In the world of trading, the term ‘growth stocks’ refer to companies that show future promise and have the potential to increase their revenue and earnings at a faster rate than other businesses or the overall market.
The key to growth investing isn’t just picking stocks that are rising in popularity but digging into their product line or future innovations that can help the company gain market share, expand into new markets, or even create entirely new industries or disrupt the traditional marketplace.
The COVID-19 pandemic saw the rise of many growth stock companies as our lives and work were disrupted and changed our habits. But the pandemic may have just accelerated trends that were already seeing acceptance the world over.
Here are some growth stock companies in sectors that can help you profit from these trends:
E-commerce: Face it, shopping online isn’t going away. We may step back out after getting tired of being stuck at home, but nobody is looking forward to long wait times at the supermarket checkout counter. The speed at which Amazon (AMZN) can deliver nowadays has prompted traditional retailers like Walmart (WMT) and Target (TGT) to invest in same-day delivery and improve their online stores. Platforms like Shopify (SHOP), Etsy (ETSY), Block (SQ), and Lightspeed Commerce Inc. (LSPD) are well-positioned to profit from smaller businesses selling a variety of merchandise online and adopt digital checkout services.
Digital advertising: Meta (FB) and Alphabet (GOOGL) are digital ad giants that are going to see higher ad revenues as marketing budgets shift from traditional media (TV, radio, and print) to online channels and platforms. While Facebook’s engagement has seen some decline, remember that Meta owns Instagram and WhatsApp, which are still growing and still figuring out monetization. Not to mention Meta’s plans for virtual reality and the metaverse, and the possibilities for advertising in the virtual world.
Cloud computing: On-premise data centers are migrating to cloud-based servers. Amazon’s Web Services (AWS) infrastructure powers everything from Netflix to Slack. Microsoft’s Azure cloud offering is seeing significant growth and powers the tech giant’s Xbox and even competitor Sony’s cloud-based gaming — a service that will be the future of gaming. Other recommendations include cloud-heavy firms such as Salesforce.com (CRM), one of the world's largest software-as-a-service or SaaS companies.
Other sectors to look at for the next two to three years include chipmakers (such as NVIDIA) and streaming entertainment — Spotify (SPOT) is diversifying into podcasts, virtual event hosting, etc. Artificial Intelligence will only continue to grow, so firms like C3.ai (AI) and Palantir Technologies Inc. (PLTR) show promise. IBM’s quantum computing efforts could help revive the granddaddy of computing. Finally, remote work solution providers are going to continue to see demand as employers realize their workers like the option to continue to work-form-home.
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