By Heidrick & Struggles’ Dorothy Badie, Lisa Baird, and Steven Krupp

During the height of the COVID-19 pandemic in 2020, human resources (HR) leaders rightly prioritized employee health and safety and then office re-openings, while also dealing with a myriad of unforeseen pressures, such as changing workers’ expectations, reinvigorated social justice movements, and growing supply chain problems. Now in 2022, they are facing a fierce war for talent, while also growing companies where people want to stay for the long term. Inclusive cultures, flexible work models, and competitive compensation all help—and companies are focusing on those areas. But, in a hybrid world, some companies are floundering in an increasingly crucial area: career development.

Lack of opportunity to advance has historically been one of the top reasons people left companies; notably, Heidrick & Struggles’ work has consistently shown that leaders see their companies’ development processes as weak. Younger generations are concerned that opportunity will be even harder to come by in a hybrid work environment. For example, working mothers, many of whom have seen their careers disrupted by the pandemic, are anxious about their next steps. Moreover, more than half of U.K. respondents in a recent People Management survey were worried they would miss out on ad hoc learning opportunities with peers and seniors in a hybrid environment.

HR leaders are aware of the concern. In a recent poll conducted by Heidrick & Struggles, 37% chose career development as the biggest challenge their company faces right now, which was more than twice the percentage of those who chose the next response of inclusion. Another recent McKinsey study showed that more than 80% of businesses face critical gaps in the skills needed to build resilience. It’s important for HR and people leaders to understand the role of career development, yet, based on employee engagement data, some employees consider this a weakness.

And now, in a hybrid work environment, supporting employees in their career development has become more important than ever. While many HR leaders are still adapting to hybrid working norms, it is critical that they also commit to new strategies to support their employees in their career progression—or potentially risk losing them.

Based on conversations with various HR leaders across industries, primarily in the Americas, there are three suggested tactics to address emerging learning, development, and inclusion needs and investing in progressive, differentiating career development programs. Companies that succeed may improve talent attraction and retention—and organizational performance—giving them an important competitive advantage in the war for talent. 

Redefining What Matters in a Hybrid World

Amid a period of reinvention, people are not only reassessing their lives, but also their careers and relationships with employers. A recent Gallup survey found that 48% of the US working population is actively job searching, and the 2021 Beamery Talent Index found that 72% of respondents were confident in their ability to find a new job. Other recent research has shown that younger generations consider the lack of belonging at work as one of the two most important reasons for leaving or considering leaving a job.

To help attract and retain people, it’s important for HR leaders and their companies to make the work experience inclusive and meaningful. In a recent interview with Satya Nadella, CEO of Microsoft, suggested the need to shift the paradigm from “I work for Microsoft” to “How well does Microsoft work for me?” Many companies are struggling with this. Attempts to engage workers with “trophy offices,” innovative spaces, and personalized snacks are missing the point.

Many leaders have increased their attention to purpose and well-being since the beginning of the pandemic as part of building or maintaining an inclusive culture. Moreover, a more intentional focus on diversity and equity, alongside inclusion, became crucial following the movements and resurgence of demands for racial and social equity. Messages and interactions that connect people to a larger purpose may help to create belonging and bolster engagement. Leaders who make their DE&I initiatives visible, including transparency about progress toward goals and role-modeling their commitments, are central to success.

But maintaining inclusion and engagement isn’t only about culture initiatives. Expanded opportunities, challenges, learnings, feedback, and career coaching are also important aspects of building commitment over time. An O.C. Tanner Institute study has shown companies that prioritize career development see an increased likelihood of engagement (+115%), opportunity (+167%), and personal success (+152%). The probability of increased engagement is 3.7 times higher for companies that provide opportunities to grow in specific areas, acquire new skills, and work on special projects.

Individuals should take responsibility for their own careers, but it appears they are looking for companies to step up—and that companies that don’t may lose them. It’s important for HR leaders to promote a culture of professional growth that moves beyond old ways of thinking and leverages the hybrid talent development upsides.

This is the first blog post of a two-part series that shares three tactics for HR leaders to optimize career development and employee retention in a hybrid world.

About the Authors: Dorothy Badie is an engagement leader in Heidrick & Struggles’ New York office and a member of Heidrick Consulting; Lisa Baird is the global managing partner of the Human Resources Officers Practice; she is based in the New York and Stamford offices; Steven Krupp is a senior partner in the Philadelphia office and a member of Heidrick Consulting and the CEO & Board Practice

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

As the growth stock sell-off gradually morphed into a bear market, many high-quality companies fell sharply despite consistently improving results. Three such examples — MercadoLibre (NASDAQ: MELI), The Lovesac Company (NASDAQ: LOVE), and Pool Corp (NASDAQ: POOL) — all trade at depressed valuations despite growing revenue by 690%, 480%, and 120%, respectively, over the past five years.

Growth rates like these, paired with lower valuations, hold the potential to create a potent one-two punch for investors. Let’s look at what makes these stocks once-in-a-decade opportunities today.

