[Editor’s note: “10 Best High-Growth Stocks to Buy for Young Investors” was originally published in November 2019. It has since been updated to include the most relevant information available.]
With an influx of positive economic data ranging from the May jobs report to robust retail sales, high-growth stocks have once again taken over the market. But for young investors that may have missed out on the initial run up, they still have a great opportunity to participate in this sector. That’s true not just because of recent volatility but also, they have an asset money can’t buy — time.
Talk to any financial advisor and, more often than not, they apply the Pareto principle for 20- or 30-somethings. Colloquially known as the 80-20 rule, advisors recommend that young investors have 80% of their portfolio in stocks, and the remainder in safer, interest-yielding assets. When it comes to millennial stock allocation, spring chickens should really consider high-growth stocks.
As the saying goes, time is money and, in most cases, time is much more important. Like I mentioned above, you can’t acquire more time, try as you might. Additionally, the present crisis has created big opportunities in risky but potentially rewarding high-growth stocks. As a young investor, you can wait out your speculative portfolio. With any luck, your target companies will reach their potential.
This mindset is valid even with the impact of the novel coronavirus. Indeed, young investors will likely look back on the pandemic as an awful event that nevertheless transformed their financial trajectory. Frankly, there has never been a better time to buy great companies on discount.
With that in mind, here are the top 10 high-growth stocks to buy for young investors:
- Amazon (NASDAQ:AMZN)
- Carvana (NYSE:CVNA)
- JD.Com (NASDAQ:JD)
- Dropbox (NASDAQ:DBX)
- Square (NYSE:SQ)
- Chewy (NYSE:CHWY)
- Trade Desk (NASDAQ:TTD)
- Voyager Therapeutics (NASDAQ:VYGR)
- Upwork (NASDAQ:UPWK)
- Champignon Brands (OTCMKTS:SHRMF)
High-Growth Stocks for Young Investors: Amazon (AMZN)
Whenever discussions about high-growth stocks arise, Amazon invariably makes most analysts’ lists.
What’s not to like here? Not only does AMZN leverage an enviable track record in the markets, but management also continues to forge ahead into new frontiers. Amazon is a disruptor among disruptors.
Even in the age of the coronavirus, Amazon continues to dominate among high-growth stocks. Obviously, pioneering online retail helps. But specific to the crisis, many traditional retailers face bankruptcy risks. That leaves Amazon to scoop up consumer demand.
Additionally, as I previously discussed, AMZN is on the verge of unprecedented greatness. Those of you who are in your 20’s and 30’s have some recollection of a time when eCommerce didn’t overwhelmingly dominate the retail sector. But we’re so close to a generation coming of age that has no clue about the prior brick-and-mortar hegemony.
When Generation Z enters the workforce en masse, they will buy through Amazon and other e-commerce channels, no question. Additionally, the company offers other relevant services that young people are likely accustomed to, such as clouding computing.
Finally, with the pandemic, you couldn’t ask for a better catalyst for AMZN stock. Basically, Amazon has been doing social distancing and contactless deliveries before they became part of the cultural lexicon.
Carvana takes a brilliant concept and brings it to fruition. Generally speaking, millennials don’t share the same love for the automobile as did prior generations.
Part of the decline in interest is the haggling over the price that used to be a given when buying a new car.
Enter Carvana. CVNA combines the tech wizardry that young people love with a centuries-old retail industry. Rather than negotiate with pushy or unsavory salespeople, buyers can instead browse cars online.
When they find one they like, CVNA delivers their vehicle to their driveway. Plus, Carvana offers a money-back guarantee to soothe concerns about buying a car sight (almost) unseen.
Considering that young people do nearly everything online, Carvana is likely the future of car buying. That’s one reason to buy CVNA stock. The other? Margins. Once the company firmly establishes itself, it has the potential to earn serious bucks. That’s because CVNA charges a premium for its convenient services.
So far, though, customers are willing to pay it. And in this new normal of social distancing, it’s not just Gen Z that likes the idea of touchless service. Also, consider that Carvana has been expanding its inventory while CarMax (NYSE:KMX) has seen theirs decline, suggesting a new paradigm is coming.
High-Growth Stocks: JD.Com (JD)
Given the heightened emotions surrounding the coronavirus and the Trump administration’s aggressive posture toward China, once universally revered Chinese companies like JD.Com now face geopolitical risks. Nevertheless, JD stock has performed very well, getting over its period of turbulence relatively quickly. Over time, shares could move significantly higher.
