We recently published a list of 12 High Growth International Stocks to Invest in Now. In this article, we are going to take a look at where Wix.com Ltd. (NASDAQ:WIX) stands against other high growth international stocks to invest in now.
What To Expect From The Stock Market in 2025?
On January 15, Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company shared his outlook for 2025. He believes that the market has lost some of its momentum as the prospects of more rate cuts in 2025 have gone slimmer. One of the reasons for less likely rate cuts came a few weeks ago with a stronger-than-expected job market report, which sparked a market dip. Moreover, on the same day, long-term interest rates went higher. The 10-year treasury yield climbed closer to the 5% mark which has haunted stocks in the past.
However, Timmer believes the market is still in a bull phase, primarily driven by rising earnings, which he expects will continue to support market growth. This optimism is grounded in the historical performance of bull markets, where earnings often play a crucial role in sustaining upward momentum. He pointed out that as bull markets mature, they typically experience greater volatility. This means that even minor disruptions can lead to significant market fluctuations. High price-to-earnings (P/E) ratios contribute to this sensitivity, as elevated valuations can make the market more susceptible to corrections. Timmer also highlighted his concerns over interest rates, specifically, the Fed’s ability to cut rates, which are likely to persist. This “interest-rate angst” could continue influencing market behavior throughout the year, as investors will continue to grapple with how rate changes can affect stock valuations and overall economic conditions.
Moreover, Timmer also discussed the shifting dynamics in the stock market, particularly focusing on the transition from a narrow leadership group to a broader market participation. He noted that in the latter half of 2024, there was a notable shift in market leadership from the “Magnificent 7”, to a wider array of stocks. This broadening indicates that more sectors and companies are contributing to market gains, which is generally seen as a positive sign for overall market health. However, since mid-December, following the Fed’s reduced expectations for interest rate cuts, the market has lost momentum, as only 24% of stocks were trading above their 50-day moving average, and just 29% of S&P 500 stocks were outperforming the index. This indicates a narrowing participation in market gains, which is concerning for investors who prefer broad-based growth.
While talking about large-cap stock performance, Timmer raises the question of whether this trend of narrow leadership will persist. He suggested that trends continue to move in the same direction until a significant change occurs. Given that large-cap growth stocks have dominated for years, it is reasonable to assume that they may continue to lead. However, he also cautioned the investors that as per the concept of mean reversion, asset prices will eventually return to their historical averages and when this happens, it could lead to sharp corrections in stock prices. Timmer believes that while 2024 was a “Goldilocks year,” for earnings and valuations, this year can be a tussle between higher earnings and rising long-term interest rates, thereby resulting in a volatile market.
Our Methodology
To curate the list of 12 high-growth international stocks to invest in now, we used the Finviz stock screener and Seeking Alpha. We used the screener as a starting point of our research to get (Ex-USA) stocks that have grown their revenue by more than 15% during the last 5 years. Next, we checked these stocks for 10-year revenue growth rates from Seeking Alpha and selected only those stocks that had grown by more than 25% during the last decade. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s third-quarter database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Copyright: rawpixel / 123RF Stock Photo
Wix.com Ltd. (NASDAQ:WIX)
10-Year Revenue Growth Rate: 29.83%
Number of Hedge Fund Holders: 46
Wix.com Ltd. (NASDAQ:WIX) is an Israel-based cloud web development platform, which allows individual and business users to build professional websites and online stores. The company operates on a subscription model with around 222 million users, 85% of which are on annual and multi-year subscriptions. The company has a 102% net revenue retention rate.
On January 13, Elizabeth Porter upgraded Wix.com Ltd. (NASDAQ:WIX) to Overweight from Equal-weight, increasing her price target from $248 to $276. The analyst mentioned that the use of AI-related innovations and a steady growth in the company’s partner segment is generating strong free cash flow for the company. However, the current valuation does not reflect these positive developments.
Moreover, Lakehouse Global Growth Fund in their November 2024 investor letter mentioned that Wix.com Ltd. (NASDAQ:WIX) is focused on innovation with almost 40% of its workforce deployed in R&D. The fund also mentioned that while the significant driver for the company’s growth has been the Do-it-Yourself (DIY) category. Its new product Studio aimed at professional web developers will drive future growth. This new product will compete with WordPress, which holds around 60% market share. Management is already witnessing excellent results from Studio as 75% of bookings from new partners were driven by Studio accounts during the fiscal third quarter of 2024.
Here’s what Lakehouse Global Growth Fund stated regarding Wix.com Ltd. (NASDAQ:WIX) in its November 2024 investor letter:
“At the portfolio level, the biggest contributor to performance during the month was Wix.com Ltd. (NASDAQ:WIX) (+34.6%). This is a new position and, so far, things are playing outwell with the company delivering a series of earnings results ahead of expectations – more on Wix below.
Lastly, we’ll wrap things up with a brief introduction to one of the Fund’s newest positions, Wix.com (“Wix”). Wix is a global leader in website development, providing critical infrastructure that enables over 270 million individuals and businesses to create, manage, and grow their online presence. Since its founding in 2006, Wix has always maintained a relentless focus on innovation, with 40% of its workforce in R&D. It has developed a comprehensive suite of tools beyond basic website building, including e-commerce, payments, and marketing solutions. The company exhibits a sticky subscription-based model, with 85% of users on annual or multi-year plans and an impressive 104% net revenue retention rate.
Historically, Wix’s primary focus has been on self-creators (think individuals and SMBs) who are looking to build and manage a website themselves. Whilst this DIY category has been a significant driver of the company’s growth to date, what got us particularly excited about Wix was the success of their new product aimed at professional web developers called Studio. This “do-it-for-me” (DIFM) market has long been dominated by WordPress which holds roughly 60% market share, however, Wix has recently started making inroads. Wix Studio simplifies the process for partners (agencies and freelancers) to build their clients websites on the Wix platform and the use of revenue sharing arrangements effectively transforms these partners into distributors for Wix…” (Click here to read the full text)
Overall, WIX ranks 4th on our list of high growth international stocks to invest in now. While we acknowledge the potential of WIX to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WIX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
