My 2 Best Growth Stocks to Buy Right Now

Over the last 10 years, the S&P 500 has surged 267% , or 13.9% per year. That's incredible, especially in light of the economic turbulence we've seen lately. In the last few years alone, a U.S.-China trade war and a global pandemic have sparked massive supply chain disruptions, business closures, and labor shortages. Yet the stock market has rocketed higher.

That highlights one of the most important lessons I've ever learned as an investor: Don't try to time the market. Instead, buy high-quality stocks at regular intervals, and hold those stocks for at least five years (or longer, if possible). Building on that idea, PayPal (PYPL 0.64%) and Zillow Group (Z -0.46%) (ZG -0.69%) both look like smart places to put your money right now.

Here's why.

Image source: Getty Images.

1. PayPal

PayPal is one of the largest fintech companies in the world. Its platform spans 200 markets, offering a variety of financial services to both businesses and individual consumers. That includes payment processing (both in-store and online), point-of-sale solutions, and short-term financing for merchants; and mobile wallets, payment cards, shopping rewards, and crypto brokerage services for consumers.

More importantly, PayPal is still growing its business in new directions. In 2020, the company launched a variety of products, including the Venmo credit card and QR code payments for PayPal's mobile apps. Like its acquisition of iZettle in 2018, these moves expanded its in-store presence. And management has already reported strong momentum -- Venmo's revenue growth accelerated to nearly 70% in the most recent quarter, and roughly 1.3 million merchants now accept PayPal QR codes at checkout.

Generally speaking, these new services boost adoption and engagement, powering the flywheel that drives PayPal's business. In other words, as new consumers join the ecosystem, PayPal becomes more valuable for every merchant, and vice versa. That virtuous cycle has helped PayPal grow its user base to 403 million active accounts, which, in turn, has translated into consistently strong financial results.

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

The company currently puts its market opportunity at $110 trillion -- that figure is 90 times larger than the $1.2 trillion processed by PayPal's platform over the past year -- and management continues to execute on a strong growth strategy.

The company recently launched a brand new mobile app, featuring direct deposit, in-app shopping tools, high-yield savings accounts, and bill pay solutions, as well as traditional features like peer-to-peer payments. In the coming quarters, PayPal plans to add support for offline QR code payments, in-store shopping tools, and new investment options.

To add, while investors shouldn't rely on rumors, various sources have also indicated that PayPal is in late-stage talks to acquire Pinterest (PINS -0.52%), a move that would make the fintech company a key player in the rapidly growing social commerce industry. In response to these rumors, PayPal's share price has fallen sharply and the stock currently sits 22% below its all-time high. That's why now looks like a good time to buy a few shares.

2. Zillow Group

Zillow recently suspended its home-buying program, Zillow Offers, citing supply chain disruptions and labor shortages as the primary cause. This news sent the share price tumbling, adding to Wall Street's already bearish sentiment, and Zillow stock currently trades 54% below its all-time high. That stings, but this is an opportunity for long-term investors.

Zillow brings technology to the residential real estate space. Its platform connects homebuyers, sellers, and renters with partner agents and property managers. To streamline transactions, the company also provides mortgage and closing services to homebuyers; and for sellers, Zillow buys, repairs, and resells homes through Zillow Offers.

Not surprisingly, the company's comprehensive approach to residential real estate is resonating with consumers. In fact, Zillow is the most popular brand in the industry. During the most recent quarter, its websites and mobile apps received an average of 229 million unique visitors each month, and a total of 2.8 billion visits. Put another way, Zillow dominates consumer mindshare, and that has translated into strong growth on both the top and bottom lines.

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

Looking ahead, Zillow has plenty of room to grow its business. According to the National Association of Realtors, 6 million existing homes will be sold in the U.S. this year. Assuming an average selling price of $372,600 (i.e. the average selling price in September) and a 5% commission, real estate transaction fees alone bring Zillow's addressable market to $112 billion. Then, if you factor in home loans, closing services, and rental properties, Zillow's addressable market is roughly $300 billion.

More importantly, Zillow offers an end-to-end solution in a highly fragmented industry. And as more homebuyers and sellers look to simplify the moving process, Zillow should grow quickly. And with the share price down so far from its high, now looks like a good time to add this stock to your portfolio.