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2 Growth Stocks to Buy in February

Buying and holding growth stocks over long periods can deliver extraordinary returns for investors. The difficulty is in the discipline of holding investments for several years or more.

It is tempting to sell a stock after it has risen 20% to 40% in less than a year, but that can remove the chance for exponential growth over several years. Here are two growth stocks long-term investors can buy in February.

Image source: Getty Images.

1. Walt Disney

The House of Mouse is making strides in recovering from devastations caused by the pandemic. Walt Disney (NYSE: DIS) temporarily locked the turnstiles at its theme parks. That was a crushing blow to a segment that generated $26 billion in revenue and $6.7 billion in operating income in 2019. In 2020 and 2021, the segment's operating income fell to less than $500 million each year.

Thankfully, by the end of its fourth quarter in 2021, theme parks were reopened, and revenue in the segment doubled from 2020. During the time the parks were shut down, the company made enhancements to improve profitability, such as implementing mobile food ordering and a robust ticket reservation system. The changes gave chief financial officer Christine McCarthy the confidence to say that the theme parks will be more profitable than before the outbreak when they return to full strength.

Moreover, Disney's streaming segment has thrived since the pandemic onset. Overall, it boasts 179 million paying subscribers with 118 million of those coming from its flagship Disney+ service. While that growth has slowed a bit recently, the company still expects to reach over 300 million subscribers by 2024 -- and sees the segment being profitable by then too.

With theme parks recovering and the streaming segment thriving, it's a great time to buy Disney stock.

2. Chewy

Online pet-supply retailer Chewy (NYSE: CHWY) is having a tough go of it already in 2022. The company is struggling to solve lingering supply-chain issues caused by the pandemic. The costs are weighing on profit margins and concerning investors. Shortages of everything from employees to products are forcing it to pay higher prices.

The stock is down by almost two-thirds from the high of $120 it reached in early 2021. That could be a bargain for long-term investors, who can now buy Chewy at a price-to-sales ratio of 2.2, down from 7.2 early in 2021 and near the lowest it has ever been.

And despite its struggles with the supply chain, Chewy is still growing nicely. In its third quarter, ended on Oct. 31, its number of active customers grew by 14.7% from the same time a year earlier. It now has 20.4 million active customers. In that same time, revenue has grown by 24%.

Looking back further, Chewy has grown from $900 million in revenue in 2016 to $7.1 billion in 2021. That's remarkable. Over that same time span, gross margins have expanded from 16.6% to 25.5%.

Indeed, there are elevated short-term risks with Chewy and the supply chain, but the stock price has fallen considerably to account for those risks. For those reasons, it's an excellent growth stock for long-term investors to buy in February.

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Parkev Tatevosian owns Chewy, Inc. and Walt Disney. The Motley Fool owns and recommends Chewy, Inc. and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.


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