Investing in growth stocks has proved to be a highly profitable strategy in the past two years. Companies that prioritized growth over profitability at any cost have especially thrived in the low-interest environment. However, this situation will soon change, considering that U.S. inflation has proven to be far stickier than previously estimated.

In October 2021, the U.S. consumer price index (used to gauge inflation) jumped by 6.2% year over year, the highest spike since December 1990. Subsequently, the U.S. Federal Reserve is now mulling over reducing monthly bond-buying. In this macroenvironment, only those growth stocks with solid competitive advantages and economies of scale have a good chance of thriving.

Building on this idea, SoFi Technologies (NASDAQ:SOFI) and Airbnb (NASDAQ:ABNB) appear poised to succeed in this market and appear to be good buys. Here's why.

Two smiling executives shaking hands in an office during a team meeting.

Image source: Getty Images. 

1. SoFi Technologies

SoFi Technologies made a solid comeback in the third quarter (ending Sept. 30, 2021) after a disappointing second-quarter performance, as both revenue and earnings surpassed consensus estimates. The company has positioned itself as a one-stop shop for all of its customers' virtual banking needs -- be it lending, mortgages, banking, investing, or personal finance services. The company's technology business helps institutional clients with their digital banking needs.

SoFi added 377,000 new customers in the third quarter, taking its total membership count to 2.9 million. The company is prioritizing market share over profitability, as is evident from its plan to reinvest 70% of the incremental revenues back in the business. The company has also been successful in its cross-selling strategy and has increased total products offered by 108% year over year to 4.3 million in the third quarter. SoFi accounts for the total number of products and services under this heading, often including several different offerings for each customer.

Sofi expects to be granted a national bank charter by the fourth quarter, subsequent to the completion of the acquisition of Golden Pacific Bancorp bank. The bank charter will give SoFi access to cheap capital and reduce loan origination costs associated with third-party banks. With lending business accounting for over 77% of the company's total revenue in the third quarter, improved loan margins will have a significant impact on SoFi's bottom line. Like fintech company LendingClub, which holds a bank charter, Sofi Technologies will also be able to retain a part of these loans on its balance sheet as investments. The resultant net interest income will add to SoFi's recurring revenue base.

SoFi's partnership with Pagaya Technologies gives the former access to fintech-oriented proprietary artificial intelligence and machine learning technology and a robust data network. This will help the company better assess borrowers' default risk and make optimal underwriting decisions. In addition, Pagaya boasts a customer retention rate of 100% since its inception in March 2016. With a history of increasing volumes by over six times for its clients within 12 months of partnership, this deal could be a game-changer for SoFi.

Despite the many pros, SoFi's share price has declined by over 10% in the last week. The drop has been triggered mainly by the CEO of Social Capital, Chamath Palihapitiya, selling 15% of the venture capital firm's position in the stock. This pullback, however, can prove to be an attractive entry point for retail investors.

2. Airbnb

Airbnb reported stellar third-quarter earnings results (ending Sept. 30, 2021), with revenue and earnings handsomely beating consensus estimates. Although the company had previously expressed concerns about the impact of pandemic-related travel restrictions on its performance, Airbnb managed to generate its highest-ever levels of revenue and earnings in the third quarter.

Airbnb is transforming the travel and tourism industry by providing travelers a convenient, secure, and cheaper alternative to hotels and resorts in the form of individual-owned, curated properties. Since its founding in 2007, the company has partnered with over 4 million homeowners (called "hosts") and welcomed over 1 billion guests across more than 220 countries and regions in the world. Thanks to its first-mover advantage, the company now enjoys significant brand presence and network effects -- a broad and geographically diversified host network helps bring in more customers, who in turn spread the word and help attract even more hosts and customers.

The host network is well-poised to grow even stronger as more homeowners become aware of the financial benefits of partnering with the company (the average annual earnings per host are $9,600). Airbnb has also focused on continually upgrading various aspects of customer service, as well as on simplifying registration and support processes for hosts. The company's asset-light model enables it to expand rapidly and may also help pave a path to early profitability.

In addition to the recovery in travel from 2020 levels, Airbnb is also benefiting from the increasing adoption of flexible working arrangements. This trend, which became mainstream during the pandemic, has made long-term stay bookings (28 days or more) the fastest-growing category by trip length for Airbnb. In the third quarter, long-term stays made up 20% of gross nights. The rising prevalence of hybrid work models and increasing demand for work flexibility will help boost Airbnb's top line and diversify its revenue base.

Although it's not profitable, Airbnb generated trailing-12-month (TTM) free cash flows of $1.6 billion. The company also boasts a strong balance sheet, with $7.9 billion cash and $2.4 billion total debt at the end of the third quarter.

Airbnb estimates its total target addressable market (short-term stays, long-term stays, and experiences) to be worth $3.4 trillion. With TTM revenue of just $5.3 billion, there is lots of room for the company to grow in the coming years.

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.