Is Nick Scali a Growth Stock to Watch?

We all want to pick the next, Inc. [NASDAQ:AMZN] or Wal-Mart Stores Inc. [NYSE:WMT]. Just take a look at how much each stock has grown since listing on the stock market.

Amazon Wal-Mart stocks

Source: Google Finance

Whether you invested in Amazon or Wal-Mart right after their initial public offerings, you would have been happy. But here’s the best part. You could have invested in either company 10 years after their IPO, and you still would have made amazing returns by now.

Just look at Wal-Mart. By 1996, it had already run up significantly from when it listed in 1972. You might have thought there was not much left to squeeze out of Wal-Mart. But had you sold out, you would have missed out on a share price climb from $11.30 to $68.50 between 1997 and 2000.

The same applies to Amazon. Had you got out when the stock ran up significantly from the late 1990s to 2014, you would have missed out on a 217% return from 2015 to present.

Of course it’s easy to say this in hindsight. But it goes to show that you can still generate amazing returns, even when a stock has significantly run up in previous years.

Is Australian furniture seller, Nick Scali [ASX:NCK] one such growth stock to watch?

Nick Scali’s Profit Growth

Over the past five years, NCK has generated revenue growth above 10% every year. The business has also had average profit growth of a little over 26% from 2013–17. Yet, investors sold the stock down leading up to the release of their full year results for 2017.

The expectation of lower housing activity is making investors question the growth of new furniture purchases.

Now, I’m not about to tell you that NCK will be the next Wal-Mart or Amazon over the long-term. But I do believe investors have closed the books on NCK’s growth stock a little too soon.

If you want to check out more growth stocks like NCK, click here.


Härje Ronngard,

Junior Analyst, Money Morning

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

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