The best way to generate long-term wealth in the stock market is to buy-and-hold stocks for many years, that is, invest in growth stocks.
When looking at stocks for long-term gains, investors are often tempted to get their hands on FAANG stocks, or the next generation. While these companies are no-doubt great investments, a number of other names across other sectors are known to provide investors with equally lucrative returns.
The stocks discussed in this article had a breakout year in 2020 and will continue to outperform the market in the long-term. When the economy hits the reset button this year, here are seven stocks you’ll want to have in your portfolio:
- Square (NYSE:SQ)
- Nike (NYSE:NKE)
- Disney (NYSE:DIS)
- Roku (NASDAQ:ROKU)
- Peloton Interactive (NASDAQ:PTON)
- Vroom (NASDAQ:VRM)
- Regeneron Pharmaceuticals (NASDAQ:REGN)
Growth Stocks: Square (SQ)
The advent of the touchless and cashless society has been a boon for the digital payments app, Square. Physical store closures at the start of the pandemic led to a swift transition of businesses to an online ecosystem. Prior to the crisis, Square was the go-to peer-to-peer payment platform for small businesses. As they moved to the digital economy, many were quick to make the shift to Square’s subsidiary, CashApp.
The payment platform allows users to pay, collect and hold digital cash balances. During the pandemic, traffic on CashApp surged as the app hit a monthly active user count of more than 30 million. While the pandemic may have accelerated the growth of digital payments, the gradual shift to cashless payments has been happening for quite some time now.
CashApp’s consistent growth will help fuel SQ stock with its flowing revenue streams. This is a great fintech play and one of the hottest growth stocks on the market right now.
While our workouts may be house-bound for the foreseeable future, athletic wear still remains a necessity. Nike, the fitness powerhouse has managed to stay at the top of its game despite low in-store revenue for much of 2020.
After a drop in earnings at the start of 2020, Nike’s digital sales put the company back on the map. For years, Nike has invested heavily in its digital initiatives and it finally paid off. In its most recent quarter, sales in this category were up 84% year-over-year.
Adding to this digital prowess, Nike is introducing innovative products that keep its customers as loyal as ever.
A stream of fresh footwear and athletic wear coupled with a smart e-commerce strategy has pushed the stock up 45% in the last six months. Danielle Shay, director of options at Simple Trading, believes this trend will continue and gave NKE stock a target price of $150.
Given the revenue potential and brand loyalty, there’s no doubt that this growth stock is in for a much greater upside.
The House of Mouse started the year on a rough note with theme park and movie theatre closures. With those two major revenue streams off the table and a declining consumer goods business, Disney was in for a major loss.
But the company was able to come out on top in 2020 thanks to its thriving Disney+ streaming platform. According to management, the success of this platform “exceeded (their) wildest expectations.” With DIS stock up 104% since March and a user-base of 87 million, the company is in on to bigger and better in 2021.
During December’s Investor Day, managed stated that Disney+ will remain its primary focus going forward. New “Star Wars” series and “Marvel Universe” characters are expected to make their debut on the platform this year. This is in addition to Disney’s original movies which have an existing loyal fanbase.
With the avalanche of new content, the entertainment giant expects to have 230 million to 260 million subscribers by 2024. The explosive revenue potential from its streaming business and the eventual reopening of its theme parks make Disney one of the top growth stocks to buy this year.
There’s no doubt that the future of entertainment lies in streaming and Roku is well-poised to benefit from this fast-paced trend.
At the start of the year, the closing of movie theatres meant that folks had to look to streaming platforms for entertainment. What seemed like a last resort at that time has now become the favored way to consume movies and TV shows. This is where Roku plays a key role. The company offers customers a selection of over 10,000 channels on its eponymous devices. Roku TV also has a 38% market share of the streaming market in the U.S.
This broad offering culminated in a spectacular year for the company. Roku closed out 2020 with a customer base of 46 million. That’s a 43% increase from 2019. A large viewership also meant greater ad revenue and licensing deals. Both revenue streams saw a 78% spike in their numbers year-over-year.
As more people jump on the streaming platform bandwagon, there’s no doubt ROKU stock will see some strong growth this year.
Peloton Interactive (PTON)
Keeping with the theme of at-home stocks, the fitness industry flipped on its head at the onset of the pandemic. The led to the rise of indoor workouts that served as a silver lining for stationary bike stock, Peloton Interactive. A bike with a $2,000 price-tag seemed like a hefty investment for many prior to the pandemic. But with gym closures, many soon made the switch to Peloton’s bikes.
While the bike is just a part of its allure, the company’s key offering is its interactive fitness classes led by world-class instructors.
Soon enough, Peloton rides became a raging pandemic trend and experts believe the momentum will continue long after the pandemic. With PTON stock up more than 400% and a user-base of 3.6 million members on its platform, there’s no doubting Peloton’s long-term potential.
Analyst John Park of Gordon Haskett remains optimistic about the future of this stock and estimates revenue for its upcoming quarter earnings will be $1.1 billion. The structural shift in the fitness industry as a result of the pandemic will do wonders for Peloton stock. Investors would be wise to ride these tailwinds to greater gains.
Names like Nio (NYSE:NIO) and Tesla (NASDAQ:TSLA) are what come to mind when we think of the automotive rally in 2020. But smaller names in the sector have the potential to offer just as much gains. Vroom, a fairly new name in the public markets, allows customers to rent used-cars online.
VRM stock rallied following its June 2020 initial public offering, it dipped in the months that followed. In any instance, this would be a major red light for any investor but a closer look behind the scenes reveals the full picture.
In hindsight, Vroom made its debut in the midst of the pandemic, and with a strong e-commerce presence, it was grossly unprepared for the avalanche of new orders. Ultimately, the company had to forgo potential revenue due to a lack of inventory to meet demand. This led to a drop in its sales numbers and stock price as result. However, looking ahead, analysts believe that Vroom is poised for a strong comeback.
With more inventory on hand and strong digital demand, this company is one of the best growth stocks to buy on the dip.
Regeneron Pharmaceuticals (REGN)
While numerous sectors rallied in 2020, no industry saw more upside than biotech firms. While Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) are now household names in the sector, one name I think is in for some big gains this year is Regeneron Pharmaceuticals.
The biotech firm has eight FDA-approved drugs to its name and created an antibody therapy to treat milder cases of Covid-19. The U.S. government placed an order for 1.5 million doses of the therapy for delivery by June 30.
Given that Regeneron’s major source of revenue comes from its portfolio of drugs, this is where its future growth potential resides. The company’s recent launches, Dupixent and Libtayo performed well in the market with an estimated $1 billion and $96.1 million in sales respectively.
While REGN stock is up 58.4% in the past year, there’s still ample room for further price appreciation. Regeneron is one of the best growth stocks to buy this year.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.