15 Best Growth Stocks to Buy for the Next 5 Years

8. Carvana Co. (NYSE:CVNA)

Number of Hedge Fund Holders: 66

5-Year Revenue CAGR: 29.69%

Upside Potential as of January 15: 18.79%

Carvana Co. (NYSE:CVNA) is an online used car retailer known for its innovative approach to car buying. As the fastest-growing online used car dealer in the US, it offers a seamless digital experience where customers can browse, finance, and purchase vehicles entirely online. It eliminates the need for traditional dealership visits.

The company demonstrated strong scalability and market expansion potential in Q3 2024. It achieved record profitability with a net income of $148 million, solidifying its position as the most profitable public automotive retailer. Its infrastructure is built for significant scale, with reconditioning capacity for over 1 million retail units annually and physical real estate supporting over 3 million units per year.

With 40 million used vehicle transactions annually, and Carvana Co. (NYSE:CVNA) currently holding only 1% market share, a vast untapped market remains. The company is pursuing this opportunity through key growth drivers such as expanding inventory selection, enhancing customer experience, and increasing brand awareness. Carvana Co. (NYSE:CVNA) stock surged 5.03% in the first week of January to $198.35 after RBC upgraded its rating to Outperform and raised the price target to $280. This follows the company’s reinstatement of a $4 billion loan deal with Ally Financial.

Optimist Fund stated the following regarding Carvana Co. (NYSE:CVNA) in its Q3 2024 investor letter:

“Carvana Co. (NYSE:CVNA) continues to perform well with unit growth accelerating from mid-teens in Q1 to over 30% in Q2, while achieving double the adjusted EBITDA margins of the automotive retail sector. It remains our largest position.”