[Editor’s note: “10 Best High-Growth Stocks to Buy for Young Investors” was originally published in November 2019. It has since been updated to include the most relevant information available.]
No investment strategy suits all the people all the time, irrespective of the disruptive events occurring now. This is particularly true for young investors in their 20s and 30s. Youth not only has social advantages; it can provide a significant margin for your portfolio to grow. As such, high-growth stocks are ideal for the young-adult, millennial demographic.
Talk to any financial advisor, and more often than not, they apply the Pareto principle for 20- or 30-somethings. Colloquially known as the 80-20 rule, advisors recommend that young investors have 80% of their portfolio in stocks, and the remainder in safer, interest-yielding assets. When it comes to millennial stock allocation, spring chickens should really consider high-growth stocks.
Time is money, and in many cases, time is more valuable. That’s because time can “buy” you money, but never the opposite way around. In this case, a younger investor’s additional working years can help mitigate investments that have gone awry. Moreover, the extra time allows riskier investments to fully expand to their potential.
This remains true even with the impact of the novel coronavirus. Indeed, young investors will likely look back on the pandemic as an awful event that nevertheless transformed their financial trajectory. Frankly, there has never been a better time to buy great companies on discount.
With that in mind, here are the top 10 high-growth stocks to buy for young investors:
- Amazon (NASDAQ:AMZN)
- Carvana (NYSE:CVNA)
- JD.Com (NASDAQ:JD)
- Dropbox (NASDAQ:DBX)
- Square (NYSE:SQ)
- Chewy (NYSE:CHWY)
- Trade Desk (NASDAQ:TTD)
- Voyager Therapeutics (NASDAQ:VYGR)
- Freelancer (OTCMKTS:FLNCF)
- Champignon Brands (OTCMKTS:SHRMF)
High-Growth Stocks: Amazon (AMZN)
Whenever discussions about high-growth stocks arise, Amazon invariably makes most analysts’ lists.
What’s not to like here? Not only does AMZN leverage an enviable track record in the markets, but management also continues to forge ahead into new frontiers. Amazon is a disruptor among disruptors.
Even in the age of the coronavirus, Amazon continues to dominate among high-growth stocks. Obviously, pioneering online retail helps. But specific to the crisis, many traditional retailers face bankruptcy risks. That leaves Amazon to scoop up consumer demand.
Additionally, as I previously discussed, AMZN is on the verge of unprecedented greatness. Those of you who are in your 20’s and 30’s have some recollection of a time when eCommerce didn’t overwhelmingly dominate the retail sector. But we’re so close to a generation coming of age that has no clue about the prior brick-and-mortar hegemony.
When Generation Z enters the workforce en masse, they will buy through Amazon and other eCommerce channels, no question. Beyond that, the pandemic has only served to reinforce the superiority of essentially no-contact retail transactions. For this and so many other reasons, you must consider AMZN stock.
High-Growth Stocks: Carvana (CVNA)
Carvana takes a brilliant concept and brings it to fruition. Generally speaking, millennials don’t share the same love for the automobile as did prior generations.
Part of the decline in interest is the haggling over the price that used to be a given when buying a new car.
Enter Carvana. CVNA combines the tech wizardry that young people love with a centuries-old retail industry. Rather than negotiate with pushy or unsavory salespeople, buyers can instead browse cars online.
When they find one they like, CVNA delivers their vehicle to their driveway. Plus, Carvana offers a money-back guarantee to soothe concerns about buying a car sight (almost) unseen.
Considering that young people do nearly everything online, Carvana is likely the future of car buying. That’s one reason to buy CVNA stock. The other? Margins. Once the company firmly establishes itself, it has the potential to earn serious bucks. That’s because CVNA charges a premium for its convenient services.
So far, though, customers are willing to pay it. And in this new normal of social distancing, it’s not just Gen Z that likes the idea of touchless service. Also, consider that Carvana has been expanding its inventory while CarMax (NYSE:KMX) has seen theirs decline, suggesting a new paradigm is coming.
High-Growth Stocks: JD.Com (JD)
Given the heightened emotions surrounding the coronavirus and the Trump administration’s aggressive posture toward China, once universally revered Chinese companies like JD.Com now face geopolitical risks. Nevertheless, JD stock has performed very well, getting over its period of turbulence relatively quickly. Over time, shares could move significantly higher.
