1 Growth Stock Down 62% to Buy Right Now | The Motley Fool (2024)

This under-the-radar name offers a huge opportunity for growth investors willing to see it.

Like bargains? Most investors do. And growth-minded investors looking for a discounted new pick to add to their portfolios now might want to consider Toast (TOST -1.59%). The stock is trading down 62% from its all-time high, but it is also seemingly testing the possibility of a rebound.

What the heck is Toast?

It may not be a household name, but there's a good chance that you've benefited from its technology. Toast supplies restaurants with point-of-sale systems built from the ground up to meet the unique needs of operators in that industry. From customer checks to supply management to online ordering to marketing, Toast can help the managers of any eatery better handle its operation.

Toast is not the only name in its business. More familiar fintech giants like PayPal and Block also offer point-of-sale systems designed for restaurants. Their alternatives aren't quite as complete as Toast's, however. For instance, Toast's software can tell you how much it costs to prepare a particular meal based on the per-plate cost of its ingredients. It also allows restaurateurs to manage their own online menus and delivery networks, negating the need for them to use third-party food delivery services like DoorDash or GrubHub.

It's not just a superior suite of restaurant-tech solutions, though. The business model is one that current and prospective investors can get excited about.

While Toast sells equipment, it also offers ongoing services, which results in a stream of recurring, predictable revenue. Roughly $300 million of last quarter's top line of nearly $1.1 billion came from recurring revenue subscriptions. Toast also gets a small portion of every bill paid by its restaurant clients' customers. Although Toast's cut of these payments is less than 1% of each check, given that the company processed $34.7 billion worth of food checks last quarter alone, this isn't an insignificant amount.

Perhaps most importantly though, this arrangement means its clients can trust that Toast has every incentive to help them grow their business. That means growth for Toast too, after all.

Toast's competitive edge is paying off

Point-of-sale systems customized for the needs of restaurants aren't exactly a new idea. Outfits like PayPal and Block have been in the business for a while now, but their offerings only replaced platforms that were no longer state of the art. Toast launched in 2012, and by the time it commercialized its technology in 2013, there was already (or soon would be) plenty of comparable competition.

It's the little things its systems provide, however, that are making a big difference in its profitability and potential growth.

While managing restaurants has always been challenging, it has arguably never been more challenging than it is right now. For instance, in their efforts to save on costs, many restaurants are dealing with more suppliers than they ever have before. Employee expectations on compensation are higher as well, with minimum wage in some states now standing at $20 per hour. Customers are more demanding than ever, too, because they can be; with the mobile internet, it's easier than ever to find an alternative restaurant or leave a scathing online review. Every detail and every penny matters in such an environment.

There's still tremendous opportunity for a solutions provider that can help restaurateurs handle those details, though. Research outfit Spherical Insights believes the worldwide restaurant point-of-sale market will grow at an annualized pace of nearly 10% through 2032. Given that Toast is a top-tier solutions provider, the analyst community expects its growth to outpace that of the overall industry.

1 Growth Stock Down 62% to Buy Right Now | The Motley Fool (2)

Data source: StockAnalysis.com. Chart by author.

This growth is expected to push the company out of the red and into the black in 2025. Although there's not enough visibility beyond 2026 to let analysts make a clear prediction regarding profits past that point, they all agree that strong top-line growth awaits for at least the next several years.

Timing isn't everything, but it's certainly something

If the opportunity is so great, then why are Toast shares still down so much from their late 2021 peak?

Consider the circ*mstances at the time. The stock market was going nuts despite the COVID-19 pandemic. Lots of companies were raising money in that bullish environment by issuing new stock or going public. Toast was no exception. Indeed, the restaurant business was particularly in high demand at the time, as consumers had fewer ways to splurge. It was an easy story to sell to investors.

That euphoria buckled, of course. The bear market began in 2022, inflation climbed, and although social distancing measures were starting to be relaxed, companies and consumers remained cautious. That environment took the wind out of Toast's shares' sails.

