Should I buy this supercharged growth stock, which is currently down 39%?
The impressive stock market execution over the past few years has lifted far more companies than others. For example, shares in One Software as a Service (SAAS) companies have risen 111% over the past 12 months.
That’s not surprising given the impressive trajectory that this business continues. still Even after its execution, its shares are 39% below the peak that was touched in November 2021. Growth stock?
toast (NYSE: TOST) By catering specifically to the needs of the restaurant sector, we created a name for itself. With a comprehensive assortment of products and services ranging from point-of-sale devices and payroll management to marketing tools and working capital loans, this is a one-stop shop for the tools managers and owners need to improve operations.
Since its founding in 2012, Toast has registered great growth. Even amidst the macro headwinds, its topline profits are noteworthy and they still go on. In the third quarter, Toast recorded revenue growth of 26% year-on-year. We also added 7,000 new restaurant locations to our customer base, bringing the total to 127,000.
However, the company still has quite a runway. There are 875,000 restaurant locations in the US and 15 million internationally (except China). Toast’s comprehensive suite of products doesn’t find its way in all of them, but there’s a lot of room for expansion.
After posting losses over the years, Toast has begun reporting revenue. Last year, the company generated a total of $70 net profit in the second and third quarters. A million.
Toast’s leadership team may have experience in making better use of operating expenses. The future of this company certainly requires spending money on sales, marketing and research and development. However, these costs don’t need to grow as much as they historically have, now that toast has an established industry presence.
The company also benefits Switching costa key competitive advantage. As more and more customers commit to the ecosystem over the long term rather than putting resources into changing service providers, Toast doesn’t have to spend much on marketing to acquire new clients. Additionally, due to high customer satisfaction, these established clients will have even fewer incentives to be confused.
I think we have already witnessed the advantages of Toast’s ability to provide a lot of value to restaurant clients. The service has already attracted a lot of interest, given that 20% of new customers come from referrals and 75% come from inbound channels.