Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

2 Great Stocks Under $100 to Buy in 2021

By Keith Noonan - Dec 31, 2020 at 7:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These companies have what it takes to be huge winners.

Imagine buying Amazon or Netflix before they reshaped their respective industries. Over the last decade alone, Amazon stock has climbed roughly 1,700% and Netflix has risen nearly 1,900%. If you bought either of these companies even earlier, your returns would have been even more impressive.

Identifying young companies that operate at the intersection of powerful trends can be a path to incredible stock returns. Read on for a look at two companies that are spearheading growth in rapidly expanding markets and have shares priced well below $100. Perhaps one or both will be worthy additions to your investment portfolio.

A hundred-dollar bill rolled up and tied in a bow.

Image source: Getty Images.

1. Upwork: Benefit from momentum in the gig economy

Upwork ( UPWK -0.85% ) provides a technology platform that connects freelance workers with clients looking to hire for various jobs. With the work-from-home trend booming and potentially accelerating a shift toward this new gig economy approach to many projects, the company could go on to be a huge winner.

The upsides to this approach are numerous. Companies can hire freelancers on a contract basis and avoid health insurance, payroll taxes, and other hefty costs. Hiring contractors also creates the opportunity to save on office rental expenses and other costs. Growth for the cost of employee benefits has also generally outpaced increases for wages.

With the increased breadth and versatility of talent available on a freelance or contractor basis, there are huge incentives for companies to satisfy some of their work needs through Upwork's platform. People are turning to the platform for projects big and small. The company also offers payment processing services that can be used by larger enterprises to simplify freelance and contractor-based projects.

Record new-customer additions helped Upwork boost its sales 24% year over year in the third quarter, and it looks like the company's growth story is just getting started. Strong gross margins (roughly 73% last quarter) also point to big earnings potential as the company continues to expand the reach of its platform and sees sales growth exceed its spending to acquire new large customers and improve the platform. 

Upwork stock currently trades in the range of $36 a share. Valued at roughly $4.5 billion and trading at 12 times this year's expected sales, Upwork has plenty of room for growth and is priced at sales multiples that still look appealing in the context of more richly valued cloud software companies. 

2. Huya: Capitalize on growth for video games and esports

Video games boast levels of engagement that trounce nearly every other form of entertainment, and momentum for the industry has been so strong that there's now even a substantial market for videos of other people playing games. Huya ( HUYA 9.54% ) is a Chinese company that provides a platform that allows users to broadcast and watch gameplay footage and commentary, and the business looks primed for impressive growth.

After completing a planned merger with core competitor DouYu in the first half of 2021, the company's position should be even stronger. Huya already is far and away the leader in gaming-content streaming and is posting strong business momentum. It should benefit from rising demand in diverse geographic markets. In addition to being a category leader in China's fast-growing esports and gaming-video market, the company is also rapidly growing its audience across Southeast Asia. 

The company managed to grow sales 24% year over year last quarter, and its adjusted net income climbed 75% compared to the prior-year period. Joining forces with DouYu should help capture more of the overall growth in gaming-video content and cut down on internal operating costs and the amount that it needs to share with content creators on its platform. 

Growth for the global games industry is still just getting started, and the same holds true for gaming-video content. Huya looks cheaply valued trading at roughly $19 per share and 24 times this year's expected earnings, and it stands out as a growth candidate that has lots of room for expansion over the long term.

These stocks could power your portfolio through the next decade

Upwork and Huya stand out as two companies that are on track to benefit from powerful industry trends, and they have the potential to deliver huge gains. These are relatively young companies operating in nascent markets, so it's important to proceed with the understanding that there could be unexpected twists and turns along the way. But investors who take a long-term approach could be richly rewarded.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Upwork Inc. Stock Quote
Upwork Inc.
UPWK
$37.26 (-0.85%) $0.32
HUYA Stock Quote
HUYA
HUYA
$8.61 (9.54%) $0.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.