2 Smart Growth Stocks to Buy in September

As an individual investor, you likely don't have access to the same resources as institutional asset managers. You don't have millions of dollars at your disposal, and you don't employ teams of analysts that can do boots-on-the-ground research. But that's OK! You still have an advantage: a long-term mindset.

In other words, you can buy and hold stock in high-quality companies without worrying about quarterly performance targets. But in order to maximize that advantage, it's important to add to your portfolio on a regular basis -- once a month, or even once a week. This helps reduce the impact of short-term market volatility on your total returns.

With that in mind, here are two smart growth stocks to buy in September.

Image source: Airbnb.

1. Airbnb: The future of travel

Airbnb (ABNB 1.09%) is disrupting the travel and tourism industry. Its platform connects 4 million hosts with potential guests around the globe, offering far more flexibility and privacy than traditional hotel chains. Additionally, Airbnb has expanded beyond lodgings, helping people find authentic experiences in 1,000 cities around the world.

In the wake of the pandemic, the travel industry is changing, and Airbnb is ready. Remote work has made people more flexible about when and where they go, and more travelers are opting for unique experiences rather than typical tourist attractions. In fact, searches for unique lodgings on Airbnb are up 94% this year compared to 2019.

Notably, that trend hits on one of the company's key advantages. Guests can find over 170,000 unique listings on the platform, from a treehouse in the rainforests of Hawaii to a tiny house in the Italian Alps. Guests can even stay at a castle in the English countryside. No traditional hotel chain can offer such varied experiences.

But that's not the only change; guests are also visiting more remote destinations. So far this year, 22% of nights booked on Airbnb have been for rural stays, but that figure was less than 10% in 2015. This highlights another benefit of Airbnb's business model. Its platform has listings in places where traditional hotels wouldn't make financial sense; that's because Airbnb's inventory is more dynamic -- it's much easier to on-board a new host than it is to build a new hotel.

Here's the big picture: After spending over a year living under pandemic-driven restrictions, many people are ready to travel again. In fact, CEO Brian Chesky recently said, "We expect a travel rebound unlike anything we have seen before." During the second quarter, Airbnb reported revenue of $1.3 billion, up 299% from the prior year. And gross bookings came in at $13.4 billion, up 320%, indicating strong demand in the coming quarters. That's why now looks like a good time to buy this stock.

Image source: Getty Images.

2. Zscaler: The new corporate network

Zscaler (ZS 0.01%) specializes in cybersecurity. The company's secure access service edge (SASE) is designed to replace outdated corporate networks, allowing employees to quickly and safely connect to company resources from any device or location. Zscaler also leans on artificial intelligence to improve threat detection, meaning its platform becomes more effective over time.

Unlike traditional castle-and-moat networks, in which companies kept resources on-site and built firewalls around the corporate perimeter, Zscaler's solution is delivered from the cloud. The benefits here are twofold: First, its SASE platform is distributed across 150 global data centers, offering more capacity (i.e., better performance) than most clients could achieve on their own. And second, it eliminates the need to buy and maintain costly on-site hardware. In short, Zscaler improves and simplifies zero-trust security.

To that end, research company Gartner has recognized Zscaler as the dominant force in this industry for 10 consecutive years, evidencing its best-in-class solution. And as more enterprises adopt cloud computing remote work, SASE solutions are becoming increasingly common. In fact, Gartner believes 40% of enterprises will have plans in place to adopt SASE by 2024, up from just 1% in 2018.

Not surprisingly, this momentum has translated into strong top-line growth.

Data source: YCharts. TTM = trailing 12 months. CAGR = compound annual growth rate. Note: Q3 2021 ended April 30, 2021.

Notably, Zscaler's retention rate has trended upward over time, from 115% in 2017 to 126% in the most recent quarter. Put another way, clients are spending more each year, evidencing the stickiness of Zscaler's product.

Looking ahead, the company has plenty of room to grow its business. Management puts the market opportunity at $72 billion -- more than 100 times Zscaler's revenue over the last 12 months -- and the company's best-in-class solution should drive demand in the coming quarters. That's why this growth stock looks like a smart long-term investment.