For full transparency, I haven’t always sung the praises of Chinese high-growth stocks to buy. Of course, the fiasco involving Luckin Coffee (NASDAQ:LK) illustrates the apprehensions many investors have toward China-based organizations. Nevertheless, if you have the patience and the stomach for potential rough waters, JD is supported by strong fundamentals.
Primarily, per-capita disposable income of China’s urban households has been steadily increasing over the last 30 years. In 2019, this metric increased nearly 8% from 2018 levels. Over the same period, U.S. per-capita disposable income increased only 2.4%.
True, the U.S. is the lone superpower so you wouldn’t expect its growth to be that high. Nevertheless, as a relevant e-commerce investment, JD stock has a strong growth catalyst with many years left in the tank.
High-Growth Stocks: Dropbox (DBX)
Admittedly, Dropbox doesn’t intuitively get the blood flowing regarding viable ideas for high-growth stocks to buy. As a file hosting and cloud storage company, the underlying business is useful yet competition abounds. However, Dropbox does have brand recognition. Most importantly, the coronavirus pandemic has made the company’s shift toward digital workspace solutions extremely relevant.
Like other coronavirus stocks, Dropbox experienced a surge of interest, as you can see from the momentum in DBX stock since the first half of March. Suddenly, companies of all sizes found themselves needing remote work solutions to accommodate the unprecedented crisis. Along with the brand recognition, Dropbox’s intuitive platform helped ease this transition.
For workers as well, DBX has provided a platform where documents and work products can be shared digitally. Internal communication systems also allow employees to comment on the details of the files being shared, keeping everyone on the same page.
Best of all, DBX stock benefited from a hostage audience, one that will probably stick around in the post-pandemic era. With the inherent cost savings associated with remote work, companies will probably consider downsizing their physical profile in the future, giving Dropbox a leg up in the digital workspace arena.
Also, the nationwide protests for social equality and justice will probably accelerate American families’ race to the suburbs and more rural areas. Therefore, the case for digital work solutions invariably will increase.
Square (SQ)
Square’s appeal is immediately recognizable to anyone who observes business trends.
Though the Great Recession deeply hurt small businesses, the subsequent recovery saw many of them pick up the pieces. Particularly, the rise of technological innovations helped smaller companies compete more effectively against their larger counterparts. The impact has been such that today, companies value agility and specialization more than outright size.
What makes SQ stock a compelling investment is that it evens the playing field for small businesses. Square provides portable credit-card readers that attach conveniently to your smartphone. That enables entities ranging from sole proprietors to small corporations to quickly set up a payment platform.
Another factor driving SQ stock for the longer term? An increasing number of Americans are going cashless.
Logically, this means we should see fewer cash-only businesses moving forward. And the types of businesses that would have once been cash only will likely gravitate towards Square’s unique and convenient solution. Don’t forget, this is extremely valuable in our social distancing protocols.
Chewy (CHWY)
According to a market research report in 2018, the global pet care market will reach nearly $203 billion by 2025. Driving much of this demand are millennials, who are utilizing digital innovations and technologies as part of their pet care regimen. And that was before the pandemic. In our post-coronavirus era, I anticipate a greater surge toward digitalization with pet-related purchases, bolstering the case for Chewy.
As an online retailer of pet food and products, CHWY stock is now suddenly relevant. That’s because brick-and-mortar pet stores have an unfortunate two-pronged threat to their customers. First, human-to-human spread of the coronavirus is already a significant fear factor. But second, dogs and cats can also catch the coronavirus. Given that many pet owners treat their animals better than humans, such a threat is a big no-no.
Cynically, what is a terrible headwind for physical pet stores is a huge plus for CHWY stock. Of course, that doesn’t mean Chewy is a perfect investment. Many analysts question the company’s operational efficiency to meet this sudden spike in demand. Further, there is a possibility that demand falls off after America fully and completely reopens.
But for young investors, you’ve got nothing but time for Chewy to work out its challenges. Therefore, you should consider this name among your high-growth stocks to buy.
