Statistically speaking, we're now in what's typically the worst month of the year for the market. Data from Yardeni Research indicates that over the course of the past 92 years, the S&P 500 has suffered September losses more than half the time, averaging a 1% loss over this long period. And yet, this long-term rally is still going strong, led by many of the same growth stocks that got the bullish ball rolling 18 months ago.
Moral of the story? The very best growth stories usually make for unstoppable stocks.
With that as the backdrop, here are my top four growth picks you may want to think about buying before this holiday-shortened week comes to a close.
It's not a name that needs an introduction. Amazon (AMZN -0.77%) is one of the world's biggest companies and the undisputed king of e-commerce, driving nearly $216 billion worth of product sales in fiscal 2020. Tacking on another $170 billion in sales of digital services gets you to a total full-year top line of $386 billion. This year is shaping up to be an even bigger one, with revenue on pace to roll in 23% higher than in 2020.
This forward progress didn't prevent shares from taking a 15% tumble between July's high and last month's low; investors did most of that selling the day after the company posted its second-quarter results marred by disappointing sales. Its revenue guidance for the current quarter also fell short of analysts' estimates.
Largely forgotten during the trading tussle, however, is that this is Amazon, a company that hasn't failed to report sales growth in any 12-month span since its inception back in the mid-1990s.
Investors appear to have realized their mistake. The stock's climbed from last month's low of roughly $3,176 to a current price near $3,500. That still leaves it with a lot of upside potential, though, particularly in light of its mostly sideways movement since last September.
It's almost cliche to suggest owning a name like Taiwan Semiconductor Manufacturing (TSM -0.69%) in the midst of a worldwide shortage of microchips; one would also expect shares of any outfit that can help address the supply crunch to already be at or near their maximum acceptable values. For the time being, though, that's not Taiwan Semiconductor shares. Like Amazon, this stock's pretty much where it was at the beginning of the year, with investors unwilling to follow through on last year's doubling in price.
Don't be surprised, however, if the stock finally starts to move again sooner rather than later. The company announced just a few days ago that it would be raising its prices -- again -- between 10% and 20% later this year, and nobody balked. Given the current situation, technology manufacturers are far more worried about the sheer availability of components than they are about their cost. That's ideal for the chipmaker.
And Taiwan Semiconductor may be the best as well as the most overlooked way of capitalizing on the microchip supply crunch. Not only is it one of the world's biggest chipmakers, as the world's most prolific contract manufacturer, but it's also got experience and intellectual property that's relevant for a serious scale-up of its semiconductor production capacity.
For largely the same reason Amazon is a growth machine -- the never-ending explosion of e-commerce -- so is PayPal Holdings (PYPL -0.83%). Consumers have to have a means of paying for all the goods they're buying online. PayPal is a top-of-mind name for many of them, already boasting more than 400 million active users as of the end of June.
And the best may be yet to come, given recent developments.
One of those developments is the possibility that PayPal will move into the stock trading space. While not officially confirmed yet, PayPal has been making moves that suggest it's in its future.
Another growth driver is the continued leveraging of its peer-to-peer payments platform, Venmo. Bank of America analyst Jason Kupferberg described Venmo's ongoing expansion as the groundwork for a "super app" capable of doing so much more than just delivering money from one user to another. Ditto for its namesake service, which now facilitates "buy now, pay later" purchase plans as well as cryptocurrency payments and crypto trading.
Analysts believe these (and other) add-ons will actually cause 2022's revenue growth to accelerate from this year's pace of 20% to nearly 23%, driving even stronger profit growth.
Finally, add Digital Turbine (APPS 0.38%) to your list of growth stocks to buy this week while it's still closer to this year's lows than it is to this year's highs.
It's the least familiar name of the four growth stocks in review and also the smallest, sporting a market cap of just $6 billion. Don't let the small size fool you, though. This company's still got a great deal of growth potential after an incredible past few months.
In simplest terms, Digital Turbine helps mobile device makers, app developers, and digital content creators better monetize their intellectual property. It's been an under-addressed aspect of the mobile market, but with the pandemic forcing a slew of companies to focus more on where business is actually happening in the modern marketplace, these outfits are increasingly realizing how poorly they had been handling the human/device interface. Revenue for the fiscal year ending in March was up 126% year over year, and analysts are modeling sales growth of 280% this year before moderating in 2023. Earnings are projected to grow accordingly, from $0.74 per share last year to $1.55 this year to $2.17 next year.
This past and projected progress hasn't buoyed the stock of late. In fact, shares are still down 38% from March's peak, which followed a huge rally during the latter half of last year. But, the stock may be testing the waters of renewed bullishness, soaring more than 30% since its mid-August low on volume we've not since 2020. It's a hint too big to ignore.