For full transparency, I haven’t always sung the praises of Chinese high-growth stocks to buy. Of course, the fiasco involving Luckin Coffee (NASDAQ:LK) illustrates the apprehensions many investors have toward China-based organizations. Nevertheless, if you have the patience and the stomach for potential rough waters, JD is supported by strong fundamentals.
Primarily, per-capita disposable income of China’s urban households has been steadily increasing over the last 30 years. In 2019, this metric increased nearly 8% from 2018 levels. Over the same period, U.S. per-capita disposable income increased only 2.4%.
Also, keep in mind that U.S.-China tensions is a double-edged sword. While aggressive U.S. policies don’t necessarily help Chinese companies, right now, many western nations are grappling with social unrest. By default, this makes JD stock a more attractive name based on China’s continuity of governance.
Finally, I found it interesting that China was able to quickly contain its recent spike in coronavirus cases. If this is true and not some communist party nonsense, it helps support the thesis of China being a relatively stable investing platform.
Admittedly, Dropbox doesn’t intuitively get the blood flowing regarding viable ideas for high-growth stocks to buy. As a file hosting and cloud storage company, the underlying business is useful yet competition abounds. However, Dropbox does have brand recognition. Most importantly, the coronavirus pandemic has made the company’s shift toward digital workspace solutions extremely relevant.
Like other coronavirus stocks, Dropbox experienced a surge of interest, as you can see from the momentum in DBX stock since the first half of March. Suddenly, companies of all sizes found themselves needing remote work solutions to accommodate the unprecedented crisis. Along with the brand recognition, Dropbox’s intuitive platform helped ease this transition.
For workers as well, DBX has provided a platform where documents and work products can be shared digitally. Internal communication systems also allow employees to comment on the details of the files being shared, keeping everyone on the same page.
Best of all, DBX stock benefited from a hostage audience, one that will probably stick around in the post-pandemic era. With the inherent cost savings associated with remote work, companies will probably consider downsizing their physical profile in the future, giving Dropbox a leg up in the digital workspace arena.
Also, the nationwide protests for social equality and justice will probably accelerate American families’ race to the suburbs and more rural areas. Therefore, the case for digital work solutions invariably will increase.
High-Growth Stocks: Square (SQ)
Square’s appeal is immediately recognizable to anyone who observes business trends.
Though the Great Recession deeply hurt small businesses, the subsequent recovery saw many of them pick up the pieces. Particularly, the rise of technological innovations helped smaller companies compete more effectively against their larger counterparts. The impact has been such that today, companies value agility and specialization more than outright size.
What makes SQ stock a compelling investment is that it evens the playing field for small businesses. Square provides portable credit-card readers that attach conveniently to your smartphone. That enables entities ranging from sole proprietors to small corporations to quickly set up a payment platform.
Another factor driving SQ stock for the longer term? An increasing number of Americans are going cashless.
Logically, this means we should see fewer cash-only businesses moving forward. And the types of businesses that would have once been cash only will likely gravitate towards Square’s unique and convenient solution.
If you needed more confirmation about Square’s relevance, look at the price chart for SQ. Since early April, shares have been steadily marching upward. Given its ability to allow its small business clients to compete effectively in the new economy, Square is a buy both now and for long-term growth.
According to a market research report in 2018, the global pet care market will reach nearly $203 billion by 2025. Driving much of this demand are millennials, who are utilizing digital innovations and technologies as part of their pet care regimen. And that was before the pandemic. In our post-coronavirus era, I anticipate a greater surge toward digitalization with pet-related purchases, bolstering the case for Chewy.
As an online retailer of pet food and products, CHWY stock is now suddenly relevant. That’s because brick-and-mortar pet stores have an unfortunate two-pronged threat to their customers. First, human-to-human spread of the coronavirus is already a significant fear factor. But second, dogs and cats can also catch the coronavirus. Given that many pet owners treat their animals better than humans, such a threat is a big no-no.
Cynically, what is a terrible headwind for physical pet stores is a huge plus for CHWY stock. Of course, that doesn’t mean Chewy is a perfect investment. Many analysts question the company’s operational efficiency to meet this sudden spike in demand. Further, there is a possibility that demand falls off after America fully and completely reopens.
But for young investors, you’ve got nothing but time for Chewy to work out its challenges. Also, the coronavirus doesn’t appear to be done with us as seven states are reporting their highest ever Covid-19-related hospitalizations. Thus, this is one of those high-growth stocks that may enjoy another cynical leg up.
