2021 has proved to be a volatile period for growth stocks, with many investors sticking to safer investments such as value stocks or other investment options. But here are 10 growth stocks that investors shouldn’t overlook and consider buying in 2021 as these stocks look to take the lead once again.
10 Growth Stocks Investors Should Consider Buying In 2021
The stock market is a place that always carries some element of surprise to investors and all investors have witnessed this in some form over the past year due to the COVID-19 pandemic.
Due to the strong impact that the pandemic has created across the globe, many investors have looked to turn their heads to investing into safer investments such as value stocks and Index Funds. To give you a clearer insight take a look at the S&P 500 Value Index that holds an annualised total return over the past 5 year outlook of just under 11% compared to the S&P 500 Growth Index that holds an annualised return of approximately 18.95%. From this data it's clear that whilst value stocks may be a safer form of investment for investors, growth stocks do typically outperform value stocks and can offer greater returns if they perform well.
Growth stocks are prime investment opportunities for investors in order to make money, as investors witnessed in 2020 as many stocks flourished off the back of the pandemic. But as we have witnessed in 2021 so far, growth stocks have experienced and still face strong challenges ahead including interest rates, high valuations and of course the ongoing COVID-19 pandemic.
Having said that it’s only a matter of time for these challenges to level themselves out and these 10 best growth stocks are looking to be the top picks for investors to buy into for 2021. Let’s take a closer look into each of the top 10 and the positives for these stocks looking ahead.
Top 10 Growth Stocks To Buy For 2021:
- Apple (AAPL)
- Netflix (NFLX)
- Fiverr International (FVRR)
- Crocs (CROX)
- Square (SQ)
- Zoom Video Communications (ZM)
- Draftkings (DKNG)
- Paypal Holdings (PYPL)
- Esty (ETSY)
- Roku (ROKU)
1. Apple (AAPL)
The first stock to come in as one of the best growth stocks to invest in for 2021 is Apple Inc (AAPL).
Although the iconic tech brand holds a market capitalization of just above $2 trillion and has established fabulous growth over recent years, the stock is still proving that there is much growth ahead for the company as witnessed in the company’s recent Q2 2021 record results.
In all key product categories AAPL reported double-digit growth that includes the stock's iPhone product line rising up by 65.5%, Mac sales rising by 70.1% in Q2 and iPad sales growing above 78%. All the above resulted in the stock to reach a revenue result for the quarter of $89.58 billion, an almost 54% increase that beat its estimated revenue of $77.36 billion for the quarter.
Within Asia Apple’s revenue surged to an impressive $17.73 billion, resulting in a 87% YoY increase with almost two thirds of first time buyers looking to purchase the stocks Mac products.
Alongside, AAPL stocks services revenue also beat its estimate of $15.57 billion revenue target and confirmed a revenue result of $16.90 billion, a rise of 26.7% due to more engagement within the company’s Apple Music, Apple Arcade and more. In total Apple now has a total of 660 million paid subscribers, up almost 28% year-over-year.
Looking ahead the company is continuing to push boundaries in all key areas with analysts predicting revenue to reach $403 billion in the next three years, a rise by just above 24% and earnings per share (EPS) set to grow around 12.50% annually over the next three to five-year outlook.
Apple returned 82% over 2020 and currently holds a forward P/E ratio of 24.97 that looks to be rather attractive, especially as the stock continues to drive further growth including building stronger growth within its services category.
Read Also: What Are the Top 7 Best Tech Stocks To Buy
2. Netflix (NFLX)
The majority of households' go-to streaming service that looks set to continue for more years is Netflix (NFLX).
Despite shares falling after the stock announced that it missed on gaining global paid subscribers within the recent quarter, falling shy of 2.2 million, NFLX still managed to rise by 24% in revenue year-over-year to $7.2 billion, sitting in line with where analysts are predicting the stock to be.
NFLX also beat earnings estimates with an EPS of $3.75 against $2.97 estimated by analysts.
The miss on subscribers is due to stronger competitive competition within this growing industry, but Netflix still holds a stronger advantage over other stocks including continuing to expand its Netflix original contents, expand its streaming service globally in order to sustain and increase growth and lastly, NFLX has proven its popularity with the stocks subscriber account growing just over 170% over the past five years, leading to revenue to rise just under 300% within the same period.
Netflix’s shares have resulted in a total return of just under 33% over the past year, slightly under the S&P 500 return of 38.2%. Nevertheless, the stock is continuing to push momentum with analysts estimating EPS to grow by 32.53% over the next three to five years with revenue expected to rise by 14% annually over the next three years.
3. Fiverr International (FVRR)
An e-commerce marketplace designed for freelancers that has been fast-growing over the past year is Fiverr International Ltd (FVRR).
In 2020 the stock grew revenue by 77% to $189.5 million beating estimates and rising near 800% over the past year. In more recent days, the company has confirmed a 100% increase in revenue to $68.3 million YoY, active buyers as of March 31st 2021 grew to 3.8 million compared to 2.5 million a year prior, showing a 56% increase YoY and spend per buyer (SPB) reached $216 compared to $177 in March 2020, showing a 22% rise.
