Skip to main content
You have permission to edit this article.
Edit
3 High-Growth Stocks That Could Soar
AP

3 High-Growth Stocks That Could Soar

  • 0
{{featured_button_text}}

Growth stocks are extra exciting because they're growing at a rapid clip. If you look at two stocks, one that has averaged annual growth of 11% over the past five years and one that has averaged 44%, the latter will likely be more intriguing, and one that you'd like to see in your own portfolio.

It's important to remember, though, that not every rapid grower is a great candidate for your portfolio -- because many have grown beyond estimates of their intrinsic value. Many have also soared on more enthusiasm than reasoning. Still, there are great growth stocks out there worth considering -- and here are three of them.

1. Etsy

If you haven't been paying attention to Etsy (NASDAQ: ETSY), thinking it's just a site where some crafters sell their wares, you probably don't realize that the stock has soared more than 600% over the past three years (an annual average rate of 94%) and the company now sports a market value near $25 billion.

As of the end of 2020, Etsy boasted 4.4 million active sellers and nearly 82 million active buyers. Those numbers generated about $10.3 billion in gross merchandise sales, up 106.7% year over year. The company noted in an investor presentation that, "In a survey of Etsy buyers, 88% agreed that Etsy has items you can't find anywhere else."

Etsy has built an online marketplace with a solid competitive advantage: It's where those who seek to buy (or sell) handcrafted goods are likely to go because that's where the sellers (or buyers) are. Recent data from the company shows that not only is it growing its number of buyers, but its buyers are spending more, too.

The company has grown quite large, but it has a lot more growth potential, in part due to international expansion. It recently entered the enormously populous nation of India, for example. Etsy is also growing by expanding its scope. Last year, for instance, it bought the music marketplace Reverb. Finally, the company's light business model is another big plus, as its growth doesn't require lots of new brick-and-mortar stores or warehouses full of inventory -- instead, it just charges its sellers fees.

2. Pinterest

Pinterest's (NYSE: PINS) stock has more than tripled over the past two years, averaging about 80% annually. It calls itself "a visual discovery engine, where people find inspiring creators, shop new products, and seek out ideas to take offline." In practice, it's where people discover, collect, and share ideas -- about décor, style, clothing, foods, drinks, travel, and more. The company only began in 2010, but it's already commanding a market value topping $50 billion, with plenty of investors believing it has far more growth ahead.

Just how fast is it growing these days? Here's an idea, from its latest earnings report: "Q4 revenue grew 76% year over year to $706 million. 2020 revenue grew 48% year over year to $1,693 million. Global Monthly Active Users (MAUs) grew 37% year over year to 459 million." Having close to half a billion users is a big deal, and it's key to the company's potential, because if it's able to monetize them to a greater degree, it can generate a lot of income.

Keep in mind that Pinterest knows a lot about its members, because it has data about items they are looking at and following. That means it can offer marketers especially promising members to market to. Last year, Pinterest added a "Shop" tab, which makes it easier for its users to transact.

International expansion is another opportunity: The company was recently only generating about 16% of its revenue outside the U.S., but foreign revenue grew by 129% from 2019 to 2020, versus 39% in the U.S.

3. Poshmark

Poshmark (NASDAQ: POSH) calls itself the "leading social marketplace for new and secondhand style." It had its initial public offering (IPO), where it launched shares for trading in the open markets, in January, with its shares popping more than 140% on their first day. They have fallen since then and were recently down 59% from their high, leaving the company with a market capitalization of $3.2 billion.

The company has been around in the U.S. since 2011 and already has 70 million registered users in the U.S., Canada, and Australia, shopping more than 200 million items, with a sale occurring every second in the U.S. An interesting angle to the company is that it combines social media with shopping, and may thereby keep customers returning to chat -- and often, in the process, buy.

This is clearly a young company, without a long track record of publicly reported earnings reports, and there's a fine case to be made to give it time to prove itself. It's often smart to avoid fresh IPOs in general, anyway. Still, if you look more deeply into Poshmark and really like what you see, you might start a small position in it and build from there. If it's very successful in the long run, you may be well rewarded.

Growth stocks can add more excitement to your portfolio -- and there are plenty more than the three above. Just do enough digging into them to be pretty sure that you're buying them for less than they'll be worth by the time you sell -- ideally many years from now.

10 stocks we like better than Etsy

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Etsy wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of February 24, 2021

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Etsy and Pinterest. The Motley Fool has a disclosure policy.

The business news you need

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

  • Updated

It’s been an up-and-down year for many student loan borrowers. Even if you could afford to keep making regular payments after the federal Covid-19 student loan forbearance period started last March, perhaps your financial situation has since changed and you would benefit from a refund of that money. If you now find yourself strapped for […]

Many restaurants have reopened for outdoor or limited indoor dining and it’s tempting to occasionally go out for a meal. However, as the weather changes, our inclination to hibernate becomes that more pronounced. It’s only a matter of time until you grow tired of cooking or miss having a favorite meal from a nearby restaurant. […]

  • Updated

Point-of-sale (POS) financing is a convenient lending option that lets consumers make purchases with incremental payments. Retailers partner with third-party lenders—like financial technology companies Affirm, Afterpay and Klarna—and then integrate those lending services into the checkout process. POS financing typically has less stringent eligibility requirements than traditional financing, and many lenders offer a 0% annual […]

  • Updated

Understanding what happens to your debt when you die is an important part of estate planning—and you don’t have to be rich to have an estate. Everything you own and owe makes up your estate. For many people, that includes a house with a mortgage. The median housing-related debt of a 65- to 74-year-old borrower […]

The best local coverage, unlimited

Sign up for a digital subscription to The Press of Atlantic City now and take advantage of a great offer.

LEARN MORE

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

PLEASE BE ADVISED: Soon we will no longer integrate with Facebook for story comments. The commenting option is not going away, however, readers will need to register for a FREE site account to continue sharing their thoughts and feedback on stories. If you already have an account (i.e. current subscribers, posting in obituary guestbooks, for submitting community events), you may use that login, otherwise, you will be prompted to create a new account.

Get up-to-the-minute news sent straight to your device.

Topics

Breaking News