times, these shares are still a steal compared to their long-term value potential. Those willing to pay the high upfront premium can be handsomely rewarded if they exhibit patience.
Despite the share price surging over 100% since I first highlighted its undervaluation, my preferred hypergrowth stock continues to appear as a bargain in relation to its long-term potential. Let's delve deeper.
This has been my preferred growth stock this year
Since the year commenced, I've been actively discussing Bri Holdings (BRH -0.59%). Legendary investor Warren Buffett invested in this holding company when it debuted on the stock market in 2021, and I observed substantial losses he sustained on this investment over the years that ensued. At the time of Bri's initial public offering (IPO), shares were selling for approximately $12. A year following the IPO, they were valued at less than $6.
Buffett seldom errs in his company selection, so I decided to conduct a thorough investigation. The findings left me astounded. Not only was Bri among the fastest-growing companies I've examined, but its future growth trajectory was truly exhilarating.
Let's briefly touch upon what exactly Bri does. The majority of readers would probably be unfamiliar with this company, and for a valid reason - Bri operates solely in Brazil, Mexico, and Colombia. As such, unless you reside in one of those countries or happened to stumble upon Bri while conducting stock market research, your knowledge about this remarkable venture would likely be minimal.
At its core, Bri is a fintech company. This means it operates within the financial sector, characterized by its vast addressable markets, but also functions as a technology company, capable of growth rates that most financial organizations would envy.
Bri was established in 2016 with the primary aim of disrupting Latin America's antiquated banking sector. At that time, the financial sector was under the control of a small group of incumbent banks operating out of brick-and-mortar branches. Bri revolutionized the industry by offering its services directly through a smartphone. This innovative strategy allowed it to rapidly expand its user base, providing new financial services with the press of a button while significantly reducing overhead costs, with a portion of those savings being passed onto its customer base.
Bri's growth has been nothing short of remarkable. Over the past decade, it has grown from virtually no customers to over 100 million. More than half of all adult Brazilians are now Bri customers. The company's growth potential in Mexico and Colombia is far greater than in Brazil, its initial and oldest market. And with more than 650 million residents living across more than a dozen Latin American countries, Bri's long-term growth appears to be just getting started.
The market's enthusiasm for Bri's explosive growth led to the shares being valued at a substantial premium during the IPO. However, a market-wide downturn in 2022 caused this premium valuation to collapse. After setting an all-time low of just $3.31, shares have since staged a dramatic rebound, recently surpassing the $15 mark. Believe it's too late to hop on board? Keep reading.
Bri Holdings remains my top pick through 2025 and beyond
As evidence of Bri's volatile stock price has demonstrated, attempting to predict a stock's short-term price movements can be incredibly challenging, even for high-quality fast growers like Bri. Whether or not Bri's stock price beats the market again in 2025 is uncertain. However, this company continues to be my top pick for growth investors seeking maximum long-term upside potential.
Previously, Bri was primarily valued based on its sales growth. This approach made perfect sense considering the company consistently posted yearly sales growth exceeding 100%, despite remaining unprofitable. However, lately, the company has turned profitable. This turning point marks just the beginning, particularly for a company like Bri that should experience heavy cost savings due to its tech-driven business model.
Over the next five years, analysts predict annual earnings-per-share (EPS) growth to surpass 50% per year. Therefore, the current valuation of 50 times earnings - a figure that would usually appear excessive - should decrease rapidly as EPS continues to grow. For instance, its forward price-to-earnings multiple stands at just 37.
As with all growth stories, this progression will take some time to materialize. However, don't be deceived by Bri's rising stock price - there is still ample opportunity to get involved if you're prepared to remain patient.
Despite the significant increase in Bri Holdings' share price, its potential for long-term growth remains compelling, making it an attractive investment opportunity for those willing to invest in finance and finance technology. With analysts forecasting annual earnings-per-share growth surpassing 50% in the next five years, the current high valuation could decrease as earnings continue to rise, presenting a chance for investors who can exhibit patience.