The stock is proving to be resilient through challenging times with the company continuing to push forward momentum as more individuals globally look to exit the 9-5 world and opt for more freelance work across the globe. This has pushed the company to increase its FY 2021 guidance with revenue expected to grow between 59-63% to $302-$308 million in 2021.
Analysts are also looking for the stock to grow at an exceptional rate expecting revenue to grow by 32% annually with the company’s EPS figures looking to rise by over 75% in 2021 and potentially looking to double by FY2022. The stock currently trades around 50% below its high at $169.70 with the stock forecasted an average price target of $254.50.
As the world moves swiftly into the digital world, FVRR is the perfect platform for entrepreneurs to create their magic from anywhere in the world leaving for this stock to be a great long-term investment.
4. Crocs (CROX)
Crocs Inc (CROX) is another stock that has performed and is continuing witnessing an impressive run in 2021 with the stock being up over 350% over the past year.
In 2020 the stock dominated, confirming total revenue of $1.4 billion, a rise by 12.6% YoY with diluted earnings per share (EPS) increased to $4.56 per share, a 174.7% rise from $1.66 in 2019. Bringing it forward to the stocks recently announced Q1 results the footwear brand’s revenues rose by 64% YoY to $460.1 million in Q2, with the company’s retail and wholesale revenues jumping to 93.3% and 50.1% respectively.
The company is now expecting revenue to grow between 40-50%, up from 20-25% previously given and for Q2 2021 revenues are expected to grow between 60-70%, showing an almost 30% rise above analyst estimates. Analysts are predicting EPS to grow by 15% over the coming three-five years with revenues set to grow annually just under 17%.
Despite challenges CROX stock has been roaring in 2021 so far with solid top and bottom lines and is looking to be a prime growth stock to add in 2021. The stock currently trades just under its 52 week high at $101.98 with a daily trading volume of 710,000, 54% below its average volume of 1.32 million.
5. Square (SQ)
Square Inc (SQ) has offered investors impressive gains over the past year and its Cash App has proven to be the big winner for the stock in 2020.
The stock’s Cash App ecosystem added 12 million customers at the end of 2020, bringing a combined total to 36 million customers worldwide. Moving into Q1 2021, the stock confirmed it achieved $5.06 billion in revenue including Bitcoin revenue, with the stock’s Cash App ecosystem being its brightest performer with generated gross profit up 171% YoY to $495 million, over half of the stocks overall earnings minus Bitcoin.
The stock also reported an adjusted EPS of $0.41 per share, almost doubling analysts estimates and improving from a net EPS loss the year prior. Looking ahead, analysts are predicting an EPS growth over the three-five years outlook of 47.13% alongside, analysts predict SQ’s revenue is looking set to grow by 30% annually over the next three years.
Over 2020 SQ shares have gained a total return of 225% compared to the S&P 500’s total return of 15.4%. As the company’s Cash App looks to be a solid avenue that will keep on pulling in the returns helping continue the company’s profitable run outside of a post COVID-19 world, makes this stock a good long-term player.
6. Zoom Video Communications (ZM)
Zoom Video Communications Inc (ZM) had a record year in 2020, and according to Bank of America, the stock could climb around 40% looking ahead.
There are many positives for this stock looking towards a post-pandemic world including remote working carrying on being a key working structure for the foreseeable which should see Zoom’s marketplace ecosystem being a great asset for the company, alongside Zoom being a simple platform for individuals across the globe to communicate.
Within the stocks Fiscal FY 2021 report that ended in January ZM confirmed a fourth quarter total revenue of $882.5 million, a rise of 369% YoY with fiscal full year revenue at $2,651.4 million, a rise up by 326% year-over-year. Looking at the stock's engagement it was confirmed that Zoom’s client base increased to 467,100 from 81,900 confirming a whopping increase of 470% YoY.
ZM is looking to continue its strong growth prospects and is expecting revenue to come in between $3.760 - $3.780 billion for FY 2022, with full fiscal year non-GAAP diluted EPS expecting to be between $3.59 and $3.65 per share, up from $3.34 per share.
Shares are trading roughly down by 50% of its 52 week high at $307.89, with Zoom shares provided a total return of just under 250% over the past 12 months. Analysts estimate revenue to grow by 26% annually, and despite the stock's overvalued position ZM looks to be a promising long-term growth stock that is looking to carry on delivering.
7. Draftkings (DKNG)
Online sports betting is rallying up in the U.S and one company in particular that is looking hot is Draftkings Inc (DKNG).
Despite the recent downslide within the stock's share price to $44.89, almost 50% below its 52 week high, the company is out beating analysts expectations within recent Q1 results.
