Some of the highest-profile growth stocks on the market have struggled in 2021 as investors have worried about rising interest rates and what the world will look like as people go back to the office. But those concerns aren't slowing some of the best growth companies available today.
There are long-term tailwinds in certain segments of the market like real estate and entertainment that investors can profit from if they buy and hold stocks long-term. These dynamics are why I think Matterport (MTTR 0.06%), Offerpad Solutions (OPAD -3.60%), and Callaway (MODG 0.97%) all have long growth runways ahead.
Image source: Getty Images.
Building the digital twin future
If a picture is worth a thousand words, then a Matterport of a building must be worth a million words. The company's spatial capture technology has democratized the ability to capture 3D spaces, from homes to commercial buildings to yachts, which could change how we interact with these spaces long-term.
Right now, Matterport is building out its technology and subscription business with real estate companies, yacht makers, and commercial building tenants who want to share this information with others or capture data from spaces for themselves. But that's just the beginning of the company's journey. Long-term, Matterport's spatial data will be a platform that developers will build on top of, enabling digital showrooms, renovations, repairs, and much more.
Image source: Matterport.
Financially, Matterport has been growing quickly in its short time as a public company. Second-quarter 2020 revenue was up 21% to $29.5 million, but subscription revenue jumped 53% to $15.3 million. That's really the future of the business as consumers and businesses find uses for the company's spatial data and Matterport begins monetizing that data.
Given how early we are in capturing and sharing spatial data, I think Matterport has a long growth runway ahead. And with a clear industry lead, this is a growth stock with a bright future.
Building out the iBuying home business
iBuying has been booming in the U.S., despite the fact that houses are selling faster than ever and prices are at all-time highs. But sellers clearly value the convenience of picking a closing date and foregoing the home showing process, and that's how Offerpad is building a multi-billion dollar business buying and selling homes.
Management expects to generate a whopping $1.7 billion to $1.85 billion in revenue in 2021, and the company is profitable -- or at least was in the second quarter of 2021, when it reported $9.2 million in net income.
The iBuying business is just getting started, and in the U.S. alone there are $1.9 trillion in real estate transactions each year, most of which go through an old, antiquated real estate broker process. Offerpad is disrupting that business, and is already one of the largest home buyers in the U.S. If it is able to capture one of the top market positions in iBuying long-term, it'll be a big winner for investors.
Golf as an entertainment business
The golf club business hasn't always been a profitable place for investors, but that's why I like Callaway's acquisition of Topgolf in 2020 to drive the company's growth. The golf entertainment business is a profitable growth driver for the business, and it gives Callaway a way to grow its technology footprint long-term.
In the second quarter of 2021 alone, Callaway reported $401 million in revenue from golf equipment, $187 million from apparel and gear, and $325 million at Topgolf. And due to COVID-19 restrictions, that was before all of Topgolf's facilities were fully open. As 2021 comes to a close and we look to 2022, I think Topgolf will have more demand than ever, and will continue to grow its non-location based business.
An underappreciated part of Topgolf is the technology side of the business. The company has a VR app and location-based technologies that can be installed in homes or entertainment venues. And of course TopTracer technology powers the golf ball-tracking visuals seen on TV.
The golf club business may not be a growth business long-term, but Topgolf locations certainly are. Callaway expects to add nine domestic venues in 2021 to end the year with 70 owned venues. Long-term, management thinks it can grow to 200 domestic venues, with 250 international locations identified already.
Not only does Callaway have a lot of growth ahead, it's a reasonable value in today's market. Management expects to generate $345 million to $360 million in EBITDA this year, which was negatively impacted by the pandemic, and the company has a market cap of just $5.2 billion. That's a reasonable price to pay for a company with such a bright future in the golf entertainment business.
Growth is still the place to be long-term
Investors who can buy and hold stocks long-term can make tremendous returns from these growth trends. I think spatial data, iBuying, and innovative entertainment products are going to be booming markets for many years to come, and that's why these are my top growth stocks today.
