Investing in growth stocks can be an excellent way to build wealth over the long term. Companies that are growing are typically gaining market share or they are part of an industry that is expanding. Plus, their costs (wages, office rent, etc.) are growing more slowly than than revenue. That growing gap between revenue and expenses expands profits and delivers excellent shareholder returns.
Here are three growth stocks you can buy in a heartbeat for 2022.
The House of Mouse was devastated by the coronavirus pandemic in 2020 and started recovering in 2021. The momentum should continue in 2022 as the world progresses in its battle against the COVID-19 disease. The Walt Disney Company (DIS 2.07%) relies on bringing groups of people together in person for several of its businesses, so it will benefit as pandemic-related illnesses recede.
Already, the company segment that includes theme parks nearly doubled revenue in the quarter ended Oct. 3 to $5.5 billion, up from $2.7 billion in the same quarter last year.
However, the bulk of Disney's revenue growth ahead will likely be delivered from its streaming segment. Disney's three services (Disney+, ESPN+, and Hulu) are growing subscribers rapidly, reaching 179 million as of Oct. 3. Of the three, Disney+ is growing the fastest with 60% year-over-year growth, reaching 118 million subscriptions.
Management expects the good times to continue for streaming services, estimating they will grow to at least 300 million subscriptions by 2024.
Yes, this is the company formerly known as Facebook. It changed its name to reflect a shifting focus toward the metaverse. Yet, for now Meta Platforms (META 1.97%) -- and its family of apps, including Facebook, Instagram, and WhatsApp -- is the leader in social media.
Combined, these platforms claim over 3.5 billion monthly active users; that's up from 3.2 billion at the same time last year. Consider that nearly half of the planet uses one of its apps monthly. Its platforms are free to join and to use. Meta makes money by showing advertisements, and its massive size creates leverage with marketers.
That has played a large part in Meta's ability to grow revenue at a compound annual rate of 45.8% over the past decade. The business is also highly profitable, having grown earnings per share at a compound annual rate of 50.4% during that same time period.
Popular lodging marketplace Airbnb (ABNB 1.73%) is a worldwide travel facilitator with a massive market opportunity. Indeed, according to Statista, the world travel and resort market was worth $1.5 trillion in 2019. Of course, the coronavirus pandemic has disrupted that industry quite a bit lately, but there is no reason it will not recover in full as the pandemic loosens its grip.
In the two years before the outbreak, Airbnb grew revenue 42.6% and 31.6%, respectively. The company is gaining market share because it offers a broader selection for travelers than a traditional hotel. And there's every reason to believe the business has a long runway for growth. In 2019, revenue totaled $4.8 billion, a tiny fraction of the travel and resort industry.
Airbnb's recovery from the pandemic is well underway. In its most recent quarter, revenue was 36% higher than the comparable quarter in 2019. Moreover, net income surged by 213%. That's impressive, indeed.
The three growth stocks to buy for 2022
Overall, Disney, Meta Platforms, and Airbnb all have excellent growth prospects for 2022 and beyond. Disney's streaming services should provide revenue growth for at least several years. Meta Platforms' dominance in the social media industry will keep marketers paying high prices for access. And Airbnb's varied and unique lodging options should allow it to continue gaining share in a trillion-dollar industry. That's what makes these three stocks excellent buys for 2022.