Whether you're a new investor or a seasoned professional, there is only one reason to buy individual growth stocks: You want to beat the market. And that's no small task. Over the last 20 years, the S&P 500 has surged 344%, representing an annualized return of 7.7%. Topping that figure won't be easy, but it is possible. 

So what's the secret? A long-term mindset is one of the most important tools at a retail investor's disposal. That means you should look for high-quality stocks you feel comfortable holding for at least five years. It's also important to build a diversified portfolio, meaning you should aim to own at least 25 different stocks.

Here are two ideas to get you started.

Two young investors working side by side at the computer.

Image source: Getty Images.

1. Teladoc Health

Teladoc (NYSE:TDOC) is disrupting the multi-trillion dollar healthcare industry. Its virtual-first platform connects patients with healthcare professionals, allowing them to attend appointments from the comfort of their own homes. More importantly, Teladoc leans on a provider network of over 50,000 clinicians, with expertise in over 450 sub-specialties, making it the most comprehensive telehealth solution available.

To reinforce that advantage, Teladoc acquired Livongo Health last year. Livongo specializes in chronic conditions like diabetes and hypertension. Specifically, the company collects data from its devices (e.g. blood glucose meters, blood pressure cuffs), then provides patients with AI-powered nudges and personalized guidance from health coaches.

In acquiring Livongo, Teladoc expanded its offering to include the remote management of chronic conditions, and it brought Livongo's prodigious data in-house, bolstering its own AI models. As Teladoc continues to add new members and collect more data, its ability to drive better health (and cost) outcomes should be a growth driver for the business.

Financially, Teladoc has delivered an impressive top-line performance in recent years.

Metric

Q2 2019 (TTM)

Q2 2021 (TTM)

CAGR

Revenue

$492.6 million

$1.6 billion

82%

Source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate.

During the most recent quarter, Teladoc's U.S. memberships grew by just 1%, a sharp deceleration from the 92% growth in the prior year. As a result, the stock currently sits 50% below its all-time high. But I think that overreaction creates a buying opportunity for long-term investors.

Last year, the average time between a member's request and a telehealth appointment was just 10 minutes. And Teladoc's virtual platform saves clients $472 per visit compared to alternative solutions, according to Veracity Analytics. Put another way, Teladoc makes healthcare faster, cheaper, and more convenient. And as more patients become comfortable with the idea of engaging with clinicians remotely, I think Teladoc will see strong demand from employers, insurance companies, and health systems.

That's why this growth stock looks like a smart buy right now.

2. UiPath

In 1980, Microsoft CEO Bill Gates expressed his vision for the future with these words: "A computer on every desk and in every home." That may seem antiquated in hindsight, but it was an ambitious goal at the time. And today, UiPath (NYSE:PATH) has a similarly ambitious goal: a robot for every person.

Specifically, its platform helps clients build and deploy software robots capable of automating a variety of business processes. To do this, UiPath leans on robotic process automation (RPA), a technology that makes it possible to automate repetitive tasks like syncing databases, completing forms, and moving files.

However, UiPath goes beyond simple RPA, infusing its software with various forms of artificial intelligence, including computer vision, natural language processing, and machine learning. In short, this empowers its bots to handle more complicated tasks, such as understanding documents, engaging in conversations, and making complex decisions. More importantly, these bots have the ability to learn from human behavior, meaning they become more intelligent over time.

This industry is still in its nascent stages, but UiPath has already claimed the top spot. Forrester Research recently recognized the company as the RPA industry leader, citing a stronger current offering and a stronger growth strategy than any of its rivals.

That advantage has helped UiPath grow its business quickly.

Metric

Q2 2021 (TTM)

Q2 2022 (TTM)

CAGR

Customers

7,000

9,100

30%

Revenue

$451.2 million

$736.9 million

63%

Source: UiPath SEC filings, Ycharts. TTM = trailing-12-months. CAGR = compound annual growth rate. Note: Q2 2022 ended July 31, 2021.

During the most recent quarter, UiPath posted a retention rate of 144%, meaning the average customer spent 44% more over the past year. That demonstrates the stickiness of UiPath's platform, suggesting that clients find it so valuable that they are actually spending more over time.

Looking ahead, the company is well-positioned to maintain that momentum. Management puts its market opportunity at $60 billion, and given UiPath's industry-leading position, this tech company should benefit from strong adoption as more enterprises aim to drive efficiency through automation. That's why this growth stock looks like a solid inivestment right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.