1. MercadoLibre: Fintech steals the show

Down 50% from its all-time highs, Latin American fintech and e-commerce juggernaut MercadoLibre is an excellent example of a stock’s price moving counter to its burgeoning operations. Despite selling off amid slowing growth from its commerce segment and rising provisions for its MercadoCredito loans unit, the company posted its highest $2 billion operating cash flow over the past year.

MELI Cash from Operations (TTM) data by YCharts.

Powered by 88 million active users, which grew 12% compared to last year, MercadoLibre continues to become enmeshed into the fabric of the Latin American community. Accounting for over 20% of Latin American online gross merchandise volume (GMV), the company’s commerce segment grew 33% despite physical retail reopening across the region.

However, as impressive as this e-commerce foothold is, MercadoLibre’s fintech unit (MercadoPago) aims to become the company’s core segment. Growing revenue by 115% in Q3, MercadoPago now accounts for 46% of revenue and has 42 million unique fintech users.

With 70% of Latin America’s population still unbanked or underbanked, according to Forbes, MercadoLibre’s fintech growth may just be starting. Additionally, 72% of MercadoPago’s total payment volume (TPV) comes from outside its marketplace. This figure highlights that its digital wallet and payment capabilities go far beyond sales on its platform, providing additional growth avenues for the company to explore.

Most importantly for investors, this growth potential comes when MercadoLibre’s valuation is near decade lows.

MELI Price to CFO Per Share (TTM) data by YCharts.

In MercadoLibre’s case, operating cash flow per share provides a better insight into the company’s valuation as it spends heavily on capital expenditures, weighing on free cash flow.

MELI Free Cash Flow data by YCharts.

At just 23 times cash from operations, MercadoLibre’s 61% revenue growth rate, steady e-commerce progress, and massive fintech potential make it a once-in-a-decade opportunity for investors.

Lovesac: 45% sales growth but priced for none

While the home-furnishings industry and once-in-a-decade buying opportunity rarely end up in the same sentence, Lovesac’s one-two punch of growth and low valuation may make it happen.

The company is sporting revenue growth of 480% since its initial public offering (IPO) in 2018, so one might imagine that its stock has fared relatively well over the same time. Instead, however, its share price is almost exactly where it was at its IPO.

Well, that’s fine, you may think. It’s probably another sold-off growth stock that keeps posting massive losses on the bottom line. Yet, that’s not the case either as earnings per share (EPS) turned positive during the pandemic and never looked back.

LOVE Normalized Diluted EPS (TTM) data by YCharts.

Now trading at just 8 times earnings, Lovesac’s low valuation has the potential to act like a loaded spring rocketing its share price higher.

LOVE PE Ratio data by YCharts.

As crucial as this cheap valuation could prove for investors, Lovesac’s growing customer base and environmentally friendly “sactionals” (couch pieces that can be arranged variously) bring additional excitement to investors.

Image Source: Lovesac Q2 2023 Investor Presentation.

With sactionals making up 87% of the company’s sales, Lovesac could rebrand as “The Sactional Company” as its beanbag products now only account for 11% of revenue. Regardless, these modular sactionals have continued to grow in popularity as their reconfigurability and optional accessories (seat tables, drink holders, coasters, etc.) make them endlessly customizable.

Further adding to Lovesac’s rising popularity among younger generations is that 100% of its upholstered fabric comes from repurposed plastic bottles. With the standard sactional pit configuration using nearly 1,000 plastic bottles, the company’s products are not only beloved by customers, but also a net positive for the world.

Sporting a strong customer lifetime value of $2,880, compared to a customer acquisition cost of $549, Lovesac’s minuscule valuation and growing customer count make it a compelling starter-position candidate with multi-bagger potential.

Pool: A quiet recurring-revenue business

As the No. 1 distributor of pool products worldwide, Pool stock has delivered total returns of over 700% in the last decade alone. Across the last 20 years, these returns jumped to over 3,800%, making the company a 37-bagger for its shareholders over that time.

Leading this incredible rise for Pool are its stable operations that are designed to thrive whether the housing market is booming or cooling off. 58% of its sales come from recurring sources, such as maintenance supplies that need to be purchased no matter what.

On top of this steady inflow of sales, an additional 22% of purchases come from replacement and refurbishment services, which the company calls “semi-discretionary.” These predictable sales build a beautiful floor for Pool in trying times, reducing the boom or bust nature of the housing cycle.

POOL PE Ratio data by YCharts.

The shares now trade at just 16 times earnings, and that cheap valuation has has caught management’s attention. With a history of buying back stock at a discount, Pool is back at it again, repurchasing nearly $500 million in shares over the past year.

With a dividend yield of 1.2% and a tiny payout ratio of 18%, the company also has plenty of room to grow its dividend.

Pool continues to prove itself as a master at returning cash to shareholders. Trading well below its lowest price-to-earnings ratio this decade, Pool’s steady growth looks like a once-in-a-decade opportunity for growth and income investors alike.

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Josh Kohn-Lindquist has positions in MercadoLibre, Pool, and The Lovesac Company. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool recommends Pool and The Lovesac Company. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.