3 stocks under the radar to buy for 2022

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A new year brings new opportunities. If you are looking for stocks to add to your portfolio, some of the best options may be lurking in the shadows and offering you a lot of earning potential. Some of the best stocks are names you know, but others are under the radar, giving you the chance to get in before the rest of Wall Street.

Three Motley Fool contributors offer their take on the under-the-radar stocks that may explode in 2022. They chose Revolution group (NYSE: RVLV), soft (NYSE: CHWY), and Hasbro (NASDAQ: HAS).

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A digital fashion revolution

Jennifer saibil (Revolution group): Online shopping has become much more than Amazon. Many of the biggest opportunities going forward belong to newer, smaller companies that are targeting niche groups and capturing market share.

Revolve Group is a small, growing online fashion company that uses artificial intelligence and machine learning to deliver elite fashion to its target market of Millennials and Gen Z shoppers. over 1,000 brands curated and connects customers and influencers with high flair, and it’s all built on a dynamic, tech-driven platform.

It resonates with its audience, and third-quarter sales were up 62% year-over-year to $ 244 million. It is also profitable, posting a net profit of $ 17 million.

As a small business with growing sales, Revolve is exploiting its great opportunities. The United States is its largest market, accounting for 81% of total sales in the third quarter, and although international sales have declined by a percentage point as a part of sales, huge international markets can play a central role. in expansion.

Active customers grew 11% year-over-year in the third quarter, and average order value rose from $ 232 to $ 274. Average sales growth per customer has accelerated over the past two quarters, indicating that the brand has become even more popular with its core customer base. More and more new buyers are buying items at full prices, indicating a long trajectory for future growth.

The share of the Revolve group has gained 86% over the past year, almost three times S&P 500gain of 29% over the same period. The stocks are trading at 47 times earnings over 12 months, which is not cheap, but not unreasonable for a high growth stock. Revolve Group has huge potential, and this under-the-radar stock could explode in 2022.

Chewy is rapidly growing its customers and revenue

Parkev Tatevosian (fluffy): Chewy is an online pet retailer that flourished at the start of the pandemic. Millions of people have searched online for a shopping alternative to visiting stores in person. Chewy has proven to be a great option for pet parents, and the company has gained millions of new customers. As of October 31, Chewy had 20.4 million active customers, up 14.7% from the same period last year.

In addition, these customers continue to increase their spending on Chewy.com. During the Company’s last quarter ended October 31, net sales per active customer increased by $ 56 compared to the same quarter last year. Management has done a great job expanding the item selection, and consumers are responding by allocating more of their pet spending to Chewy.

Plus, it gives consumers more reasons to stay. One of the perks of shopping at Chewy is free access to Connect With a Vet for subscribers to its Autoship program. Connect With a Vet allows clients to speak to a Chewy-provided veterinarian over the phone or online. This can add a layer of convenience for pet parents who now have an option that bridges the gap between ignoring your pet’s illnesses and bringing them to potentially expensive local vets.

Adding new customers and increasing expenses for each customer increases overall revenue. Chewy’s revenue doubled from $ 3.5 billion in 2019 to $ 7.15 billion in 2021. Luckily for the company, pet ownership is usually a long-term commitment. This allows him to serve his clients for several years.

Chewy’s shares are trading at a price-to-sell ratio of 2.9, less than half of the price they were selling for earlier in the year. A cheap price coupled with growing revenue and customers make Chewy a great stock to buy for 2022.

An emerging entertainment power

John Ballard (Hasbro): There are a number of reasons to love Hasbro right now. Former CEO Brian Goldner, who passed away a few months ago, left the company with a clear growth roadmap, and the company’s recovery from the pandemic provides a glimpse of what’s to come.

Hasbro has dozens of film and TV projects in the works to capitalize on its 2019 acquisition of Entertainment One, which has taken a leading role in the development of Hasbro’s top toy franchises, including GI Joe, Magic: The Gathering, and My little Pony, in big theatrical releases. The entertainment segment posted a 76% year-over-year revenue increase in the third quarter, as it recovers from the pandemic. But future versions could result in much more revenue growth.

Digital games also continue to show steady growth, up 32% in the third quarter. The demand for Magic: The Gathering and Dungeons and Dragons, along with higher entertainment shipments, helped Hasbro offset a slight decline in consumer products in the last quarter. Hasbro grapples with supply chain disruptions, but total revenue still grew 11% year-over-year, with operating profit up 9%. This paves the way for strong growth once the supply issues are resolved.

In the meantime, investors can expect to receive an above-average dividend yield of 2.7%. With clear growth catalysts on the horizon, the stock could outperform the overall market in 2022 and beyond.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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