Investors can accumulate stocks and generate long-term returns with a buy-and-hold strategy. While growth stocks can deliver exceptional gains over vast time horizons, some investors want gains sooner.
Hence, seeing a positive return within a few weeks can fuel motivation and result in higher portfolio contributions in the future. However, returns became less certain as the time horizon got shorter. Long-term investors stretch their time horizons across multiple years so a company’s growth initiatives can play out.
Therefore, while each of these stocks offers compelling long-term potential, it’s possible that these stocks will deliver solid returns before Valentine’s Day.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has been rallying in recent months. Shares are up by 20% over the past six months, and that rally is part of a 59% surge over the past year.
Further, AMZN enjoys several high-growth business segments. Cloud computing, e-commerce, and online advertising are some of the company’s top revenue streams. Also, the company is jumping into artificial intelligence (AI) and working on its own AI chips to generate additional revenue. Already, Amazon has several large corporations as customers for its chips. Amazon refers to these chips as Amazon Bedrock.
AMZN’s efforts paid off in the third quarter of 2023 as net sales increased by 13% year over year (YOY). Additionally, advertising revenue grew robustly in that quarter. The advertising industry exhibits high profit margins which can strengthen Amazon’s margins in the future.
Finally, Amazon’s Prime Day was once again its largest ever. Demand for the company’s online marketplace remains strong and can help the company invest in other ventures. While the company looks promising in the long run, the firm reports earnings on February 1st. Good earnings can drive the stock price higher before Valentine’s Day.
Direct Digital Holdings (DRCT)
Direct Digital Holdings (NASDAQ:DRCT) is a micro-cap advertising company valued at under $200 million. The company has a 15-forward P/E ratio and is growing its revenue and earnings at exceptional rates.
Also, Direct Digital Holdings achieved 129% YOY revenue growth in the third quarter of 2023. Revenue growth throughout the year will double if the company achieves the midpoint of its Full-Year 2023 Revenue Guidance.
Most of DRCT’s revenue and high growth comes from its sell-side platform, Colossus. The segment’s revenue grew by 174% YOY. And, net income surged from $0.8 million in the same period of 2022 to $3.4 million. Higher net income growth will result in a lower P/E ratio that can help the stock march higher.
The company finds itself at the center of a shift in ad spend as more businesses look toward digital media for visibility. While the sell-side advertising segment is the main revenue driver, DRCT’s buy-side advertising also achieved double-digit YOY revenue growth.
Additionally, Direct Digital Holdings achieved triple-digit YOY revenue growth in Q3 2022 compared to 2021. High growth seems like it will stick around for a few years.
The Trade Desk (TTD)
While Direct Digital Holdings is a small player in programmatic advertising, The Trade Desk (NASDAQ:TTD) is the leader. Shares have gained 38% over the past year and are up by 368% over the past five years.
TTD has been a consistent winner due to its revenue and earnings growth. Both numbers remain high and indicate The Trade Desk is gaining market share among the advertising giants.
Revenue increased by 25% YOY in the third quarter of 2023. The company’s net income more than doubled, going up from $16 million in Q3 2022 to $39 million in Q3 2023. Expanding profit margins and solid top-line growth suggest The Trade Desk can continue to rally.
Customers have been enjoying the company’s results. The firm has a 95% retention rate in the third quarter, maintaining that same rate for the past nine consecutive years.
The Trade Desk reports earnings on February 15th. Although that’s after Valentine’s Day, a rally leading into earnings can produce a solid gain. TTD looks like an enticing long-term stock that can benefit from some momentum leading up to Valentine’s Day.
On this date of publication, Marc Guberti held a long position in DRCT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
