Please ensure Javascript is enabled for purposes of website accessibility

2 Top Growth Stocks to Buy Right Now

By Will Ebiefung - Apr 24, 2021 at 8:48AM

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

Want market-beating growth? Look no further than Pinterest and JD.com.

Growth stocks are companies that increase their revenue and earnings faster than the market average. Owning stock in these companies is often a net positive and the stock price tends to rise faster (and with more volatility) as well.

Pinterest (PINS 3.03%) and JD.com (JD 2.69%) fit into this growth stock category because of their rapid top-line expansions and clear catalysts for continued success. Let's dig deeper into the reasons why both stocks could supercharge your investment portfolio and are top stocks to buy right now.

1. Pinterest 

Pinterest is an image-focused social media platform that is generally dominated by female-friendly topics. The stock faced recent headwinds after an analyst report cast some doubt on its first-quarter fiscal 2021 performance. But over the long term, Pinterest's edge in social e-commerce can make up for near-term challenges.

Dollar bill and growing stock chart.

Image source: Getty Images.

Social e-commerce (which involves selling products within a social media experience) is expected to grow at a compound annual growth rate (CAGR) of 29% to $1.9 trillion globally by 2026, according to market analysis firm Research And Markets. Pinterest has an edge in this market because it can integrate advertisements and digital storefronts into its platform without sacrificing immersion. Management has built upon this advantage by teaming up with e-commerce giant Shopify to help merchants turn their products into Pinterest pins. 

Analysts at Cleveland Research think Pinterest could experience softer-than-expected first-quarter results (planned for release on Tuesday, April 27) because of decelerating omnichannel retail spending. The analyst report sent share prices down by 12%, from roughly $84 to $74 as of writing. But this bad news could be a buying opportunity because it doesn't take away from Pinterest's long-term thesis -- which will likely unfold over many years, not weeks.

Fourth-quarter revenue grew 76% year over year to $706 million, with global monthly active users (MAUs) jumping 37% to 459 million. Pinterest trades for 106 times forward earnings, but the company deserves this lofty valuation because of its rapid growth rate and catalysts for continued expansion. 

2. JD.com

JD.com is a fast-growing online retailer operating in China. Chinese internet companies have been under pressure because of increased regulatory attention (JD's share prices are down 15% year to date). But this dip could be a buying opportunity for value-hungry investors. 

China is getting tougher on its internet companies. This month, antitrust regulators fined JD.com's competitor Alibaba Group Holding the equivalent of $2.8 billion for anti-competitive behavior toward rivals and merchants on its e-commerce platform. While this move introduces uncertainty into the industry, it could also be a buying opportunity for JD.com, which has not been subject to fines or penalties related to monopolistic behavior and could benefit from having one of its rivals knocked down to size. 

Perhaps fending off monopoly concerns, JD.com is spinning off non-core assets. In March, management divested its cloud computing and AI businesses for $2.4 billion. This follows plans to IPO its logistics arm, JD Logistics -- a business that could be worth up to $40 billion, according to Bloomberg.

JD.com's fourth-quarter revenue grew 31% year over year to $34.4 billion, with net income jumping from 3.6 billion yuan to 24.3 billion yuan ($3.7 billion) in the period. The stock reports a forward price-to-earnings (P/E) multiple of just 41, which is significantly lower than U.S.-based e-commerce rivals like Amazon and Shopify, which boast P/Es of 62 and 303, respectively. 

Betting on growth

Pinterest and JD.com enjoy innovative digital business models and catalysts for continued growth, but they fit into different investment strategies. Pinterest is better for investors who would rather pay a premium for a faster-growing domestic company. JD.com, with its relatively cheap valuation, is better for bargain-by-comparison investors willing to tolerate some regulatory uncertainty.

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

Pinterest Stock Quote
Pinterest
PINS
$18.71 (3.03%) $0.55
JD.com, Inc. Stock Quote
JD.com, Inc.
JD
$65.95 (2.69%) $1.73

*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 analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

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.