Investing in growth companies can help you create a significant amount of wealth from the stock market. In fact, to get rich, you really only need a few picks to become future multi-baggers. To that end, these seven growth stocks have the potential to skyrocket and take your portfolio to the next level.
Growth companies offer innovative products and services which tend to have the edge over existing competition. Identifying these companies is the real challenge for investors. The best place to start looking? The long-term secular trends of a given sector. Figuring out which companies will able to ride these trends for a sustainable period of time is key. These enterprises should also have sizeable competitive advantages with massive addressable markets.
It is also key to buy these kinds of promising names early. The earlier they are in their growth cycles, the longer they can continue to bloom at an aggressive pace. So, based on this information, let’s look at seven of the most promising growth stocks out there right now.
- Upstart (NASDAQ:UPST)
- Shopify (NYSE:SHOP)
- Align (NASDAQ:ALGN)
- Square (NYSE:SQ)
- Crocs (NASDAQ:CROX)
- BioCryst Pharma (NASDAQ:BCRX)
- Match (NASDAQ:MTCH)
Growth Stocks to Buy: Upstart (UPST)
Upstart provides partner banks with the facility to screen borrowers using artificial intelligence (AI) to automate the approval process effectively. These partner banks, in turn, pay the company a fee that protects Upstart from credit risk.
This pick of the growth stocks has been moving at an incredible pace lately. Revenues shot up 1,018% year-over-year (YOY) in the second quarter, helping it make a profit as opposed to 2020. Additionally, there was a 1,600% increase YOY in loans originated on its platform during Q2.
So far, Upstart’s credit scoring system has been hugely successful, with a 71% approval rate. Moreover, it is now expanding into areas such as auto refinance, which is a massive $40 billion market. This month, it also launched auto loans on its Upstart Auto Retail tool, gaining a lot of traction. With the company eyeing markets such as student loans, mortgages and credit cards in the future, UPST stock has colossal growth runway ahead.
Next up on this list of growth stocks is Shopify. There are only a handful of companies that come close to the explosive growth this name has seen during the pandemic.
Shopify revenues surged by 86% to $2.9 billion in 2020. But the trend is still continuing this year. SHOP now expects mammoth sales growth of 395% by 2025, arguably making it the best performing company in its sector.
This company provides software tools that businesses can use to establish their e-commerce presence. Last year, 8.6% of all U.S. e-commerce sales happened on the platform, second only to Amazon (NASDAQ:AMZN). Shopify boasts a humongous customer base “exceeding 1.7 million businesses across the world” as well as more than 46,000 partners.
Perhaps the greatest thing about this company, though, is that it’s already profitable, boasting a robust balance sheet — something that’s typically unheard of in the e-commerce realm. That makes SHOP stock a no-brainer that’s likely to grow at a tremendous pace for the foreseeable future.
Growth Stocks to Buy: Align (ALGN)
Align is the company behind the hugely successfully Invisalign brand. A brand of clear dental aligners, the popular method of tooth alignment has quickly and successfully challenged traditional braces. The company partners with orthodontists and dentists who recommend clear aligners to their patients and add their markup to the selling price. Thanks to the Invisalign brand, Align reported a whopping $1 billion in revenues in Q2.
When Covid-19 made dentist visits virtually impossible at the start of the pandemic, many believed that this name’s top competitor — SmileDirectClub (NASDAQ:SDC) — would take control. However, that hasn’t been the case for this pick of the growth stocks. Align has steamrolled competition with a phenomenal performance in the first half of 2021.
Although it makes less revenue per case, Align has the edge over peers in terms of margins, shown by its EBITDA growth. Hence, ALGN stock has an exciting pathway ahead.
Next up on this list of growth stocks is fintech giant Square. This company has evolved from point-of-sales (PoS) device manufacturer to full-fledged financial platform. Its seller ecosystem includes access to capital analytics, point-of-sale services and other solutions for merchants. Moreover, its peer-to-peer (P2P) platform, Cash App, has also been growing at a breathtaking pace. Square expects to grow its top-line by 273% by 2025.
For Q2, gross profits for Square’s seller and Cash App rose by 85% and 94% from the prior-year period, to $585 million and $546 million respectively. All told, this name’s massive customer base has created a robust network effect. Plus, its potential acquisition of Australian buy-now-pay-later player Afterpay (OTCMKTS:AFTPY) could add up to 16 million new active customers.
Although SQ stock trades at a frothy valuation, it’s well worth it — especially considering revenue growth estimates are at an amazing 99% for 2021.
Growth Stocks to Buy: Crocs (CROX)
Crocs are perhaps one of the most polarizing names in the footwear industry, but that doesn’t mean the company isn’t an ideal pick among the growth stocks.
This company manufactures clogs and other shoes made from its unique Croslite material. CROX is in the midst of a massive turnaround, several years after the initial fad for its footwear died down in the mid-2000s. Specifically, management now believes sales could speed past $5 billion by 2026.
Results in the past four quarters have been astonishing, with double-digit improvements in Crocs’ top-line on a YOY basis. Online sales are leading the way, with 37% of its total revenues from digital channels. Moreover, Crocs intends to expand into Asia, a relatively untouched territory for the company. Management believes that Asia will outpace other markets, supercharging CROX stock in the process.
BioCryst Pharma (BCRX)
Next up on this list of growth stocks is BioCryst Pharma, a biotechnology company that has been making waves of late. The main growth catalyst for this name is an oral hereditary angioedema (HAE) drug called Orladeyo. HAE is a rare disease that causes swelling in the abdomen, face, respiratory pathways and other areas. The drug was approved in late 2020 and is off to a flying start.
Orladeyo has comfortably surpassed analysts’ quarterly sales estimates and has already gathered a sizeable market share in its niche. Wall Street’s current consensus estimates suggest that the drug could generate $300 million in sales by 2023.
However, with a four-digit growth in revenues for its most recent quarter to $50 million, BioCryst could achieve that feat much quicker than expected. Moreover, with other clinical assets in the pipeline as well, BCRX stock has a lot of potential to deliver big for years to come.
Growth Stocks to Buy: Match (MTCH)
Last up on this list, Match Group is an online dating conglomerate that has experienced a healthy run-up in its stock price this past year. The company boasts a portfolio of top dating platforms, including Tinder, Match.com, OkCupid and more. Further, a 2017 study suggests that about 40% of U.S. heterosexual relationships begin online as well as 60% of same-sex relationships. Clearly, that means massive upside for MTCH stock.
With the network effect, Match’s platforms are spending significantly less money in acquiring new customers. For instance, as The Motley Fool recently laid out, the company grew its average subscriber count by 800,000 people and spent 36% of revenue on marketing expenses four years ago. However, that percentage was only 22% in the most recent quarter while the subscriber base grew by 1.2 million.
All told, despite hiccups during the pandemic, the long-term potential for this pick of the growth stocks is enormous.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.