3 sharply rising stocks I would buy now without hesitation

You’ll probably agree that a rising stock price is a happy occasion worth celebrating. As the price of the stocks you own increases, the value of your portfolio increases. However, a surge in stock price may also deter you from purchasing shares because you believe the company is becoming too expensive to own or is reaching its peak.

But that’s not how we should see things. A stock may rise because the company reported good earnings, launched a promising new product line, or made an acquisition intended to increase earnings. These events act as catalysts for rising stock prices and should be considered a great reason to take a closer look at these companies to determine if they are worth holding for the long term.

Here’s a trio of stocks that have soared recently and are still worth considering for your portfolio.

1. Dutch Brothers

Dutch brothers (BROS -1.11%) started as a stroller next to the railroad tracks in Oregon in 1992, but has now grown to become a national coffee chain with 950 stores in 18 states. The stock is up 68% year to date as I write this, and is just below its 52-week high.

Dutch Bros demonstrated impressive growth in the first nine months of this year, with revenue up 31.8% year-over-year to $938 million. Operating profit doubled to $90 million over the same period, while net profit increased tenfold to $31.6 million. The coffee chain also generated positive free cash flow of $5.2 million, reversing last year’s negative free cash flow of $72.8 million.

With 156 new stores opened over the past year, Dutch Bros increased its presence by 20%, ending the period with 645 corporate stores and 305 franchise stores. For the third quarter, same-store sales and transactions increased 2.7% and 0.8%, respectively.

The company is optimistic about its momentum as it has refined its site selection process for new stores, helping to generate better results. The company is increasing investment in its development and construction teams and plans to open a total of 150 new stores in 2024.

And this month, Dutch Bros named Venki Krishnababu as its new chief technology and information officer. Krishnababu worked at Lululemon Athletica as Chief Technology Officer, and his expertise is expected to help Dutch Bros grow and improve its customer engagement initiatives. Technology, along with a people-centric approach, are critical success factors for the company, and this new hire is expected to advance its goals towards creating a welcoming environment that builds customer loyalty and incentivizes to come back.

The company could leverage technology to improve beverage personalization and create opportunities for customers to provide feedback to help the organization improve its offerings. Dutch Bros’ app could also increase personalization for each customer by recording their preferences and providing suggestions for promotional items and new drinks, thereby increasing the company’s revenue.

2. Reddit

Reddit (RDDT -3.95%) is a social media company where users select the most popular posts on the platform through a simple voting system. With forums called subreddits covering a wide variety of topics, the platform fosters a vibrant discussion community.

The company only went public in March at a price of $34 per share, but the stock had climbed to $169 as of this writing. Reddit’s revenue growth accelerated throughout the year, with revenue up 68% in the third quarter.

The social media company also reported an operating profit of $6.9 million and a net profit of $29.8 million, reversing an operating loss of $19.6 million and a loss net of $7.4 million a year ago. Positive free cash flow of $70.3 million also marked a sharp reversal from the previous year.

Operating metrics were also encouraging, with global “daily active unique” – a user who visited a page on Reddit or opened a Reddit app at least once in a 24-hour period – jumping 47%. year-over-year to 97.2 million and Global “weekly unique assets” jumped 53% year-over-year to 365.4 million. Additionally, Reddit’s average revenue per “unique” improved 14% year-over-year to $3.58, demonstrating growing engagement and increased spending from its user base in in full swing.

Last May, Reddit partnered with OpenAI, the company that developed generative AI software ChatGPT, to integrate the latter’s AI tools into Reddit content. At the same time, OpenAI will also become an advertising partner of Reddit.

More recently, Reddit began testing its own conversational AI feature. Known as Reddit Answers, the feature allows users to ask questions and receive summaries of responses and discussion threads on the company’s platform. This conversational interface will help users find the topics or answers they are looking for without having to manually navigate through different posts and communities.

Such improvements are expected to help the social media company improve user retention and increase the number of daily and weekly active users. Monetization will be through advertising based on user engagement, and Reddit’s prospectus estimates its total addressable market from advertising (excluding China and Russia) to be around $1.4 trillion , opening up significant opportunities for future growth.

3. Twilio

Twilio (TWLO -0.73%) operates a customer engagement platform that helps connect its customers with their customers by building personalized relationships. The company uses communications and data to help businesses better engage their customers.

Twilio’s stock price has jumped 48% year-to-date as of this writing and is trading near its 52-week high of $116. The company has seen steady growth in revenue from $2.8 billion in 2021 to $4.2 billion in 2023. Gross profit also increased from $1.4 billion from $2 billion over the same period. The business also saw its free cash flow turn positive in 2023 after two years of negative free cash flow in 2021 and 2022.

Twilio saw its strong performance continue through 2024, with the first nine months of this year seeing 6% year-over-year revenue growth and an 11% year-over-year increase. the other from the gross margin. Free cash flow did even better, increasing more than threefold year over year, from $152.7 million to $564 million. The number of customers grew nearly 5% year over year to 320,000 as of September 30, 2024, and the company maintained a net dollar expansion rate above 100% over the five last quarters.

Twilio recently expanded its integration with Amazon Web Services to build personalized solutions for the latter’s customers. The company is expected to share more about its strategy and total addressable market at its upcoming 2025 Investor Day, which will be held on January 23. Judging by the steady growth seen in Twilio’s financials and the sharp increase in free cash flow, the company should signal good potential for future growth, and it’s certainly a stock worth considering even s ‘he has already jumped.