Last year, numerous stock market records were broken. Investors navigated the sharpest bear market downturn in history and reveled in the quickest bounce-back rally to new highs of all time.
It was also a period that saw millennial investors flood into the market. Online investing app Robinhood, which is known for its commission-free trades and gifting of free shares of stock to new users, gained approximately 3 million new users in 2020. Since the average age of Robinhood's user base is only 31, many of these new users are likely millennial or novice investors.
If there's one thing young investors love, it's growth stocks. Robinhood's leaderboard of the 100 most held stocks on the platform is packed with growth stocks from a variety of sectors and industries.
However, not all fast-growing companies are built the same. If you're looking to get richer in 2021, the following four Robinhood growth stocks can help you achieve your goal.
One of the easiest ways to build wealth is to buy highly profitable companies with clear-cut competitive advantages. That's why Alphabet (GOOGL -0.32%) (GOOG -0.37%) makes the list. Alphabet is the parent company of Google and YouTube.
You certainly don't have to be a tenured investor to understand what millennials see in Alphabet. According to GlobalStats, Google has controlled between 91% and 93% of worldwide internet search over the trailing 12 months. With no other search platform even close to matching its dominance, advertisers will pay big bucks for the opportunity to target their product or service at a desired audience. With the exception of the coronavirus recession, Alphabet has been a consistent double-digit growth company for a long time.
But there's more here than just internet search. YouTube has become one of the three most-visited social platforms in the world. Further, Google Cloud is Alphabet's fastest-growing operating segment (45% year-over-year sales growth in the third quarter). Although Cloud only accounted for $3.44 billion of $46.17 billion in Q3 sales, the margins associated with cloud services are substantially higher than the ad revenue generated from search and YouTube. In other words, Alphabet looks to be on the verge of an operating cash flow explosion, thanks to Google Cloud.
Next to electric vehicles, there are no hotter investments right now than marijuana stocks. The buzz surrounding North American pot stocks primarily has to do with Democrats winning the White House and both chambers of Congress. There's a growing belief that we could see cannabis regulations eased at the federal level. But no matter what happens in 2021, Canadian licensed producer OrganiGram Holdings (OGI 0.80%) has the looks of a growth stock that can make investors richer.
Canada has been contending with federal and provincial red tape, leading to supply issues, but OrganiGram offers something unique to investors. Unlike other large licensed producers, OrganiGram has a single facility in Moncton, New Brunswick. Having only one grow site makes it easier for the company to adjust expenses and output, as well as streamline its supply chain.
OrganiGram has also designed Moncton to be highly efficient. The company's grow rooms accommodate three tiers of plants to maximize licensed cultivation space, and it's spent big bucks on automated equipment capable of producing up to 4 million kilos of infused chocolate edibles each year. Derivative products like edibles and beverages boast much higher margins than dried cannabis flower.
Long-term investors should begin to reap the rewards of their patience in 2021.
Cloud-based customer relationship management software provider salesforce.com (CRM -0.25%) is the stock for bargain-hunting growth investors.
Robinhood investors probably have two reasons to buy into the salesforce growth thesis. First, CRM software seems to have ever-broadening applications. With the ability to access customer information, log service issues, manage marketing campaigns, and suggest add-on sales in real time, CRM solutions have applications in any consumer-facing business. The retail and services industries are no-brainers, but we're seeing a big uptick in CRM demand from manufacturing, financials, and even healthcare. The global CRM market has double-digit growth potential written all over it.
The second thing Robinhood investors probably like about salesforce is that it's the undisputed global CRM share leader. Gartner pegged its share of the worldwide CRM market at more than 18% at the end of 2019. That's nearly equal to the No. 2, 3, and 4 companies in global share.
With salesforce recently announcing its largest acquisition in history -- the $27.7 billion cash-and-stock deal for Slack Technologies -- the company is set to continue its high-growth ways. At less than 8 times Wall Street's projected sales for 2021, salesforce has all the makings of a big-time bargain.
A final Robinhood growth stock that can put some pep in your portfolio's step is digital payments company Square (SQ 1.72%). It's no secret that young investors love peer-to-peer payment platforms, and Square is the one you're going to want to buy into.
Most folks are familiar with Square because of the company's growing seller ecosystem. Square has been providing small businesses with the devices and analytics needed to process payments and grow for nearly a decade. Prior to the pandemic, the payment volume crossing Square's network had been growing by an average of 49% per year between 2012 and 2019. This seller ecosystem can remain a consistent growth driver, especially if it continues to attract larger merchants.
But let's face the facts: Investors are buying into Square because of Cash App. Between the end of 2017 and mid-2020, Cash App's monthly active user count more than quadrupled to 30 million. Millennials and Generation Z love the idea of digital payments, and the pandemic only made it easier for folks to shun the use of physical cash. Cash App gives Square the opportunity to expand its revenue stream beyond just merchant fees and into banking transfer fees, investment fees, and bitcoin exchange charges.
Square may well be one of the fastest-growing fintech stocks of the decade, which is why you'll want it in your portfolio for 2021 and beyond.