The stock market is always unpredictable, but the events of the past year have tested investors' nerves on a whole new level. Amidst the pandemic market madness, it hasn't been unusual to see stocks double or even triple in price in a matter of mere months. However, only a handful of stocks that have seen these serendipitous gains have strong enough balance sheets to support such hefty valuations.
Let's take a look at three top growth stocks that have more than doubled over the past year alone and still have plenty of upside potential left for investors to explore.
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1. Teladoc
An enormous spike in telehealth visits during the pandemic brought Teladoc (TDOC -0.07%) to the forefront of many investors' attention. In the year-long period from mid-February 2020 to mid-February 2021, shares of the company shot up by more than 160%. Teladoc's price has retracted to a more reasonable level over the past few weeks, and it's now trading about 60% higher than one year ago.
The surge in demand for Teladoc's full-service platform certainly had a highly positive impact on the company's revenue in 2020. Last year, revenue shot up by 98% over 2019's levels, while visits on its platform saw a 156% year-over-year spike.
Teladoc's CEO, Jason Gorevic, noted in the full-year financial report that "virtual care shifted to become a consumer expectation in 2020," adding that "Teladoc Health not only met the rapidly growing demand, but we transformed our company to define a new category of whole-person virtual care." One of the company's most notable initiatives to expand its already massive foothold on the global telehealth market was its October 2020 acquisition of applied health signals company Livongo. Management labeled the merger "a transformational opportunity."
The growth and value that Teladoc can provide to investors' portfolios is far from limited to the pandemic era. The addition of Livongo's platform, client base, and resources to Teladoc's existing assets can fuel massive returns and revenue growth for years to come, translating to further share growth. Teladoc is already targeting another banner year of exponential revenue and platform growth in 2021. Management projects that the company can increase its revenue by another $1 billion this year and boost total visits on its platform by about 2 million.
It's also important to remember that Teladoc was a high-growth healthcare stock even before the pandemic. In 2019, its revenue was up 32% year over year and total visits on its platform rose by nearly 60%. The durability and growth potential this stock has to offer make its price tag well worth it.
2. Zoom
Shares of Zoom (ZM 0.05%) have surged by more than 220% from their trading price just one year ago as everyone from businesses to families increasingly rely on the company's platform to work and stay connected with the world. Given the lightning-fast growth Zoom has experienced as a direct result of the pandemic, it's not surprising that some investors have been antsy about its longevity as an investment.
There's no debating that the unprecedented uptick in demand for Zoom's services during lockdowns has fueled astonishing share-price and balance-sheet growth. But that doesn't mean Zoom can't sustain these gains and continue to deliver for investors in the years ahead. Even before the pandemic, Zoom was a tried-and-true growth stock. For example, in the company's fiscal 2020 (ended Jan. 31 of last year), its top line grew 88% year over year while its bottom line more than quadrupled.
And in the third quarter of Zoom's fiscal 2021 (the three-month period ended Oct. 31), the company's revenue swelled 367% while its net income rose by nearly 9,000% year over year. Also in this quarter, the number of Zoom's client companies with over 10 employees shot up by about 500% from the year-ago period. Zoom reports its financial results for the fourth quarter and full-year fiscal 2021 on March 1.
Management is already making strides to tweak its platform and marketing message to fulfill the demands of a post-pandemic world, with Chief Product Officer Oded Gal noting Feb. 3 that the company is "focused on innovating across our platform" to accommodate the global transition of companies back to in-office operations while catering to a growing remote workforce. (The same announcement reported that "more than 80 percent of employees working remote say they'd like to continue to work remotely at least 50% or more once they do return to the office.")
Remote work isn't going anywhere, but Zoom's relevance as a tool for global brands, small companies, families, and friends to stay connected will remain equally important in a post-pandemic era. Investors who buy Zoom shouldn't necessarily expect the same high returns the stock achieved in 2020 come to fruition right away, but long-term shareholders will likely still see substantial portfolio growth over the next five to 10 years.
3. Etsy
Last but not least is one of my favorite e-commerce stocks of all time. Etsy (ETSY -2.17%) shares have jumped nearly 300% over the trailing 12 months. Online shopping surges and a wave of both new buyers and sellers on the e-commerce platform led to mind-blowing balance-sheet growth in 2020, and investors took notice.
In 2020, Etsy's gross merchandise sales and revenue soared by 107% and 111%, respectively. The company's net income increase beat both of these figures, spiking by 264%. During the 12-month period, active sellers on Etsy's platform rose by 62%, and active buyers went up 77%. CFO Rachel Glaser cited "meaningful improvements in buyer engagement, retention, and frequency" as "important levers to maximize our growth opportunity," adding that in 2020, the company "acquired 61 million new and reactivated buyers, and saw nearly 160% growth in our habitual buyers."
Management is targeting between 125% and 135% revenue growth for the first quarter of 2021 alone. Etsy also boasts an excellent liquidity-to-debt ratio. Its cash and cash equivalents of $1.2 billion more than cover the $454.7 million Etsy owes in total current liabilities (obligations due within the next year).
Given its history of growth, its impressive cash position, and the fact that it doesn't have any dividend obligations to satisfy, Etsy looks well positioned to continue to boost its top and bottom line while building on its existing liquidity and slashing debt. These are all excellent reasons for investors to take a second look at this stock. As Etsy continues to expand its presence in the competitive world of e-commerce, its shares (and investors' portfolios) will soar accordingly.
