Last year was a great year for shareholders in Amazon (NASDAQ:AMZN) stock, which saw returns of more than 75%. Although the “stay-at-home, work-from-home” trend has clearly been the catalyst behind this amazing metric, AMZN stock is typically hailed as one of the most important growth stories, especially of the past decade. Therefore, let’s look at three growth stocks following in Amazon’s footsteps.
Remember, Amazon went public in 1997 at only $18 per share. Now it has a market cap of $1.57 trillion and trades at more than $3,100.
With the recent positive vaccine news, investors wonder if 2021 can continue to bring significant revenue growth for Amazon. Making market predictions after a year like 2020 is not easy. However, the Street loves Amazon and I expect investors to put their faith into the shares again in the new year.
Meanwhile, many other businesses, which have provided services and products that appeal to consumers during the pandemic, have also been winners in 2020. Growth stocks typically increase revenue and earnings faster than their industry peers. The Street offers plenty of companies that could be appropriate for growth-oriented investors.
With that information, here are three growth stocks to buy in 2021:
Growth Stocks to Buy: Clearway Energy (CWEN)
San Francisco-based Clearway Energy is one of the most important stateside names in clean energy. In 2020, CWEN shares, which have clearly benefited from investors’ appetite for clean energy, were up over 60%. Current price also supports a dividend yield of almost 4%.
The renewable energy generator released Q3 earnings in early November. The figures included net income of $42 million, adjusted EBITDA of $312 million, cash from operating activities of $257 million and cash available for distribution (CAFD) of $171 million.
The company has been steadily putting capital in a number of new investments. Its largest customer is PG&E (NYSE:PCG), the California-headquartered utility group that exited bankruptcy.
CEO Christopher Sotos, who was pleased with the results, underlined the stock’s long-term annual dividend growth target of 5 to 8%. “The prospects for long term growth at Clearway remain robust,” he said.
Many analysts expect clean energy businesses to see further growth under the new Biden administration. Therefore, the company ought to be on your radar. However, CWEN stock’s forward price-earnings and price-sales ratios are 34.1x and 3x. A potential decline toward $30 or even below would improve the risk/return profile for long-term investors.
Crowdstrike (CRWD)
If you are looking for a stock that returned triple-digit gains in 2020, look no further than Crowdstrike stock. The company is a cloud-based cybersecurity provider. In 202o, it was up over 320%, pushing the market cap to $46.5 billion.
As billions of people have become homebound in 2020, most companies had to secure their online presence, providing tailwinds for Crowdstrike and its peers. A great number of Fortune 100 businesses have decided to trust the company for preventing online security breaches.
Crowdstrike announced robust Q3 earnings at the start of December. Revenue hit $232.5 million, a jump of 86% from the previous year. It also added 1,186 net new subscription customers during the quarter. Now, the number of customers is almost 8,500, up 85% from the previous year. Annual recurring revenue (ARR) also went up by 81% and grew to $907.4 million as of Oct. 31.
Non-GAAP net income was $18.6 million, translating into a non-GAAP net income per share, diluted, of 8 cents. A year ago, the metrics had been a loss of $13.4 million and a net loss of 7 cents.
CRWD stock’s forward P/E and P/S ratios of 714.9 and 59.2 show an overvalued share price. Interested investors may want to put the company on their radar. A decline toward $180 would make the stock price more attractive for the long run.
ERShares Entrepreneur 30 ETF (ENTR)
Our next choice is an exchange-traded fund, the ERShares Entrepreneur 30 ETF, which started trading in 2017. The fund invests in the 30 largest U.S. public firms that meet several standards, including profitability, minimum revenue, revenue growth and low executive turnover, among others.
More than half of the funds are in technology shares, followed by consumer cyclicals, health care and financials. Several of the top names held in the fund that InvestorPlace.com readers would know well are Amazon, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Facebook (NASDAQ:FB), Netflix (NASDAQ:NFLX), Nvidia (NASDAQ:NVDA), Roku (NASDAQ:ROKU), Square (NYSE:SQ), Tesla (NASDAQ:TSLA), Twitter (NYSE:TWTR) and Zoom Video Communications (NASDAQ:ZM).
Although many of these firms currently have frothy valuations, they have also become household names. Therefore, we can expect investor interest in them to continue next year, too. In 2020, ENTR was up over 43%. The price is currently hovering around $26, Any decline below $25, and especially toward $22.5, would make the price attractive for the long term.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation and publishes educational content on investing.
