It is always great practice for investors to diversify their holdings. Investing in growth stocks can help balance your portfolio and generate market-beating returns over the long term.

Growth investing involves a strategy where you place your bets on companies that are likely to grow faster than the market. Underlying businesses of growth stocks are inclined to increase their revenues and earnings at a much faster rate than their peers.

Investing in growth stocks involves having a long-term mindset. It helps limit short-term volatility and could potentially bring in life-changing wealth. If you consistently dip in and out of stocks, you’re probably more of a gambler than an investor.

Having said that, let’s look at the seven best growth stocks to add to your portfolio this year:

• Roblox Corporation (NYSE:RBLX)
• Nio (NYSE:NIO)
• Unity Software (NYSE:U)
• Texas Instruments (NASDAQ:TXN)
• Sea Limited (NYSE:SE)
• Shopify (NYSE:SHOP)
• Meta Platforms (NASDAQ:FB)

Growth Stocks: Roblox Corporation (RBLX)

Roblox has created quite the stir since listing on the stock market in March last year. RBLX stock has been up a healthy 37% since its listing and is poised for even greater gains in the future.

The gaming platform is essentially a premonition of the power of the metaverse and Internet 3.0. Though it initially plans to develop a metaverse tailored toward gaming, it has ambitions to take things up a notch to build a full-scale metaverse.

Roblox recently reported its stellar third-quarter results, where revenue grew 102% from the prior-year period. Though profitability is in the red, the surge in revenue continues to dent losses. Additionally, the company’s year-to-date (YTD) operational cash flows are up considerably compared to last year.

Roblox’s virtual gaming environment provides creators a place to socialize, develop communities, host multiplayer gaming and monetize their creations. Hence, it’s a sneak peek into the possibilities of the metaverse, which will only bode well for the stock.

Nio (NIO)

Nio has been a revelation in the rapidly-growing Chinese electric vehicle (EV) market. Having launched its first model in 2018, it has delivered more than 150,000 cars as of November last year.

Amazingly, more than 50% of those deliveries occurred in 2021, a testament to the robust demand for its cars. Moreover, after conquering the Chinese market, it began deliveries in Norway last year and plans to enter more European countries this year. Hence, there’s immense upside potential with NIO stock, as it seems to be just getting started.

Nio has plenty on its plate this year. Apart from its foray into several new international markets, deliveries of its newest luxury sedan, ET7, will begin in the first quarter. Additionally, it plans to launch its mid-size sedan, the ET5, and another model, which is so far unnamed.

On top of that, analysts expect another record year of deliveries. Hence, Nio is a growth juggernaut in the Chinese EV realm, which isn’t going anywhere.

Growth Stocks: Unity Software (U)

Unity is one of the top 3D engine developers for gaming companies. However, in recent years, its utility has expanded far beyond gaming.

Most recently, Unity has been in the news for its audacious plans for the metaverse. The goal is to build more than 60% of metaverse-related content using its engine. It can achieve this feat, and when it does, U stock could provide multi-bagger returns for investors in the coming years.

Unity can be an incredible pick-and-shovel play for those who want to invest in the burgeoning metaverse. As of 2020, roughly 71% of the top 1,000 mobile games used Unity’s platform. Most developers are likely to tap into the metaverse trend and stick with Unity.

On top of that, the company’s addition of Weta Digital means it can take advantage of a whole new technology stack. Hence, Unity has the potential to take full advantage of the growing metaverse opportunity.

Texas Instruments (TXN)

Semiconductor giant Texas Instruments has been one of the most consistent performers in its sector in the past decade. It’s committed to increasing shareholder value through dividend distributions, growing free cash flows and improving profitability.

Moreover, TXN stock has delivered more than 500% returns in the past decade. This comfortably exceeds the S&P 500’s returns for the same period.

Of late, the company has posted some remarkable results with its profitability firmly in the green. As of the third quarter of 2021, revenue grew 22% on a year-over-year (YOY) basis. Free cash flow was 41% of revenue at $7.1 billion.

Global semiconductor sales shot up close to 25.6% last year and are expected to grow at a healthy pace this year as well. Texas Instruments’ extensive product portfolio and manufacturing prowess will expand its market share further.

Growth Stocks: Sea Limited (SE)

Sea Limited is a consumer internet company based out of Singapore. It has recently expanded into the fast-growing Southeast Asian e-commerce and fintech space.

Over the years, it has been reinvesting in its business to expand its market share and user base quickly. Consequently, SE stock has seen mind-boggling returns in the past five years.

In the first nine months last year, it reported $6.7 billion in sales, up 140% from the same period last year. Moreover, e-commerce revenue during the same period rose 175%, while digital entertainment sales experienced a 120% increase.

With an incredible product mix, the company is expanding into new markets and fortifying its position in its existing markets. The flywheel effect with the synergies between Sea Limited’s gaming, e-commerce and fintech ecosystem is a massive competitive advantage.

Shopify (SHOP)

Shopify is a software-as-a-service platform used by over 1.5 million businesses globally. It enables merchants to manage their revenue-side activities through its platform, integrating with custom websites, social media platforms, and payment providers. Additionally, Shopify also provides a range of services, including marketing, shipping and payment processing tools, which makes its value proposition more attractive.

It is among the fastest-growing companies in its sector, boasting considerable average revenue growth. Moreover, it is extremely profitable, with year-over-year EBITDA growth of 512%. Additionally, it has been a cash flow growth machine, with a levered FCF growth of roughly 346%.

Looking ahead, SHOP stock has plenty of catalysts, including international expansion plans, growth of the company’s fulfillment network and the Shop mobile app.

Growth Stocks: Meta Platforms (FB)

Meta Platforms shook up the world with the next big thing in technology: the metaverse. The company now plans to make that a critical element of its future direction. Moreover, Meta intends to spend billions on commercializing the metaverse, a project with outlandish potential.

Though the company’s social media activities continue to bring in the moolah, reports suggest a slowdown in user growth in the coming years. Meta’s financial metrics are firmly in the green, but the company needed a new direction.

Hence, it was an ideal time for FB stock and its underlying business to transition to an avenue with limitless potential. Those who are patient enough for the long haul will reap massive rewards from FB stock.

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.