3 Top Growth Stocks in January 2021
Many investors consider companies with strong return potential as a good part of their portfolio. The trick, of course, is knowing which ones to pick. No investor can guarantee what the best growth stocks for 2021 will be, especially given the times we live in.
Despite being the year that it was, 2020 saw many growth stocks still succeed in outpacing the market considerably. Admittedly, even in 2021, there is no guarantee that the market will return to “normal.” But with vaccines rolling out and the worst hopefully behind us, this year could be a less volatile one.
Growth Stocks Poised for Success in Early 2021
The stocks we’ve listed below are only suggestions, placed on this list as a result of last year’s performance. If they can consolidate on their previous growth, 2021 could be even better. Consequently, they are worth looking at for long-term investments as well.
1. Square, Inc. (NASDAQ:SQ)
Square is a payments solution company most known for its Cash App. Founded by Jack Dorsey, the company’s product is a hit among younger individuals. In its short lifespan, it has already attracted 30 million users.
Square’s biggest headline in 2020 was its direct $50 million investment into Bitcoin. Dorsey has been a strong proponent of Bitcoin, calling it the “money of the internet.” That staunch support has materialized in Square’s product features, which has driven its revenue up considerably.
- Q2 2020 saw gross profit go up by 28% year-over-year to $597 million.
- Q3 2020 was even better, with gross profits going up by 59% to $794 million.
- The third quarter was the breakout period for Bitcoin, with the revenue stream growing by over 1000% to $1.63 billion.
- The company expects stronger adoption going forward.
2. Chegg, Inc. (NASDAQ:CHGG)
Education technology company, Chegg, has grown significantly as students studied from home during the lockdowns of 2020. Home tutoring and online platforms will likely be a fixture for education going forward, as classroom dynamics change.
Chegg has grown in 2020 across almost all metrics. The most important indicator of growth is the rise in the number of Chegg Services. The company does expect growth to slow down in 2021.
- In Q2 2020, total net revenue was recorded as $153.0 million, an increase of 63% year-over-year.
- In the same time period, net services revenue grew to $126 million, up 57% year-over-year.
- Perhaps most importantly, Chegg subscribers increased by 69% year-over-year in Q3 2020, which in turn boosted its services revenue.
- The company expects total net revenues to fall in the range of $626 million to $628 million for 2020.
3. Shopify Inc.(NASDAQ:SHOP)
Shopify’s e-commerce solutions are a common sight on the Internet. The company has come a long way from its inception in 2006, benefiting smaller businesses. Its growth looks optimistic as the world further moves toward digital operations.
Businesses have scrambled to mitigate damage caused by lockdowns, some turning to Shopify to adapt to new ways. Consequently, the company’s business numbers have grown tremendously, gaining over 150% in 2020. Analysts even see the merchant user base growing to as high as 4.6 million by 2030.
- Revenue skyrocketed during Q2 2020, growing 97% year-over-year to $714.3 million.
- Total revenue in Q3 2020 was $767.4 million, a 96% increase year-over-year.
- Subscription solution revenue grew by 48% year-over-year to $245.3 million.
- The company also saw 37,400 merchants referred via its partner ecosystem.
You will have noticed a theme among these companies — they all benefited from the pandemic. Living at home, all digitally, has greatly boosted tech companies. The growth of emerging tech will be a recurring theme in the future.
If you’re a new investor, proceed to learn the fundamentals of stock research. Regardless of experience, it is important to take advantage of the opportunities that 2020 will present. Growth stocks stand tall among those opportunities.
What do you think of the three stocks listed here? What growth stocks would you suggest? Let us know your thoughts in the comments below.
Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.