Peloton Interactive (NASDAQ:PTON) and Take-Two Interactive (NASDAQ:TTWO) have delivered big returns to investors, but these two companies are swimming in a big ocean of opportunity in their respective markets. Here's why it's not too late to buy these two top growth stocks.

1. Peloton Interactive

It can pay off to invest in companies that are disrupting traditional ways of doing things. We've seen digital streaming services completely change how people consume movies, music, and books. Peloton believes the thousands of health clubs and gyms, where people spend good money to work out, are ripe for disruption, and its growth so far suggests it's on to something big.

A man uses a Peloton Interactive cycle in a home setting as a woman walks by.

Image source: Peloton Interactive.

Revenue has roughly doubled every year over the last six years, while the pandemic accelerated that momentum. Connected fitness subscribers doubled over the last year to reach 1.09 million, and management believes it will nearly double again over the next year to reach 2 million subscribers. A growing subscriber base provides the company a recurring stream of cash to reinvest in new products and features to keep its already high member engagement up.  

Peloton has similar advantages as Spotify, which has dominated the music streaming market. Like the leading audio service, Peloton has put its digital app on several platforms, such as Apple TV, Roku, and others, so members can access Peloton content when they are away from their hardware, or provide a low-cost option for new members to access workout programs without owning a Peloton bike or treadmill. 

Peloton's long-term goal is to spread brand awareness, expand internationally, and use increasing scale to drive down the cost per workout for each member. It just recently announced new lower prices on its basic Bike and Tread models, which management believes will go a long way to increasing its already sizable addressable market.

The stock price has tripled from its IPO last year, but Peloton is just getting started. The company says there are 200 million people around the world with gym memberships, which provides ample room for the business to grow well beyond its current 1 million subscriber base. 

2. Take-Two Interactive

More than 2 billion gamers are estimated to spend $159 billion on video games this year, according to Newzoo. Interactive entertainment represents a substantial growth opportunity for the leading companies, as new ways of generating revenue have opened up in recent years, including esports, mobile gaming, and the digital distribution of content, with cloud gaming expected to be the next big thing in the industry.

A man playing video games.

Image source: Getty Images.

Take-Two Interactive is known for its Grand Theft Auto franchise, in addition to Borderlands, NBA 2K, BioShock, and many others. Yet Take-Two is relatively small, generating only $3 billion in net bookings in fiscal 2020 (which ended in March). 

Revenue has more than doubled over the last five years, and profits have grown even faster, fueling a 366% rise in Take-Two's stock price. This growth is due to its ability to keep players engaged by continuously releasing new content for its biggest titles.

In calendar 2019, Take-Two released the Diamond Casino & Resort update for Grand Theft Auto Online. The game, which has sold 135 million units since launching in 2013, subsequently achieved its highest level of monthly active users after more than five years on the market.

Other recent releases have performed well. Red Dead Redemption 2 has sold 32 million units since releasing in late 2018, more than doubling the sales of the previous installment. Borderlands 3 sold 50% more units than the previous installment, and NBA 2K20 recently hit a milestone of $1 billion in net bookings. 

There's more growth coming. Take-Two has its deepest pipeline in company history, with up to 93 titles planned for release in the next five years. Many of those won't make the final cut, but Take-Two is working on new sequels to some of its most acclaimed franchises, such as BioShock, which will be met with high demand upon release. 

Take-Two is among the best in the industry at generating sales from its catalog of games, as recent releases show. With so many games in development and a stellar record of growth, this top video game stock should continue to hit new highs over time.

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.