Today, however, the stock -- while still well down from its peak -- is testing new multiyear highs. That's a sign that investors are at least starting to see the scope of the opportunity here. The analyst community isn't quite on board yet. The consensus price target stands at $27.62, which is just slightly above the stock's price.

Don't read too much into that, though. This may be one of those cases where analysts need to see a stock start performing better before they adjust their targets. You don't necessarily need to wait for their tacit approval. Analysts can be wrong, and they can certainly move too slowly. If you're a risk-tolerant investor who believes in Toast's story, the reward potential right here and right now is worth the risk.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Block, DoorDash, PayPal, and Toast. The Motley Fool recommends the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.

1 Growth Stock Down 62% to Buy Right Now | The Motley Fool (2024)


1 Growth Stock Down 62% to Buy Right Now | The Motley Fool? ›

And growth-minded investors looking for a discounted new pick to add to their portfolios now might want to consider Toast

Toast, Inc. is an American cloud-based restaurant management software company based in Boston, Massachusetts. The company provides an all-in-one point of sale (POS) system built on the Android operating system.
https://en.wikipedia.org › wiki › Toast,_Inc
(TOST 2.45%). The stock is trading down 62% from its all-time high, but it is also seemingly testing the possibility of a rebound.

What is the best stock to own with the Motley Fool? ›

The Motley Fool has positions in and recommends Alphabet and JD.com.

What is the best stock to buy right now in 2024? ›

Compare the best stocks to buy now
Company (Ticker)SectorMarket Cap
Broadcom (AVGO)Technology$649.38B
Meta Platforms (META)Communication services$1.26T
ServiceNow (NOW)Technology$144.61B
UnitedHealth (UNH)Healthcare$463.06B
1 more row

How do you value a stock Motley Fool? ›

The most common way to value a stock is to compute the company's price-to-earnings (P/E) ratio. The P/E ratio equals the company's stock price divided by its most recently reported earnings per share (EPS). A low P/E ratio implies that an investor buying the stock is receiving an attractive amount of value.

How do stocks go down and up? ›

If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.

What is Motley Fool's all in buy? ›

We regularly see similar ads from the Motley Fool about “all in” buy alerts, sometimes also called “double down” or “five star” buys, and they're generally just the type of steady teaser pitch that they can send out all year, over and over with no updates, to recruit subscribers for their flagship Motley Fool Stock ...

What is the single best stock to buy right now? ›

The 9 Best Stocks To Buy Now
Company (Ticker)Forward P/E Ratio
Alphabet, Inc. (GOOG, GOOGL)13.2
Intuitive Surgical, Inc. (ISRG)52.2
Tapestry, Inc. (TPR)12.3
TopBuild Corp. (BLD)18.2
5 more rows
Jun 3, 2024

What are the best growth stocks right now? ›

Best-performing growth stocks
CompanyPerformance (Year)
Universal Technical Institute Inc (UTI)146.63%
Robinhood Markets Inc (HOOD)130.82%
Blue Bird Corp (BLBD)120.44%
Ceco Environmental Corp. (CECO)115.24%
17 more rows
Jun 3, 2024

What is the best stock to make money fast? ›

Money Making Stocks To Invest In
  • Airbnb, Inc. (NASDAQ:ABNB)
  • Novo Nordisk A/S (NYSE:NVO)
  • ASML Holding N.V. (NASDAQ:ASML)
  • Lockheed Martin Corporation (NYSE:LMT)
  • Cisco Systems, Inc. (NASDAQ:CSCO)
  • PDD Holdings Inc. (NASDAQ:PDD)
  • The Home Depot, Inc. (NYSE:HD)
  • Booking Holdings Inc. (NASDAQ:BKNG)
Dec 30, 2023

What stocks are hot right now? ›

Most Actives
SymbolNamePrice (Intraday)
TSLATesla, Inc.177.29
NIONIO Inc.4.4500
SOFISoFi Technologies, Inc.7.07
MARAMarathon Digital Holdings, Inc.20.31
21 more rows

What is the rule of 72 Motley Fool? ›

Let's say that you start with the time frame in mind, hoping an investment will double in value over the next 10 years. Applying the Rule of 72, you simply divide 72 by 10. This says the investment will need to go up 7.2% annually to double in 10 years. You could also start with your expected rate of return in mind.

