As 2021 draws to a close, fireworks won't just be observed in New Year's Eve festivities. The stock market is entering a very uncertain period with potential interest rate increases, and COVID-19 is at the forefront of investors' minds. As such, it's a great time to be more selective with the stocks you buy.

Three Motley Fool contributors think Duolingo (DUOL 0.34%), Upstart Holdings (UPST -3.10%), and Latch (LTCH 36.36%) could do well in the face of broader market adversity. Here's why you should consider buying them now.  

Two students sitting at a table studying, with flags in the background.

Image source: Getty Images.

No. 1, and still growing

Anthony Di Pizio (Duolingo): It's estimated that over 1.8 billion people are learning languages globally right now, and Duolingo has found a way to make it fun. The company takes a smartphone app-based approach, gamifying the learning experience to make it more interactive and more sticky. 

It's working well, with over 500 million downloads, a No. 1 rank in Alphabet's Google Play store, and a No. 3 rank in Apple's App Store by revenue generated in the broad education category. Considering it serves less than a third of its addressable market, there's plenty of room for growth. 

But that addressable market is also set to expand rapidly, with Duolingo watching developing nations closely as they experience rapid internet uptake. For example, the Duolingo app grew by 400% in India during 2020, and it's estimated that over 500 million people in that country will have accessed the internet for the first time by 2022. That could set up an explosion in the company's user base over the mid to long term, as Duolingo offers a cost effective way to learn global languages like English.

The company is on track to deliver $246 million in revenue for 2021, which would represent compound annual growth of 86% since 2019. By 2025, the company estimates the market for digital language learning will be $47 billion annually, so Duolingo's revenue growth potential is significant. Over 5.2% of its user base is currently paying for premium content, which is up from 3% in 2019, and definitely trending in the right direction. 

A rapidly growing addressable market, strong revenue growth, and more paying users each year means Duolingo represents a great opportunity for investors in 2022. That's especially true since its business is unlikely to be affected by rising interest rates, and could even benefit from further pandemic-related restrictions.

A smiling couple shaking hands with a car dealer inside a dealership.

Image source: Getty Images.

A new beginning for loan determination

Jamie Louko (Upstart): Shares of this artificial intelligence stock have been hammered, falling over 55% off its all-time highs in just a few weeks. This is not reflective of business success, however, because Upstart has been executing flawlessly.

Upstart is trying to reimagine how consumers get credit. With many large banks only using a handful of variables to determine approval and interest rates for loans, many consumers are often left out unless they have near-perfect credit. Upstart is trying to change this with its AI system that integrates over 1,000 variable inputs and analyzes over 10 million past repayments to come up with more accurate loan decisions. 

Upstart's algorithms have done extremely well. In an internal study, Upstart found that its algorithm had 75% fewer defaults on the same amount of loans approved compared to larger banks. Results like this appear to have translated into reality because its customers have more than tripled over the past year and the number of loans that Upstart makes decisions on passed 363,000, growing 348% year over year. 

What's better than a company expanding its customer count and growing at triple-digit rates? A company doing all that while being profitable. It's rare to have a company see tremendous growth and rapid adoption while still bringing money to the bottom line, but this balancing act is a testament to the company's strategic prowess.

As more companies begin to realize that the old way of determining credit is flawed and Upstart's new way is more effective and beneficial, I expect to see continued adoption of Upstart's determination platform. With a $5 trillion loan origination market in front of Upstart, it is at the very beginning of its journey, which is why I think this stock could rocket upward over the next decade

A person pointing to two arrows outperforming another arrow, with a cityscape below.

Image source: Getty Images.

Shaping the future of smart buildings

Trevor Jennewine (Latch): Over the last two decades, innovative technologies have reshaped many aspects of our daily lives. If you could travel 20 years into the past, imagine how someone would react to your smartphone -- you have a relatively powerful computer in your pocket! Now fast-forward 20 years into the future and try to imagine what might be different. One change you can bank on is more connected devices.

Latch specializes in smart lock technology. Its platform comprises both hardware and software, including door-mounted access controls, intercoms, and cameras, all of which are powered by the LatchOS operating system. Collectively, that ecosystem streamlines the entry experience for property managers, allowing them to manage access permissions remotely. It also creates a premium experience for residents, which allows real estate operators to charge more their properties.

Moreover, Latch's comprehensive portfolio differentiates it from other smart lock vendors, many of which focus on a single aspect of smart building technology. By comparison, Latch offers solutions for smart access, guest and package delivery, and smart home control. And that approach has translated into strong customer retention. In fact, Latch has never lost a single customer, and its technology powers more than 1 in 10 new apartment buildings in the U.S.

During the third quarter, revenue surged 120% to $11.2 million, but total bookings -- non-binding agreements not yet recognized as revenue -- grew even more quickly, rocketing 181% to $96 million. That's encouraging, as it suggests strong future sales growth.

Going forward, Latch is well positioned to reward shareholders. The company already has a strong foothold in the apartment industry, and earlier this year, Latch announced its expansion into commercial office spaces. Moreover, the company has already made headway in that market, as its technology will be integrated into several iconic properties in Manhattan, including the Empire State Building.

As a whole, the smart lock industry is expected to triple in value over the next seven years, reaching $5.3 billion by 2028, according to Grand View Research. That puts Latch in front of a massive opportunity. And with the stock down 46% from its all-time high, the company has a market cap of just $1.1 billion. For that reason, I think Latch could deliver 100x returns over the next 10 to 20 years. That's why this firecracker stock is worth buying.