Forget “The Magnificent Seven.” Instead, buy these three top growth stocks.

There’s no doubt that some of the biggest technology stocks are driving change in the world and deserve the spotlight. But once a stock reaches a $1 trillion market cap, investors may start looking for the next big thing.

year (year -1.04%), pending (Onon 1.68%)and Dutch Brothers (bros 0.47%) Each has a market capitalization of less than $10 billion and offers incredible growth opportunities.

1. Roku: Ad-based streaming model

Roku is a streaming company with a dual model. Although they sell streaming devices, many of their free channels also offer ad-supported streaming content.

The Roku operating system (OS), which refers to streaming hardware that provides access to a large group of streaming networks, is the top OS in the United States, Canada, and Mexico, competing with members of the ‘Magnificent Seven’. Amazon. It has carved out a wide niche in the streaming devices space, which has helped it win the company over.

But while this sector is growing, it is far more useful as a gateway to creating more streaming accounts that serve a much larger advertising business. The advertising business, or platform segment, accounted for 87% of total sales in 2023.

Advertisers are still in the process of shifting their business from traditional broadcast TV to streaming. There is no doubt that movement will continue as viewers move and advertisers follow their gaze. According to Nielsen, TV airtime decreased by 16% compared to the fourth quarter of last year. American adults ages 18-49 spend 60% of their viewing time on streaming, yet advertisers only spend 29% of their budgets on streaming.

So while Roku reported double-digit revenue growth in the fourth quarter of 2023, the key metrics were active accounts, up 14% year-over-year, and watch hours, up 21% year-over-year. View time on Roku channels increased by 63%, indicating wide open opportunities for more advertising revenue.

Roku stock is down as much as 30% in 2024. The decline comes as a result of investor disappointment with Roku’s profitability. walmart It’s acquiring a Roku competitor. Roku’s profitability metrics are improving, and the Walmart deal doesn’t really have an impact. This looks like a great opportunity for smart investors to buy top growth stocks in a falling market.

2. ON: Develop a loyal following.

On Holding aims to be the “most” premium sportswear brand on the planet, capturing market share in the affluent and resilient communities it serves.

The Swiss company is best known for the CloudTec sneakers that Hellen Obiri wore to win the New York and Boston Marathons last year, and customers can’t seem to get enough of them these days. But it’s also developing a full line of footwear and activewear for athletes and aspiring athletes.

Growth is strong and opportunities are wide open. Sales in 2023 increased 47% year-on-year and 55% on a currency-neutral basis. We’re working through direct-to-consumer (DTC) and wholesale channels, and DTC is growing at a faster rate. This represents loyalty and brand power.

The goal is to target a premium demographic that can afford to pay full price, resulting in higher gross margins and improved profitability. Gross margin increased from 56% in 2022 to 59.6% in 2023, and net profit increased 38% compared to last year. Last October, management gave long-term revenue guidance of 26% compound annual growth through 2026, but now expects a 30% increase in 2024.

The company is still a relatively small company, with trailing 12-month revenue of just $1.9 billion. But we’re still venturing into relatively unknown territory. For example, in the United States, brand awareness is low in cities with high affluent populations, such as only 9% in Miami, 15% in Miami, and 12% in Dallas.

On is positioning itself as the next activewear brand, and now is a great time to buy stock.

3. Dutch Bros: Expanding nationwide

Dutch Bros is reporting strong growth as it opens new stores across the United States. Although it currently operates in 16 U.S. states, the drive-thru coffee chain has ambitions to reach every corner and introduce Americans everywhere to the cup of coffee already beloved in the West. Coast.

The company had 831 stores as of the beginning of the year and plans to open 165 new stores in 2024. Although this is still a small number of stores, management believes the number could reach 4,000 within the next few years. This expansion provides a long-term growth runway, but the company also reports accelerating comparable sales (comps) growth.

Dutch Bros enjoyed higher comp growth when it first listed in 2021, but the pace has begun to slow and even decline as inflation sets in. The company has responded quickly by raising prices to counter the impact of inflation, and is developing a following while winning fans with its unique coffee brand. In the fourth quarter of 2023, sales increased 26% year-over-year, and components increased 5%.

The coffee chain is also generating more stable profits. The contribution margin continues to expand, increasing from 24.6% in 2022 to 28.2% in 2023. Full-year net income was $10 million, after a $19 million loss in 2022, but Dutch Bros reported a loss of $3.8 million in the fourth quarter. Since it is still operating in a harsh environment and is still a young, growing company, it is not a level of concern.

This is a trend to watch over time, and poor performance indicates that the company is in flux. This is what presents an attractive opportunity for investors at this stage. Dutch Bros could be a breakout stock this year and an excellent long-term addition to your portfolio.