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2 No-Brainer Growth Stocks Down 29% and 22% to Buy Hand Over Fist Right Now

With major stock market indices recording a series of new or recent highs in the last few months, many investors are looking with fresh eyes at stocks and what opportunities may lie on the horizon. It's important to understand that the stock market is cyclical, and both bear and bull markets are a natural, inevitable part of that cycle.

When you're investing in stocks for many years at a time, while the volatility may still be difficult in the moment, you can maintain your focus on the long game. On that note, if you have some extra cash to invest in stocks -- money that you don't need for bills or other essential costs -- here are two no-brainer growth stocks to scoop up right now.

1. Doximity

Doximity (NYSE: DOCS) is trading down by about 29% from its position one year ago at the time of this writing. On its face, the platform provides various services for healthcare professionals, including networking solutions, medical news, telehealth capabilities, and career opportunities. In fact, 80% of U.S. physicians across all specialties are members of Doximity's network.

However, Doximity's bread and butter actually comes from two key services that it offers to its actual customers, who include large pharmaceutical companies and other healthcare entities. These services consist of marketing solutions and hiring solutions.

On the marketing side, Doximity's customers, like pharmaceutical companies, pay to advertise to the medical professionals using the platform. On the hiring side, its customers source talent and share job postings to medical professionals on the platform. Currently, 17 of the top 22 hospitals in the U.S. are enterprise clients of Doximity.

Most of Doximity's revenue comes from recurring subscriptions. The majority of its contracts with these pharmaceutical companies, hospitals, and other large entities are one year or less, and these are renewable.

Despite what Doximity's share price might indicate, the business is doing well and generating substantial profits according to generally accepted accounting principles (GAAP). In the company's recent quarterly report, for the third quarter of its fiscal 2024, GAAP profits totaled $48 million, a 43% increase from the same period the prior year.

Revenue for the three-month period totaled $135 million, up 17% on a year-over-year basis. Doximity generated operating cash flow of $50.1 million, while free cash flow totaled $48.7 million. Those figures were both up 3% from the same quarter the prior year.

Some Wall Street analysts think that the stock could hit a median 12-month upside of 22% from its current trading price, or as much as 47% on the high end. The extensive adoption of the Doximity platform by the medical community is important, given that its pharmaceutical and other healthcare customers are marketing services and solutions specifically geared toward these individuals.

Doximity serves a durable need, and is doing so profitably. Long-term investors might find that its current valuation justifies buying a few shares on the dip.

2. Ulta Beauty

Ulta Beauty (NASDAQ: ULTA) is down about 22% from where the stock was 12 months ago. While this decline is likely a function of continued concerns about how wallet-constrained consumers will direct their spending, this company is continuing to see robust in-store and online sales while generating consistent profits.

Ulta Beauty offers thousands of products from hundreds of beauty brands across its omnichannel experience. Its product categories include skincare, cosmetics, haircare, and fragrances, all booming subsectors of the beauty space.

It currently has over 1,350 stores open in the U.S., with a focus on high-traffic environments. Almost every store offers beauty services, and its fruitful partnership with Target has also allowed it to cultivate over 500 Ulta Beauty in-store locations across the U.S. The standard Ulta Beauty store is around 10,000 square feet, with approximately 950 square feet of that space dedicated to a salon space.

One of the secrets to Ulta Beauty's continued success in a crowded, continually evolving beauty space is its loyalty program. The company says that 95% of its total sales come from loyalty members.

Interestingly, most of Ulta Beauty's members prefer to shop in-store versus online, although its dual digital and brick-and-mortar presence has been key to its growth trajectory. In 2023, management reported that 76% of its loyalty members bought only in a store, while 18% of loyalty members shopped both in store and online.

Most of Ulta Beauty's net sales come from cosmetics. In 2023, 41% of its total net sales were derived from this category. Management estimates its total addressable market in the beauty products industry at $112 billion, and it currently controls around 9% of this space. That's an impressive footprint given the scale of this industry, while also allowing plenty of room for expansion.

In the company's fiscal 2023, net sales totaled $11 billion, a 10% increase from fiscal 2022. Net income rose 4% year-over-year to $1.3 billion. The company also finished out the year with around $767 million in cash on hand.

A number of Wall Street analysts are estimating generous 12-month upside for the stock, anywhere from 45% on the midpoint to 74% on the high end. Regardless of what the stock does in the coming months, the underlying business looks strong, maintains an impressive presence in a highly competitive industry, and relies on diverse sources of revenue and profits. Ulta Beauty could be a tempting buy at its current downtrodden valuation.

Should you invest $1,000 in Doximity right now?

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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Doximity, Target, and Ulta Beauty. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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