Investors have found that the stock market is a great way to generate wealth in the long run. Where it can get tricky, however, is picking out the stocks that will do the best not just today or this month, but for years to come.
With many investment trends, it can be extremely difficult to understand exactly what companies are doing. If you’re not a techie, the latest software-as-a-service platform may be beyond your comprehension. And even knowing how to drive a car can give you a headache trying to understand what really makes one electric vehicle manufacturer better than another.
You don’t have to invest in things you don’t know to make money in the stock market. Below we’ll take a look at two top-notch growth stocks with simple companies that won’t leave you wondering how they work.
1. Boston beer
Boston beer (NYSE: SAM) has been a surprisingly strong stock over the past year. After maintaining consistent and solid price gains for years, the maker of Sam Adams beer has tripled in value since early 2020.
If you expect to find some kind of technical stock corner here, you will have to search a long time. For its customers, Boston Beer’s greatest foray into the cloud comes when they find its beverages on an airplane flight. And Boston Beer hasn’t figured out a way to build a subscription-based platform for beer enthusiasts.
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What Boston Beer does have is a range of popular products. Increasingly, the most successful product lines are actually not beer.
Twisted Tea offers iced teas and lemonade drinks with a kick, while Angry Orchard’s hard cider line also has a devoted following. More recently, alcoholic sparkling water has become the new hit, with Boston Beer’s Truly brand leading the way with flavors like pomegranate, Colima lime and Sicilian blood orange.
Boston Beer sales are up 25% in 2019, and even with the challenges of the pandemic, the company is on track to surpass that growth rate once the latest fourth-quarter 2020 results come in. The net result is rising even faster. That’s great news for Boston Beer shareholders, and anyone who has ever enjoyed a trip to the local watering hole can understand the beer maker’s success.
2. RH
Anyone who has ever owned a home knows that finding the right furniture for it can be a balancing act. Most people have a budget to follow, but they also want premium furniture and accessories that can give them the distinctive and comfortable feel they crave.
RH (NYSE: RH) focuses on the luxury home owner. The retailer does not take any punch and uses an unusual membership model to lure his best customers to his luxurious gallery locations. CEO Gary Friedman’s mission is to build an unparalleled brand known for cutting-edge concepts in helping luxury shoppers build their dream home.
As tough as the pandemic has been on retailers, RH has also benefited from people staying at home more and wanting the places they live to be better than ever. While retail traffic has declined, ecommerce sales have slowed.
Going forward, RH has ambitious plans to build entire ecosystems of luxury around its retail locations, with plans to invest in key destinations such as the international ski resort of Aspen. The company has become immensely profitable over the past three years, and with huge future ambitions RH has a long growth path ahead.
Invest in what you know
Many growth stocks succeed because they have great ideas that no one else could come up with. But in some cases, companies that are very easy to understand still manage to achieve strong growth. Neither RH nor Boston Beer are confusing at all, and they have promising avenues for future expansion opportunities that could keep the growth for years to come.