Don’t believe for a second that you should avoid growth stocks. Yes, there has been a significant shift of money away from many previously high-flying stocks into less pricey stocks over the last couple of months. However, that doesn’t impact the long-term prospects of the best growth stocks at all.
On the contrary, the recent sell-off has made quite a few stocks even more attractive thanks to their lower prices. Here are three growth stocks, in particular, that I’d buy right now.
Etsy (NASDAQ:ETSY) has held up better than many stocks with the latest market rotation. Shares of the e-commerce company are down only 15% from the highs set earlier this year. I think Etsy is poised for a strong rebound.
The company enjoyed a banner year in 2020 because of the COVID-19 pandemic, with gross merchandise sales growing 2.5 times faster than the U.S. government’s e-commerce benchmark. While face mask sales presented a significant source of revenue growth, Etsy had a much broader appeal for customers looking for unique, handcrafted products.
My prediction is that Etsy will continue to deliver exceptional growth well after the pandemic is over. Etsy now ranks as the fourth-largest e-commerce site in the U.S. based on monthly visits. It’s one of the most recognized brands in retail. A growing number of customers return to the site frequently for purchases, with 88% of Etsy buyers saying that the platform offers products that can’t be found anywhere else.
I also like that the company is investing heavily in product development. Etsy has improved its search capabilities. It’s expanding the use of video to allow sellers to tell their stories more effectively.
Etsy is only in the early stages of going after the huge online retail market. This stock should be a tremendous winner over the next decade.
Social Capital Hedosophia Holdings V
I’m a big fan of fintech stocks in general. So when I saw that Chamath Palihapitiya’s special-purpose acquisition company (SPAC), Social Capital Hedosophia Holdings V (NYSE:IPOE), planned to take SoFi public, my interest was piqued.
SoFi stands out as one of the most innovative fintech leaders around. The company’s app is a one-stop shop that offers individuals a wide range of financial services, including applying for loans, depositing checks, buying and selling stocks, and making digital payments.
The innovations keep on coming. SoFi recently announced that its app will enable users to invest in initial public offerings (IPOs) of companies going public. Buying IPO stocks has long been exclusive to large institutional investors and the super-rich.
SoFi also has big banking ambitions. In March, the company announced a deal to acquire Golden Pacific Bancorp. This transaction is a key milestone for SoFi to obtain a national bank charter, which would reduce its costs of funding loans and offer more products and services to customers.
IPOE is down more than 30% from its January peak. I think the stock will deliver great long-term returns after the merger with SoFi closes.
Teladoc Health (NYSE:TDOC) skyrocketed nearly 140% last year. The telehealth stock also got off to a great start in 2021, with shares jumping as much as 46% by late February. But Teladoc gave up all of those gains and more. Its shares are now down nearly 9% year to date.
One key reason behind Teladoc’s fall is that the company’s dizzying growth rate from 2020 appears to be tapering off significantly. Another is that Amazon.com plans to enter the telehealth market this summer. Neither are issues that scare me away from Teladoc.
The company should still have strong growth prospects over the next decade and beyond. Teladoc is only scratching the surface of its U.S. telehealth market. It also has great cross-selling opportunities with the digital health platform for chronic disease management it picked up with the acquisition of Livongo.
I think the virtual-care market will be big enough to support multiple winners. And I’m confident that Teladoc will be one of those winners. This healthcare growth stock still looks like a great pick for long-term investors.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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