Adding These 2 Stocks Could Double Your Money in 2021

With the S&P 500 index up about 15% in 2020 despite an economy that is facing significant headwinds, many top growth stocks are trading at frothy valuations. But the availability of COVID-19 vaccines could help jumpstart the economy and bolster many of the consumer discretionary companies that have struggled during the pandemic…

If you’re looking to double your money next year, a good bet is to look for solid companies with stocks trading down that are likely to see accelerating sales growth as consumer spending recovers. Here are two stocks that have already reported an uptick in demand heading into the holidays and are primed for a prosperous new year.

1. Revolve: An undervalued growth stock

Revolve Group (NYSE:RVLV) is a leading e-commerce destination for millennials and Generation Z shoppers who are looking to buy on-trend apparel from fashion-forward brands. The company has been around for 17 years, accumulating hundreds of millions of data points that it uses to direct its merchandising strategy, pricing, and marketing.

Revolve revenue nearly doubled between 2016 and 2019, while its data-driven business strategy contributed to rising margins and profitability. It was more challenging to create additional demand in 2020, as social distancing and canceled events pressured sales of party attire, such as dresses, which is Revolve’s top sales category.

However, the third-quarter earnings report featured an improving trend. Revenue declined 2% year over year, which shows the business heading in the right direction after a 12% drop in the second quarter. Sales fell by a high-single-digit percentage in October, but Revolve should experience plenty of pent-up demand once vaccines become widely available.

Analysts currently expect Revolve to generate revenue growth of 18% in 2021, consistent with the company’s pre-pandemic growth trajectory. What’s more, it’s posting a healthy profit even with sales down, partly helped by a lower tax rate and lower marketing spending with events canceled. Profits doubled over the year-ago quarter in Q3, bringing Revolve’s trailing-12-month net income to $45 million.

Moreover, investors are undervaluing Revolve’s growing free cash flow, with the stock currently trading at a…

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