Although stock market corrections are part of the investing cycle, no investor, tenured or not, could have been prepared for what 2020 has offered. In about a four-month time span, the stock market has crammed in about a decade's worth of volatility -- and the coronavirus disease 2019 (COVID-19) pandemic is squarely to blame.
But if there's an upside to the unprecedented uncertainty created by COVID-19, it's that it opens the door for long-term investors to put their money to work in growth stocks at a discount. There's little question that a continued record low-interest-rate environment is going to favor growth stocks going forward.
And as the icing on the cake, you don't need to be rich to get rich investing in the stock market. If you've got $3,000 you can set aside for investments that won't be needed for bills or emergencies, you have more than enough to take control of your financial future.
With that being said, here are three growth stocks you can pick up right now that you won't regret buying.
Generally speaking, insurance isn't what I'd call a high-growth industry. But it is when we're talking about the insurance of companion animals, such as dogs and cats. That's why Trupanion (TRUP -4.44%) is the perfect stock to buy and forget about.
According to the American Pet Products Association (APPA), an estimated 67% of American households own a pet, which is up 11 percentage points since 1988. Further, the APPA is estimating that $99 billion will be spent on pets in the U.S. in 2020.
This figure is especially noteworthy given that expenditures on companion animals haven't declined on a year-over-year basis dating back at least a quarter of a century. Pets are increasingly considered to be part of the family, and owners will spend whatever is necessary to ensure the health of their four-legged friends.
Enter Trupanion, which provides health insurance in the still-nascent companion-pet marketplace. Only between 1% and 2% of all companion pets in North America have health insurance, so there are more than 83 million households in the U.S. alone that could be addressable customers for Trupanion.
What's more, Trupanion hit the ground running in terms of securing partnerships with veterinarians and being inside companion animal clinics. These doctors and nurses are the true frontline marketing campaign for Trupanion and the reason it can continue growing at a double-digit rate throughout this decade.
Another growth stock you won't regret buying right now is cancer-focused drug developer Exelixis (EXEL -1.52%).
The key growth driver moving forward for Exelixis is lead drug Cabometyx. Although Cabometyx flopped in a 2014 prostate cancer trial, it's been lights out in other indications. It's the only second-line therapy in advanced renal cell carcinoma (RCC) to hit the trifecta of a statistically significant improvement in objective response rate, progression-free survival, and overall survival. It dazzled in first-line RCC and hepatocellular carcinoma trials, which led to its approval in both indications.
Though Cabometyx has already garnered notable market share in RCC, the somewhat recently released CheckMate-9ER study, which examined Cabometyx in combination with Bristol Myers Squibb's immunotherapy Opdivo, suggests promise for the combo treatment after meeting its primary endpoint. With Cabometyx involved in numerous combination and solo studies, there's plenty of opportunity for Exelixis to expand its lead-drug's label.
The point is that Exelixis has the potential to generate perhaps $400 million or more in free cash flow annually from Cabometyx, which means a fast-growing pile of cash that it can put to work via acquisitions or internal drug development. Look for Exelixis' streak of double-digit annual sales growth to continue.
Getting things right in the social media space is a lot tougher than it looks, but up-and-comer Pinterest (PINS -1.43%) appears to have the formula for success. The only regret for investors will be if they pass up the opportunity to buy into the Pinterest growth story over the long run.
Like most social media assets, Pinterest generates the bulk of its revenue from advertising. While monthly active users (MAU) in the U.S. are the most valuable commodity to advertisers, it's Pinterest's international user growth that'll be responsible for the lion's share of its ad-based growth in the years to come. Over the past five quarters, more than 90% of the 102 million MAUs added by Pinterest came from international markets, with average revenue per user more than doubling in 2019 in overseas markets from the prior-year period. Pinterest should have no trouble maintaining or growing ad-pricing power as long as its overseas MAU count keeps rising.
Maybe the most exciting aspect of Pinterest's business model is the ability to pivot the interests of its MAUs into actionable purchases of goods or services. Since MAUs are using Pinterest to share the products, services, and ideas that inspire them, it only makes sense for Pinterest to transform its platform into an e-commerce marketplace that connects users with small and medium-sized businesses that can fulfill those interests. While still nascent, Pinterest's e-commerce segment could be a big moneymaker by mid-decade.
With Pinterest still in the early innings of its growth spurt, look for a doubling in annual revenue approximately every four years.