By Ali Hassan
3:52 AM UTC
Investing in growth stocks is no joke. Where growth stocks offer a greater potential for future return, they also carry an equal amount of risk. That means it’s important to consider both the history and upcoming long-term prospects before investing in the Best Growth Stocks For The Long Term.
We have gathered the five best tenfold growth stocks to invest in now. These companies have huge potential and if they break that point, you will surely make millions out of it.
Lately, inflation and rising interest rates have affected many small and mid-cap growth stocks. The companies have touched new lows and continue to plunge week after week.
But there’s an argument to be made that the kitchen sink, that investors are throwing out might have some gems in it. That’s right; there are the best growth stocks with the long-term potential to grow tenfold hiding in plain sight. Let’s break into them.
Fiverr International (FVRR) is a recognized brand for freelancers across the globe. The company is growing pretty well as the freelance market continues to expand rapidly.
According to research by Upwork, more than 50% of the U.S. population could participate in freelancing by 2027. That would make it a permanent staple in the economy instead of a pandemic fluke.
Fiverr benefited from the lockdowns in 2020 as people leaned more heavily on online businesses and freelancing to make ends meet. The company’s revenue grew 77% year over year in 2020, an uptick from the 42% increase in 2019. However, the stock price ran ahead of its growth, pushing its price-to-sales ratio skyward, going as high as 56 in early 2021.
The sell-off in growth stocks also impacted Fiverr, bringing the stock’s PS back down to pre-lockdown levels at less than 11. Meanwhile, revenue growth remains solid following its pandemic surge. Analysts expect the 2021 fiscal year to end with 55% higher revenue year over year, and 2022 revenue estimates call for 26% growth. We think the long-term development of freelancing could give Fiverr an opportunity to continue its upward trajectory for years. FVRR stock’s $3 billion market cap is still tiny compared to its potential upside.
On top of that, more Americans are quitting their jobs and opting for self-employment. That ultimately creates opportunities for freelancing platforms. Considering the long-term growth, FVRR stocks are one of the best growth stocks for the long term.
Nextdoor Holdings (KIND) operates a neighborhood network that connects neighbors, businesses, and public services. The company went public through a SPAC merger in 2021 and has seen unprecedented success ever since.
Nextdoor is an interesting company looking to change the dynamic of how we use social media. It is an app that connects people in real-life neighborhoods with one another. The company provides private online networks for continued communication and updates about what’s happening near your house. That helps in building stronger communities. It’s a fast-growing company, expanding both locally and internationally.
The company, in the third quarter, saw a 66% increase in revenue to $52.7 million, and the average revenue per user increased 38% year over year to $1.61. This significant increase in revenue has made the company stocks valuable enough to be among the best growth stocks for the long term. The majority of that increase came from new users. While the number of weekly active users reached new heights with a 20% year-over-year increase to 33 million.
Like many social networks, Nextdoor deals with the same problems and is working to cover the gap. With strong growth and user support, the company has more responsibility than ever before. However, with an experienced hand like CEO Sarah Friar at the helm, there is little cause for concern.
With its growing market, KIND seems a perfect stock to invest in with huge growth potential.
Caterpillar (CAT) is a famous company that manufactures and sells construction and mining equipment. In today’s world, few companies can match the size of Caterpillar. The firm is one in a selected group to produce both construction and mining equipment and have operations worldwide.
Caterpillar is expected to have a profitable year, with its earnings and free cash flow projected at an all-time high. This will create significant value for investors due to the global economy whirring back to life.
Even in America, things are looking up for Caterpillar. President Joe Biden recently signed the $1.2 trillion infrastructure bill into law. This will bring new federal investments and create jobs over the next five years. That includes everything from bridges to broadband internet systems with its promises of improved cities around the USA. CAT being a tycoon in construction equipment manufacturing will, naturally, benefit from these initiatives.
In the third quarter of 2021, Caterpillar announced sales and revenues that had grown by 25% compared with $9.9 billion in 2020. The revenue increased primarily due to demand for equipment and services at higher end-user levels driving the growth. Third-quarter profits were up significantly from last year, with a whopping $2.66 per share in profit. In addition, the company bought back $1.4 billion of shares and disbursed dividends totaling $0.6 billion.
CAT seems to be in a dominant position and the stock has huge potential going forward. UBS has reiterated the buy rating for CAT with a $250 price target and now we can say that it is one of the best growth stocks for the long term.
DocuSign (DOCU) is a cloud-based software company that offers a variety of e-signature and similar cloud-based products and services. In simple words, DOCU is disrupting the centuries-old industry of physical documentation. With the Help of DocuSign, companies across the globe are executing agreements in an efficient, timely, and secure manner.
It is important to note that DocuSign isn’t one of the best stocks to buy right now because of its valuation; this is not a value play. Instead, DocuSign is considered expensive in an industry synonymous with sky-high valuations. With a price-to-sales ratio of 12.50x, Docusign is well above the industry average of just under 6x. However, DocuSign’s premium offerings require a premium valuation.
Despite trading above peer valuations, DocuSign is a company that looks like it can easily justify its current price. The company’s total addressable market is just about the entire planet if for nothing else. Estimates put the entirety of the e-signature business somewhere around $25 billion globally each year. At the moment, DocuSign has only captured about 10% of the total addressable market, which means there’s plenty of room to grow.
If DocuSign can realize its dream of an Agreement Cloud, it can change the way businesses interact and produce significant returns for investors. The company is expected to report record revenues in the next five years. DOCU is certainly perfect to fall in the category of best growth stocks for the long term.
Beyond Meat (BYND) is a company that produces plant-based substitutes for beef, pork, and poultry. In no time, BYND has captured the market’s attention and is already on the path to glory. The company aims to help reduce pollution from the meat and poultry industries. While the idea is to help people live healthier lives by eating more vegetarian meals.
In a time of high inflation, Beyond Meat is focused on providing food at affordable prices. Last year, Beyond launched its new line of chicken in Canadian and U.S restaurants and grocery stores across North America.
The valuation of the company is considered to be right on the spot. Even though the stock hasn’t performed well in the recent past, the growth opportunity is immense. That leads to marketers and businesses honing on any area that could lead to a healthy lifestyle. Beyond Meat will do well in considering the current environment and it will be among the Best Growth Stocks For The Long Term.
Recently, Barclays analyst Benjamin Theurer updated BYND’s price target to $80 from $70. Benjamin believes that the current share price of the stock doesn’t reflect the right valuation. He says that specific segments are yet to be exploited. For instance, BYND’s international opportunity has become more relevant. The company could well become a global leader in the broader meat alternative market, especially given its non-GMO profile.
Therefore, BYND stock is poised to grow sooner or later based on these considerations.