Does Motley Fool outperform the market? ›

Does Motley Fool beat the market? Yes, Motley Fool stock picks have historically beat the market significantly. Their Stock Advisor picks have returned over 5x more than the S&P 500 over the past 20 years.

Does Motley Fool recommend when to sell? ›

Here at The Motley Fool we stand behind a long-term buy-and-hold strategy across the board for any recommended stock. Additionally, we won't always recommend a sell just because the stock price drops - we prefer to weather market fluctuations and hold stocks in companies that we are confident in for the long term.

Should I buy more stock when it goes down? ›

If you feel the stock has fallen because the market has overreacted to something, then buying more shares may be a good thing. Likewise, if you feel there has been no fundamental change to the company, then a lower share price may be a great opportunity to scoop up some more stock at a bargain.

How do beginners make money in the stock market? ›

How to make money in stocks
  1. Open an investment account.
  2. Pick stock funds instead of individual stocks.
  3. Stay invested with the "buy and hold" strategy.
  4. Check out dividend-paying stocks.
  5. Explore new industries.
Apr 3, 2024

What is one tip for how to select stocks to buy? ›

Look for strong sectors and industry groups if you want to go long—that is, buy a stock with the expectation that its price will rise—and weak ones if you want to go short—which means borrowing and selling a stock whose price you think is going to fall, and then buying it back later at a lower price should it actually ...

Is Motley Fool Everlasting stocks worth it? ›

Overall Performance

Everlasting Stocks is up 31.75% as of February 2024, while the S&P 500 is up 32.46% over the same time period (since 2018), for a total underperformance of 0.71%. Pro Tip: The Motley Fool Everlasting Stocks portfolio has seen some ups and downs throughout its life.

What stocks are in Motley Fool's ownership portfolio? ›

Portfolio Holdings for Motley Fool Asset Management
Company (Ticker)Portfolio WeightChange in Shares
Microsoft Corp Ordinary Shares (MSFT)6.1+8%
Amazon Ordinary Shares (AMZN)5.5+4%
Apple Ordinary Shares (AAPL)5.2+7%
Alphabet Inc Cl C Ordinary Shares (GOOG)4.8+5%
65 more rows

Which is better Zacks or Motley Fool? ›

Zacks is better if you want quantitative analysis and short-term trading ideas. Motley Fool is preferable for fundamental analysis and long-term investing approach.

What is the most profitable stock to buy? ›

Best S&P 500 stocks as of June 2024
Company and ticker symbolPerformance in 2024
Super Micro Computer (SMCI)176.0%
Vistra (VST)157.2%
Nvidia (NVDA)121.4%
Constellation Energy (CEG)86.0%
6 more rows


Top Articles
Latest Posts
Article information

Author: Annamae Dooley

Last Updated:

Views: 6355

Rating: 4.4 / 5 (45 voted)

Reviews: 84% of readers found this page helpful

Author information

Name: Annamae Dooley

Birthday: 2001-07-26

Address: 9687 Tambra Meadow, Bradleyhaven, TN 53219

Phone: +9316045904039

Job: Future Coordinator

Hobby: Archery, Couponing, Poi, Kite flying, Knitting, Rappelling, Baseball

Introduction: My name is Annamae Dooley, I am a witty, quaint, lovely, clever, rich, sparkling, powerful person who loves writing and wants to share my knowledge and understanding with you.