As 2020 comes to a close, investors may be thinking about how to invest wisely for long-term growth. Growth stocks, which are those stocks expected to grow at a much higher rate than the market average, are important to consider for long-term investing.
While growth stocks usually don't pay dividends to investors, people who buy into these companies hope to maximize their earning potential through capital gains when they sell the stock in the future.
Best growth stocks to buy right now
The behemoth online retailer Amazon will likely continue to be a solid growth stock. In addition to Amazon's vast e-commerce business, it's also the world’s leading cloud computing company. Stocknews reported that Amazon had a five-year average EBITDA YoY growth rate of 51.5 percent. It expects revenue growth of 18.1 percent in 2021.
Shopify is also a top growth stock for investors to consider going into 2021. As the second-largest e-commerce platform in the U.S. (only behind Amazon), Shopify has benefited from the pandemic-fueled spike in online retail purchases. Research by eMarketer says that by 2024, online retail transactions will make up 19.2 percent of all retail transactions in the U.S.
Shopify has 21 percent of the e-commerce market. Its revenue grew by double digits in each of the first three quarters of 2020 compared to the same periods in 2019, according to The Motley Fool.
Best growth stocks under $50
Himax Technologies may be a good growth stock coming in under the $50 per share price point. On the Nasdaq as "HIMX," Himax is currently priced at $6.61 per share. The Motley Fool noted that share prices had climbed roughly 36 percent year-to-date by Nov. 3 and noted multiple signs that it might be on a “cyclical upswing.”
Baozun, a Chinese e-commerce company, may also see large growth. It continues to bring aboard more Western brands. Baozun's revenue increased by 26.3 percent in the second quarter of 2020.
Best growth penny stocks
Fintech company GreenSky has lost 80 percent of its value since 2018, but analysts predict 250 percent growth in 2021 to help the company bounce back.
Best growth stocks for 2021
Other stocks poised to bring solid growth in 2021 and beyond include DocuSign, Zoom, and Dexcom. DocuSign and Zoom have grown partly due to the COVID-19 pandemic and may continue to see growth.
Snap (SNAP) has a social-media app for users to share pictures and short videos. Its stock price has increased by 157.1 percent this year. SNAP has a strong growth outlook and expects YoY sales growth of 47 percent – 50 percent in the fourth quarter.
Investors interested in growth stocks may also purchase shares of the SPDR Portfolio S&P 500 Growth ETF (SPYG). Year-to-date, this growth-focused ETF has gained 23 percent compared to the S&P 500 with a 6.6 percent return.
InvestorPlace also included Alibaba, Datadog, Fastly, Nvidia, and Roku among some of its top recommended growth stocks for 2021.