Investing in high-quality, high-growth stocks is a fantastic way to beat the market over the long term. But it's not always easy to separate the businesses with room to run from those whose growth has run its course.

So we asked three Motley Fool contributors to each pick a high-growth stock that they believe is just getting started. Read on to learn why they like Atlassian (NASDAQ:TEAM), iRobot (NASDAQ:IRBT), and iQiyi (NASDAQ:IQ).

Man in white shirt and tie pointing up in front of wooden sign indicating gains.


Letting happy customers do the legwork

Steve Symington (Atlassian): Atlassian is already delivering exceptional growth, both with its revenue climbing 40% year over year last quarter and its stock up 94% year to date. And as it stands, it's accomplishing that growth primarily with its core Jira software products, which focus on handling enterprise team collaboration and productivity functions.

Most intriguing, though, is how Atlassian is outgrowing its competitors. The company employs a "viral"-style sales and marketing approach, keeping overhead low by choosing not to employ a traditional sales force. Rather, it makes its software free to try with competitive pricing openly available online, and its 125,000 happy customers do the rest by spreading the word.

Even then, Atlassian insists it's targeting the "Fortune 500,000." Indeed, according to Market Research Future, the global enterprise software industry is growing at a healthy 8% clip and will represent a market of over $630 billion five years from now.

As Atlassian expands its reach with a combination of existing products, acquisitions, and new innovations, it should only continue to grab a larger piece of that market. And I think the stock should continue to handsomely reward investors in the process.

Vacuums are just the beginning

John Bromels (iRobot): Robotic vacuum cleaners are becoming more and more popular, but even as a number of companies get in on the action, the iconic Roomba -- manufactured by household robotics pioneer iRobot -- still remains the market leader, with 62% of market share. There's a good reason that, like brand names Xerox or Kleenex, "Roomba" has become synonymous with robotic vacuums in general.

And yet, for all its success to date, Roomba's market penetration is still quite low. iRobot's management estimates that its current domestic market penetration of about 13 million households represents only around 10% of its potential, with even lower penetration overseas. As more households are turned on to the idea of a robotic vacuum -- and who doesn't want to avoid doing chores like vacuuming? -- that market should grow.

But robotic vacuums, even though they're iRobot's best-selling product with excellent growth potential, probably aren't iRobot's best avenue for growth. Instead, it's the software and technology powering the Roomba that iRobot can leverage into developing new products. Already, the company has used Roomba technology to develop robotic mops and pool cleaners. It's known to be developing technology for lawn care as well, and there are numerous other potential applications. (Personally, I'd like to stay indoors with a cup of hot cocoa while a robotic snow shovel clears my driveway, and I doubt I'm alone in that.)

As the market leader in an emerging industry, the signs are that iRobot's growth is just getting started. 

Investors could stream big gains with iQiyi

Keith Noonan (iQiyi): Sometimes called "the Netflix of China," iQiyi is a company that's already come a long way and still has plenty of room for growth. The streaming video and multimedia platform, which spun off from its parent company, Baidu, in March, has expanded its paid-subscriber rolls to 67 million members -- up from 50 million subscribers at the end of 2017 and 5 million members as of May 2015. Including iQiyi's ad-supported service, the company counts over 400 million monthly active users.

iQiyi grew sales 51% year over year in the June quarter and 57% year over year in the previous quarter, with membership additions and new ad sales driving the momentum. Shares are up roughly 50% from the company's $18 IPO price, but they're down roughly 40% from the $46 lifetime high that they hit in June. Rising operating costs amid the company's content production and acquisition pushes are leading to expanding operating losses and bolstering bearish sentiment, but I think risk-tolerant investors looking for high-growth stocks should consider adding iQiyi to their holdings. 

The company is building an impressive lineup of original and third-party content, scoring big hits with self-produced shows like Story of Yanxi Palace and regularly announcing new content licensing deals. It's also in the early stages of making a bigger push into video games and securing merchandising deals for its properties. Adding new content isn't going to be cheap, but the company has the potential to shift into regular profitability as China's fast-growing consumer economy provides the backdrop for expanding its paid user base and per-user revenue growth. 

The bottom line

To be clear, high-growth stocks tend to be particularly volatile. And no one can guarantee that any given pick will go on to deliver outsized gains and beat the market in the coming years. But whether we're talking about Atlassian's low-overhead model for penetrating the enterprise software market, iRobot's enviable position at the center of the emerging home robotics industry, or iQiyi's growing user base, content library, and broader ambitions, these three investors think chances are high that they'll do exactly that.

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.