Trade Desk (TTD)
Prior to the coronavirus, Trade Desk was one of the most compelling high-growth stocks available. Naturally, an increasing number of people have cut the cord over the years thanks to streaming services’ inherent flexibility and convenience. Features such as on-demand content and paying only for what you want particularly appeal to younger consumers.
Given this demographic shift, it’s imperative for advertisers to maximize their footprint in this new platform. Utilizing data and next-level market research, Trade Desk provides their clients with effective advertising campaigns that target specific audiences. Plus, the company’s agility enables advertisers to keep up with consumer trends quickly and seamlessly. Therefore, it’s not surprising that TTD stock has exploded higher.
And the coronavirus pandemic makes this story even more compelling. When Covid-19 began spreading across the U.S., most states issued stay-at-home orders. This had the effect of creating a hostage audience for streaming companies. In that situation, the business model for Trade Desk became patently obvious; hence, the resilience of TTD stock during this crisis.
After the coronavirus fades away, the bullish thesis will only get stronger. People will continue to cut the cord as they have. During quarantine, many folks have been undoubtedly converted to streaming. These are all net positives for TTD.
Voyager Therapeutics (VYGR)
As millions of families worldwide can attest, watching a loved one suffer from a neurological disease is a painful journey. It can also be agonizingly frustrating as a once proud and independent person succumbs to physical and mental ailments.
Voyager Therapeutics aims to put an end to this scourge, and I give them all my blessings. Utilizing a common, naturally occurring virus called adeno-associated virus (AAV) as a “treatment carrier,” VYGR scientists propose to target diseased cells for repair.
A significant advantage for using AAVs is their long lifespans. A single dose could potentially lead to lifelong benefits.
The technology is very promising but VYGR is still relatively in the early phase. Naturally, Voyager’s financials aren’t the greatest, and its share price is volatile.
However, if the company manages a breakthrough, we will witness a paradigm shift in how we approach ailments such as Parkinson’s disease, and it will become a hig-growth stock
Furthermore, gene therapy holds the key for solving a multitude of other diseases. VYGR is among a few high-growth stocks that could spark a medical revolution. Young investors should carefully watch this space.
Freelancer (FLNCF)
One of the most significant impacts of the Covid-19 pandemic is the shifting nature of the white-collar workplace. The previous paradigm dictated that workers commute to a central location to burn countless hours in a cubicle. If you’re good enough at being busy – or played office politics to your advantage – you might bestowed an office. On the other hand, Freelancer offers a rethink to this tired concept.
Essentially, Freelancer is an online auction house. But rather than bid on products, “Freelancers” bid on jobs offered by corporate clients throughout the world. Whoever has the most compelling bid gets the work contract. It’s an innovative idea that should gain traction during this time, boding well for FLNCF stock
For one thing, remote work was thrust upon corporate America suddenly but so far, it’s working relatively well. Plus, with the cost savings involved in not having an employee, more organizations will be eager to consider such freelancing services.
Granted, FLNCF stock is a very speculative play. But the fundamental environment has improved dramatically, making it one of the most attractive high-growth stocks to buy.
Champignon Brands (SHRMF)
I’m going to close out my list of high-growth stocks with easily one of my most speculative picks, Champignon Brands. On the surface, Champignon Brands isn’t controversial or particularly noteworthy, which specializes in mental health solutions. But how it gets there is what raises eyebrows. Instead of traditional methodologies, this company utilizes psychedelic drugs.
No, you didn’t misread that. SHRMF stock is one of the few examples of the exciting and burgeoning psychedelics industry. With careful formulations of mind-altering substances, scientists have discovered the platform’s potential for addressing serious conditions, such as post-traumatic stress disorder, along with substance and alcohol use disorders.
Of course, current public perceptions don’t exactly do favors for SHRMF stock and other psychedelic investments. However, educational opportunities will likely shift this perception positively. Further, younger investors have a long time to wait out this story. And the daring ones can get in now before the wave strikes.
Finally, it’s important to note that unlike retail products like cannabidiol (CBD), the psychedelics industry currently only focuses on medicinal applications. Therefore, the barrier to entry from both a competitive and legal standpoint is extremely high (no pun intended).
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he is long SHRMF stock.