Growth Stocks May Have Pulled Back Recently But They Still Warrant Attention.
Investing in growth stocks almost seemed like a sure-win strategy to make money in the stock market. If you’re lucky, you may be still sitting at nice gains you have accumulated over the past year. And you may be thinking that you are a great stock-picker. But the stock market has continued to be under pressure over the past weeks. As a result, it may be an opportune time to be looking for top growth stocks that are now trading at more reasonable prices.
Now, a big reason for the recent selling has been the rotation to cyclical stocks and value stocks. After all, as most seasoned investors would know, cyclicals often follow the flow of the economy. With the accelerating vaccination efforts and stimulus hopes, these companies could rebound strongly along with the reopening of the economy. While it is true that there has been ongoing rotation to value stocks from growth stocks, that doesn’t mean value stocks are always going to be better investments than growth stocks. For instance, if one were to look at electric vehicle stocks in the stock market, General Motors (NYSE: GM) is certainly much cheaper than Tesla (NASDAQ: TSLA). But over the past month, TSLA stock is clearly the better performer here. My point is, we can’t simply make broad conclusions simply because of a particular trend.
Of course, buying growth stocks when the market continues to slide may not exactly be a popular choice. However, it’s also worth mentioning that the underlying fundamentals of many top growth stocks remain rock solid and the potential return that they offer could be lucrative. With all these in mind, would you put up a list of top growth stocks to buy in the stock market today?
Top Growth Stocks To Watch In The Stock Market Today
- Weyerhaeuser Co. (NYSE: WY)
- Fastly Inc. (NYSE: FSLY)
- Etsy Inc. (NASDAQ: ETSY)
- Fisker Inc. (NYSE: FSR)
Weyerhaeuser
Weyerhaeuser is a lumber stock that has been quietly rising in the stock market. For starters, the company is a timber company that grows trees and sells them for profit. It is one of the world’s largest private owners of timberland, controlling or managing a total of 24.8 million acres of timberland in the U.S. and Canada.
Now, the demand for wood is skyrocketing and lumber prices have soared to records. Therefore, investing in WY stock would be a great way to capitalize on this trend. The company could take advantage of the unusually high margins at the time.
From its 2020 fiscal year results, revenue came in 15% higher to $7.532 billion. More impressively, the company posted a $797 million profit, up from a net loss of $76 million net loss in 2019. Yet one can still buy WY stocks for 3.7 times revenue and 36 times earnings. That puts Weyerhaeuser at a much more attractive valuation than many of the better-known growth stocks. But would the opportunity still be around when more investors find out about it? At a time when lumber prices continue to soar, would you bet on WY stock right now?
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Fastly
Fastly is one of the hyper-growth tech stocks in the stock market over the past year. After reaching an all-time high of $136.5 at the end of last year, it has shed more than 50% of its value. That came amid the pullback among growth stocks.
The decline in stock price had a lot to do with Fastly’s full-year outlook. In particular, the company sees its losses for this year to be higher than what Wall Street had expected. That is primarily due to higher headcount and acquisition-related expenses.
On the flip side, investors love FSLY stock because its existing clients are big fans of Fastly’s services. The company managed to keep a 99% annual revenue retention rate last year. Simply put, nearly all of its existing clients stick around. If the clients love their services so much, I don’t see a good reason why investors are avoiding FSLY stock amid the recent discount.
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Etsy
From a doubted-commerce site to a mainstream online retailer, Etsy has been one of the favorites growth stocks among investors. In essence, the company is a global marketplace for unique and creative goods. Its website specializes in handmade or vintage items and craft suppliers. And it is this niche that helped power the growth of Etsy. Many designers and crafters have built their entire business around the company. That in turn had given Etsy one of its best years as an e-commerce company. The company’s share price has jumped over 230% in the past year.
The company reported its fourth-quarter and full-year 2020 financial results in February. In it, net income grew more than 260% last year. It also reported revenue growth of 128.7%. You could say that 2020 was an inflection point for e-commerce and Etsy. And if you think all growth stocks are operating at loss, you have ETSY stock to prove it otherwise.
After all, there are millions of buyers choosing Etsy for their everyday needs as the pandemic took its full course. Considering its strong growth, I would imagine it is difficult not to like ETSY stock.
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Fisker
Fisker got a boost this week after analysts at Bank of America said investors should buy FSR stock. The analyst initiated coverage with a ‘Buy’ rating and a price target of $31. That implies a potential upside of more than 100%. The analysts used estimates for 2025 sales and EBITDA and referenced the valuation multiples that Tesla used to trade at. The California-based company is focusing on what designer Henrik Fisker does best: creating beautiful cars.
That said, the company is leaving the manufacturing and maintenance work to its partners including Magna International (NYSE: MGA) and Apple’s (NASDAQ: AAPL) contractor Foxconn to build its vehicles.
No one can say for sure if FSR stock will experience the sort of run TSLA stock has had. However, with a string of partnerships and its focus on the affluent market, Fisker could prove its skeptics wrong once the Ocean debuts. Sure, it may take time for this electrification play to truly pay off. Should Fisker execute its asset-light model strategy well, it could bring in strong returns without substantial investment in plants and supply chains. With that in mind, would you consider buying FSR stock now?