High-Growth Stocks: Trade Desk (TTD)
Prior to the coronavirus, Trade Desk was one of the most compelling high-growth stocks available. Naturally, an increasing number of people have cut the cord over the years thanks to streaming services’ inherent flexibility and convenience. Features such as on-demand content and paying only for what you want particularly appeal to younger consumers.
Given this demographic shift, it’s imperative for advertisers to maximize their footprint in this new platform. Utilizing data and next-level market research, Trade Desk provides their clients with effective advertising campaigns that target specific audiences. Plus, the company’s agility enables advertisers to keep up with consumer trends quickly and seamlessly. Therefore, it’s not surprising that TTD stock has exploded higher.
And the coronavirus pandemic makes this story even more compelling. When Covid-19 began spreading across the U.S., most states issued stay-at-home orders. This had the effect of creating a hostage audience for streaming companies. In that situation, the business model for Trade Desk became patently obvious; hence, the resilience of TTD stock during this crisis.
After the coronavirus fades away, the bullish thesis will only get stronger. People will continue to cut the cord as they have. During quarantine, many folks have been undoubtedly converted to streaming. These are all net positives for TTD.
Voyager Therapeutics (VYGR)
As millions of families worldwide can attest, watching a loved one suffer from a neurological disease is a painful journey. It can also be agonizingly frustrating as a once proud and independent person succumbs to physical and mental ailments.
Voyager Therapeutics aims to put an end to this scourge, and I give them all my blessings. Utilizing a common, naturally occurring virus called adeno-associated virus (AAV) as a “treatment carrier,” VYGR scientists propose to target diseased cells for repair.
A significant advantage for using AAVs is their long lifespans. A single dose could potentially lead to lifelong benefits.
The technology is very promising but VYGR is still relatively in the early phase. Naturally, Voyager’s financials aren’t the greatest, and its share price is volatile.
However, if the company manages a breakthrough, we will witness a paradigm shift in how we approach ailments such as Parkinson’s disease, and it will become a hig-growth stock
Furthermore, gene therapy holds the key for solving a multitude of other diseases. VYGR is among a few high-growth stocks that could spark a medical revolution. Young investors should carefully watch this space.
High-Growth Stocks: Upwork (UPWK)
Every worker-bee has always at least once thought seriously about redefining the corporate environment. Rather than partially being rewarded for showing up and sitting in a cubicle, wouldn’t it be better if companies instead exclusively focused on performance? And if so, why bother with the physical platform?
This is the question that Upwork seeks to answer with a win-win solution for both businesses and individual professionals. Rather than hiring someone as a full-time employee, companies can go to Upwork’s marketplace for professionals. There, they can review qualified independent contractors and pick the one whose skillsets and costs are a match.
Of course, the pandemic has made UPWK stock all the more pertinent. With most companies having to adjust to the new normal, remote work has been quickly accepted. While this is a benefit to employees, businesses may use this platform to reduce overhead costs in the future. Why pay for cubicle space if no one will fill them?
Moving forward, UPWK stock should have incredible upside. Simply, it’s more cost effective for organizations to hire contractors for need-based projects. And this allows freelancers the personal enjoyment of working on their own terms.
Champignon Brands (SHRMF)
I’m going to close out my list of high-growth stocks with easily one of my most speculative picks, Champignon Brands. On the surface, Champignon Brands isn’t controversial or particularly noteworthy, which specializes in mental health solutions. But how it gets there is what raises eyebrows. Instead of traditional methodologies, this company utilizes psychedelic drugs.
No, you didn’t misread that. SHRMF stock is one of the few examples of the exciting and burgeoning psychedelics industry. With careful formulations of mind-altering substances, scientists have discovered the platform’s potential for addressing serious conditions, such as post-traumatic stress disorder, along with substance and alcohol use disorders.
Of course, current public perceptions don’t exactly do favors for SHRMF stock and other psychedelic investments. However, educational opportunities will likely shift this perception positively. Further, younger investors have a long time to wait out this story. And the daring ones can get in now before the wave strikes.
Also, it’s important to note that unlike retail products like cannabidiol (CBD), the psychedelics industry currently only focuses on medicinal applications. Therefore, the barrier to entry from both a competitive and legal standpoint is extremely high (no pun intended).
That said, SHRMF stock recently demonstrated why trading shares over-the-counter is so treacherous. Still, for young investors with a long-term horizon, Champignon gives you a discounted opportunity toward a potentially groundbreaking investment.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he is long SHRMF stock.