The future is even more unclean than normal for investors these days. Stocks have been roaring since late March, but it's difficult to deny the coronavirus contagion has proven problematic for the economy. And all indications are that the upcoming earnings season will be rife with ugly results.
Nevertheless, there are some growth names too juicy to pass up in nearly any investing environment. Assuming this recession is eventually shrugged off, stepping into certain names sooner than later could be a move that pays big (proverbial) dividends.
Here's a rundown of three growth stocks you can buy right now, knowing they're solid enough to survive in -- and perhaps even thrive in -- tougher times.
Image source: Getty Images.
1. PayPal Holdings solves the touching problem
A long-standing agreement between digital payments name PayPal Holdings (PYPL 1.41%) and online auction platform eBay (EBAY 1.09%) just ended. As of July 17, eBay is steering users toward a similar (and rival) payments middleman called Adyen. Buyers will still have the option to use their PayPal account as a payment option, but in some ways PayPal is what it is today specifically because of eBay's growth. In fact, until 2015, eBay and PayPal were one combined company.
Circumstances in the meantime have decidedly worked in PayPal's favor, though. Mobile/digital wallets like PayPal's have been slowly displacing cash and even credit card accounts for years now anyway. The advent of the coronavirus outbreak, however, kicked that growth into higher gear as consumers sought ways to buy goods without physically touching anything they didn't have to. PayPal's vice president of global sales, Peggy Alford, noted to PaymentsJournal just a few days ago that in April -- when the fallout from COVID-19 was most frenzied -- net new active accounts surged by a record-breaking 7.4 million. That's more than twice the typical growth pace.
And a return to the old ways seems less likely after several weeks of using new payment approaches. Alford goes on to explain "consumers' needs, behaviors, and demands have changed," forcing merchants to respond. As the graphic below illustrates, sales as well as per-share earnings have been and should continue to grow at a strong double-digit pace.
Data source: Thomson Reuters/Refinitiv. Chart by author.
2. Slack Technologies makes working at home work
It's not just consumers developing new habits in the age of COVID-19 and beyond. Employees are picking up some new habits as well, like continuing to communicate with coworkers even while working at home. They just need the right tools to help make that happen.
Slack Technologies (WORK) is one of the providers of such a tool. Its primary app, for instance, essentially functions like an online chatroom but with more bells and whistles. Employees can be broken down into individual groups, and private conversations are made possible by direct messaging. The service even offers video conference calling and integrates with Alphabet's Google G Suite of business productivity tools.
Eventually, more people will be able to return to their offices, but that doesn't necessarily mean businesses will cancel their Slack subscriptions. If nothing else, companies will want to retain the ability to sail through any future pandemics that force lockdowns. Meanwhile, several organizations including Facebook and Twitter are planning on letting significant portions of their workforces permanently work from home.
That's a key reason analysts' estimates are calling for top-line growth of 38% this year and only a modest slowdown next year.
No, Slack isn't profitable yet, but its progress to that end may be enough to continue driving the stock higher. The earnings portion of the chart below suggests the company could move out of the red and into the black the year after next.
Data source: Thomson Reuters/Refinitiv. Chart by author.
3. Marvell Technology Group is marvelously well shielded
Finally, add Marvell Technology Group (MRVL 1.21%) to your list of growth stocks that could power a portfolio better than other names might.
Odds are good that most investors can't name one specific technology product that Marvell makes. Conversely, odds are good that those very same investors are beneficiaries of Marvell Technology's wares without even realizing it. The organization makes hardware for everything ranging from ethernet controllers to computer drives to server computer processors, just to name a few. It counts wireless carriers, cloud computing companies, and even automobile manufacturers as its customers, diversifying its business in several stable revenue streams.
It seems as if these industries could be adversely impacted by a global economic slowdown linked to the COVID-19 pandemic. And to be fair, that concern is legitimate. Technology market research outfit IDC even suggested back in May that, due to the contagion, semiconductor sales would slip somewhere between 4% and 7% in calendar 2020. Given the sheer difficulty of challenges that presented themselves starting late last year, though, that's not bad. It actually implies something of a rebound during the second half of the year.
On the other hand, the Semiconductor Industry Association reported earlier this month that sales of semiconductors were up 5.8% in May, marking the fifth straight month the industry's revenue improved in spite of the coronavirus. That data obviously calls IDC's pessimistic numbers into question, but more than that, it aligns with the 11% growth analysts are still modeling for Marvell Technology Group this year. Next year's apt to be even better with an estimated 16% increase in revenue, with both year's earnings expected to mirror that growth.
The image below paints that picture, showing uninterrupted double-digit growth of sales and earnings expected to continue through 2022.
Data source: Thomson Reuters/Refinitiv. Chart by author.
