As volatility increases now that bonds have shifted out of their dormant near-zero interest rate state, we can use the downside of this volatility to buy into promising growth stocks that have gotten a bit expensive.
It’s true that a lot of growth stocks are expensive here, with the average price-earnings ratio of the S&P 500 running at around 39 right now. Historically, it’s in the upper teens. The tech-heavy NASDAQ 100’s P/E is also at 39.
That’s baking in a significant amount of recovery in the next year.
It wouldn’t be surprising to see the markets have a rolling series of corrections and rallies to stabilize prices to keep the bull going. And that means opportunities in some great stocks you can pick up now.
The seven super simple growth stock for new investors I feature here are a great place to start building those positions.
- Chewy (NYSE:CHWY)
- DocuSign (NASDAQ:DOCU)
- Etsy (NASDAQ:ETSY)
- Generac (NYSE:GNRC)
- HubSpot (NYSE:HUBS)
- Trade Desk (NASDAQ:TTD)
- Wayfair (NYSE:W)
Growth Stocks for New Investors: Chewy (CHWY)
Talk about timing. CHWY is an e-commerce business-to-consumer pet supply company. It delivers food, toys, medications, you name it, to your door for the same price you would pay if you jumped in the car and drove to your local pet food store.
It shows that the e-commerce model has matured to the point that gambling on bypassing brick and mortar stores is a very viable option for a scalable, national model. Remember, the big pet supply companies have all the overhead of physical locations on top of running an e-commerce business and all its logistics.
So, the company started well, but when the pandemic hit, the stock took off. It’s up 250% in the past 12 months. While that takes it far ahead of where it thought it would be – it currently has a $43 billion market cap — that extra capital can be used to solidify and grow its operations without loans or more stock issuances.
And pet ownership is a growing trend, especially with Covid-19 comfort animals for families and individuals.
DocuSign (DOCU)
This is another stock that has flourished during 2020, largely because its business is focused on remotely managing documents.
The company has been around since 2003, but the space was never that hotly contested by big players, so a handful of niche players have been fighting for dominance for years.
Last year brought the realization of the need for remote document management and DOCU was one of the most visible names in the pack. And by then it had also built in unique features that added value to its brand.
Now this is a full-fledged growth stock and has a $45 billion market cap. DOCU stock is up 175% in the past 12 months and its growing customer base is very sticky, since you don’t want to have your important documents with a variety of services when one can do it all.
Etsy (ETSY)
Part of the reason more people know ETSY now is because of the stock’s success. More investing dollars means more visibility and for ETSY that means booking advertising everywhere it can.
Launched in 2005, the company struggled to build out its niche as a more individualized, hip and fresh e-commerce site. It was more like a farmers’ market of goods. And that put it in a tough spot between online auction sites and online and local niche retailers.
But it persevered and began to offer more services for these new entrepreneurs to make it easier to build out a storefront and manage the business end of things. By the time the pandemic hit, ETSY was well established, and it was well positioned to reap the rewards of “e-commerce for the people.” And with unemployment rising, people with hobbies saw an opportunity to sell their wares remotely for extra income, as well as something to do to remain sane.
The past year has turbocharged its growth stock potential. It is up 322% in the last 12 months, which will help it fund its new growth opportunity.
Generac (GNRC)
Every time there’s a power issue in the U.S. – fires in California or ice in Texas – you can be sure that one of the growth stocks that will get plenty of attention is GNRC.
If you’re not familiar with the company, it was launched in 1959 in Waukesha, Wisconsin, where it still has its headquarters. It makes power generation and power management and power storage equipment. That’s a triple threat when the power supply goes on the fritz.
It’s also a very good thing to have if you live in more ex-urban communities that don’t have the redundancy of an urban power grid. And it’s great for people who use solar power and can store their extra energy on their property, so they have back-up if the power fluctuates or they simply want to get off the grid altogether.
The stock has seen some significant moves in the past couple of years. In the last 12 months it’s up over 215%. Yet it still trades at current P/E of 63, which may seem high, but it’s reasonable given it potential moving forward.
HubSpot (HUBS)
Customer resource management (CRM) has become a very big deal for enterprise-level firms and is trickling down to smaller firms now thanks to HubSpot.
While the enterprise sector has launched the futures of a handful of CRM companies, HUBS has been able to compete on that level as well as providing services for smaller companies as well.
Fundamentally, HUBS cloud-based software allows companies to dive deep into their inbound marketing efforts. It allows customers to slice and dice a variety of information beyond just open rates and conversion rates. The more details and cross tabulation a marketer or salesperson can do, the more likely they can attract new customers and keep current ones.
Currently HUBS offers four different hubs for businesses – a marketing hub, a sales hub, a customer service hub, and a content management hub. They work individually or collectively, so businesses can scale their growth.
HUBS stock is up 186% in the past 12 months, which helps put it on the map with its bigger competitors. This is one of those software as a service (SaaS) firms that promises to be on of the top growth stocks in the sector in coming years.
Trade Desk (TTD)
There have been plenty of paradigm shifts that have taken place in the past year due to the pandemic and the ensuing economic challenges.
One of them has been the increase in digital advertising. Your email box is full of it. You see it on streaming services, and most social media platforms have found a way to jam it in there as well. Messages even pop up on your mobile phone.
The oldsters out there might remember cursing the junk mail in their physical mailboxes. But that only happened once a day. Digital advertising is with us all day, every day.
Just remember, it’s not showing up on its own. Companies want your attention and it’s big business to be able to place advertising in front of potential customers. That’s what TTD does. And its fourth-quarter earnings beat in late February shows that it remains one of the growth stocks to watch in 2021.
The stock has had a big run in the past year but it’s consolidating at this point, which is good for new buyers.
Wayfair (W)
If you were to tell me a decade ago that online furniture shopping was going to be a major source of revenue in this sector, I would have thought you were a little overly enthusiastic about e-commerce retail.
But here we are, and now online furniture retailers aren’t odd fish, there are schools of them. And these generally quiet retailers are some of the hot growth stocks in the marketplace. Who knew selling sofas and patio furniture could be so sexy?
On Feb. 25, Wayfair announced its Q4 numbers. The good news is the company hit its first profitable quarter ever. The bad news was revenue fell short of expectations. And one analyst even cut their price target for the stock down to $200.
However, given the fact that the stock is up 357% in the past 12 months, and it added about $1.1 billion in sales from year ago levels (nearly a 50% increase yoy), a small miss isn’t that big a deal.
The larger point is, if W can keep its profits rolling in, there will be plenty of support for the stock and the company will be in a great place moving forward.
On the date of publication, Louis Navellier has positions in CHWY, DOCU, ETSY and GNRC in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
