The broad market may be on wobbly footing as we move deeper into September. After all, this is historically the worst month (on average) for stocks, and the S&P 500's 100%-plus gain since its March 2020 low is certainly inviting some profit-taking.
The fact is, however, five years from now anything that happens this month just won't matter for a handful of high-growth stocks; it probably won't even be remembered. So if you're itching to put some idle cash to work for the long haul, there's not a thing wrong with doing exactly that. And if you want a little help getting started, here's a look at three great growth stocks that are likely to be priced much, much higher a few years down the road.
1. Array Technologies
The use of solar power has outright exploded in recent years, here and abroad. Yet, despite these incredible growth rates, the U.S. Energy Information Administration reports that solar power still only generates just a little over 1% of electricity in the U.S. The rest of the world isn't doing much better when it comes to turning sunlight into power, either.
That's the crux of the opportunity ahead, however. With its production cost now roughly at parity with other sources of energy and the nighttime storage issue being meaningfully addressed by lithium batteries and hydrogen fuel cells, the EIA estimates that solar power will account for 80% of the U.S.' growth in renewable energy consumption through 2050, which should double its piece of the country's power production from 21% to 42% during this time. The rest of the world's solar power efforts are on a similar growth track.
Enter Array Technologies (ARRY -0.05%).
It's not a solar panel maker, nor do investors want it to be -- solar panels are largely a commodity anymore, keeping profit margin rates relatively low for all involved in the business by virtue of what's ultimately a price war.
Rather, Array Technologies makes equipment that optimizes the power production of solar power farms by adjusting the angle of the panels as needed. The need for such solutions has only become fully apparent as the solar business has matured; more efficiency means more profitability for utility companies with solar power operations. Next year's projected revenue growth of 33% is just one piece of evidence that providers are getting serious about the idea of getting more out of their investments.
It remains to be seen if this company will be the next Tesla, as many nascent electric vehicle manufacturers have failed to live up to those expectations. It's not out of line to suggest, however, that if any company could grow into an EV name that's on par with Tesla, it's China's NIO (NIO 21.71%). There's certainly enough business for both. Market research outfit Meticulous Research estimates the electric vehicle market will grow at an annualized pace of nearly 34% through 2027.
It's not always been smooth sailing for the relatively young company, mind you. NIO failed to deliver as many vehicles as expected in several quarters spanning 2018 and 2019, driving the stock to record lows in the latter of those two years, and driving a U.S. CEO, CFO, and co-founding vice president out of the company altogether. The pandemic and its subsequent supply chain disruptions of course continue to complicate matters. In late August, the company lowered its Q3 delivery outlook to a range between 22,500 and 23,500 vehicles versus a previous forecast of between 23,000 and 25,000 deliveries.
The funny thing is, the stock price didn't take a dive in response to the dialed-back guidance. This non-response suggests investors believe the EV market's broad growth will still be a boon for NIO.
And well they should. Problems aside, last year's revenue more than doubled 2019's top line, and 2019's top line was more than 50% stronger than 2018's. This year's sales are on pace to improve 2020's by 65%. Clearly, NIO's cars are increasingly clicking with consumers, even if it was Tesla that proved electric vehicles were marketable to the masses.
Finally, add Argentine-based MercadoLibre (MELI 4.69%) to your list of great long-term growth stocks.
If you're not familiar, MercadoLibre is the king of e-commerce in most of South America. It's often even described as the Amazon of South America, but that comparison doesn't do the company justice. MercadoLibre is also a payments processor akin to PayPal, and an online auction site in the vein of eBay.
These various business models all work well together, allowing the company to steer users of one service into another one it also manages. The end result is nearly 76 million active users participating in a network that facilitated sales of 244.6 million items last quarter, and handled 729.9 million digital payments during the same three-month stretch. Those two figures improved 37% and 80%, respectively, despite the fact that the pandemic's benefits to e-commerce operations are abating.
And yet, there's lots of room for more growth from this all-encompassing outfit.
Numbers from Fidelity International put the opportunity in perspective, indicating that e-commerce only accounts for a little more than 12% of Brazil's retail spending. The figure for Chile is even lower at 10.5%, and lower still for Mexico at 8.5%. Last year was something of an awakening of the continent's digital consumerism, though. Fidelity now estimates Latin America's total e-commerce market will swell from last year's $68 billion to $160 billion in 2025, jibing with an outlook from consulting companies Americas Market Intelligence and Euromonitor that point to increasing adoption of mobile internet across the continent.
MercadoLibre's recent acquisition of logistics service provider Kangu only puts the company's growth destiny deeper into its own hands, much like Amazon's in-house foray into package handling.