DKNG reported a revenue of $312 million within the quarter, beating analysts' expectation of $231.53 million, which was pushed forward from the launch of the stocks mobile sports betting and iGaming in Michigan and Virginia. Alongside, the stock reported a better than expected loss per share of $0.36 against a loss per share forecast of $0.42.
Off the back of the company’s success DKNG has raised its fiscal full year revenue guidance between $1.05 - $1.15 billion looking to a top end year-over-year growth of 79%. Based on analysts' predictions revenue is set to grow at an annual rate of 35% over the next three year outlook with revenue estimated to come in at $1.1 billion in 2021. Analysts are also expecting forward EPS growth over the next three to five years to grow just under 30%.
As more states are looking set to legalize online sports betting across the US and with this stock holding a price-to-sales(P/S) ratio of 20.13, DKNG is looking to be the most promising stock sitting within this blossoming industry.
Check Out: 7 of the Best Sports Betting Stocks to Watch
8. PayPal Holdings (PYPL)
The American digital payment company PayPal Holdings Inc (PYPL) witnessed its strongest ever performance in 2020.
Total payment volume (TPV) grew by 31% to $936 billion over the year with revenue growing to $21.45 billion, a rise of 21% YoY. Non-GAAP EPS of $3.88 showed a rise of 31% and lastly, the stock confirmed it added 16 million net new activite accounts (NNAs) amongst its historical year.
Now switching to the start of 2021 PYPL has delivered a new record quarter in Q1 with total payment volume (TPV) rising by 50% to $285 billion, non-GAAP EPS of $1.22 up from $0.66 and the stock added 14.5 million net new active accounts (NNAs) totaling to 392 million active accounts.
On the back of the record performance, PYPL and analysts are looking for the stock to reach new highs with PayPal raising its FY21 guidance with the stock now expecting revenue to grow by 20%, with analysts predicting revenue to grow around 17% annually,non-GAAP EPS to grow by 21% to $4.70 as analysts are forecasting EPS to grow by 8.63% and lastly, NNAs expected to reach between 52-55 million in FY21.
PayPal has gained around 75% over the past year and so far has gained around 4% in 2021. The stock is currently trading at $246.49 as of close of play on Friday and looks to continue to be a strong long-term stock moving forward as the world drives forward with digital payments.
Read More: Could PayPal Be A Millionaire-Maker Stock?
9. Esty (ETSY)
The unique e-commerce marketplace Esty Inc (ETSY) is looking to be a great growth stock for many more years to come.
ETSY witnessed its revenue more than doubling in 2020 confirming a revenue of $1.73 billion compared to $0.82 billion a year prior. This result was all thanks to the pandemic as more individuals globally turned their hands to create and market their own unique designs, and this was also witnessed as the stock recorded a rise in new and reactivated buyers to 61 million, and almost 160% YoY in habitual buyers.
In the company's recent Q1 results ETSY is continuing to bring momentum witnessing net revenue increasing by 141% to $550 million beating analysts' estimate of $530 million and gross merchandise sales (GMS) rose by 132% to $3.1 billion compared to $1.3 billion in Q1 2020.
Despite these positive results this caused a sell-off for the stock, but this is actually looking to be a positive feature given that Goldman Sachs analyst Heath Terry estimates that the stock could grow by 75% to $266 within its share price from where the stock sits at $163.11.
ETSY stock is up roughly around 140% over the past year and as of the stocks latest report, ETSY had 90% active buyers and 67% active sellers YoY. Although management has expressed that investors may see activity slowing down over the coming next quarters as the world looks set to slowly re-open, we believe this stock is going to remain a sustainable long-term stock within the post-pandemic world.
10. Roku (ROKU)
The last stock to come on the list of 10 growth stocks to buy in 2021 is Roku Inc (ROKU).
The streaming platform has risen by almost 450% from March lows in 2020, swinging between a 52 week range of $100.19 at its lowest and $486.72 at its highest.
ROKU stock managed to outperform the broader market due to the surge in demand from individuals streaming over the past 15 months, and in light of the world easing the stock is still looking to benefit in the long run.
In the stocks recent Q1 results ROKU’s revenue boomed rising by 79% YoY to $574.2 million and reported net income of $76.3 million or $0.54 cents per diluted share, despite the stock announcing to investors that it was estimating a loss for the quarter. In Q1 2021 Roku had 53.6 million in new active accounts, up by 35% YoY with streaming hours growing just shy of 50% to 18.3 billion YoY.
The company is continuing to add to its growing portfolio with ROKU now offering users HBO Max and confirmed in January, the stock has now taken over Quibi’s catalogue and look to rebrand by calling it ‘Roku Originals’ that is looking to come further in 2021.
ROKU stock is looking towards healthy growth within its top and bottom line over the next coming three-year outlook, with analysts also being bullish on the stock with revenue set to grow by 35% annually, leading to a forecast 2021 revenue of $2.7 billion with earnings set to grow by 33% annually.
Based on the stock's discounted share price at $315.95, this is showing a potential upside of above 50% based on analysts estimates making this stock an exciting buy for long-term investors.
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