2 Top Growth Stocks to Buy Right Now and Hold

Despite a strong year for the broader market, growth-focused investors have encountered headwinds in the latter half of 2021. Concerns about high inflation and future interest rate hikes have sparked sell-offs in many richly valued stocks. However, those variables are temporary in nature, and the resultant sell-offs actually create an opportunity for long-term investors.

In the coming years, Elastic (ESTC 1.14%) and Fiverr International (FVRR 1.34%) are well-positioned to benefit from industrywide trends, such as the proliferation of data and the rise of the gig economy. And given that the share prices of Elastic and Fiverr are currently down 34% and 64%, respectively, from their all-time highs, now looks like a good time to buy.

Here's what you should know.

Image source: Getty Images.

1. Elastic

Elastic is a search company. Its platform allows organizations to ingest and log data from any source, then search, analyze, and visualize that data to find relevant information. That technology, referred to as the Elastic Stack, powers three different applications: Enterprise Search, Observability, and Security.

Enterprises Search is a workplace search engine that allows clients to sift through corporate information, and embed search functionality in websites and mobile applications. Observability allows IT teams to monitor and resolve performance problems with applications, networks, and infrastructure. And Security helps organizations detect and respond to threats.

Notably, Elasticsearch -- the heart of the Elastic Stack -- is the top search-powered database management system on the market, according to DB-Engines. That popularity has helped Elastic win big customers like Microsoft and Walmart. In fact, Elastic grew its clientele by 32% in the most recent quarter, surpassing 17,000 subscription customers. And the average customer spent roughly 30% more over the past year.

That compounding dynamic has translated into solid financial results. In fact, Elastic is now free-cash-flow positive, an encouraging sign for this young tech company.

Source: YCharts. TTM = trailing-12-months. Note: Q2 2022 ended Oct. 31, 2021.

Going forward, Elastic is well-positioned to maintain that momentum. Enterprises generate a tremendous amount of data on a daily basis, and as all that information accumulates, it becomes more difficult to surface relevant insights. But Elastic solves that problem, applying the power of search to a variety of use cases. To that end, management puts its market opportunity at $78 billion. And given the popularity of Elasticsearch, Elastic looks like a smart long-term investment.

2. Fiverr International

Fiverr has become a cornerstone of the gig economy. Its marketplace connects buyers with sellers of digital services, helping businesses find talent across nine industry verticals like graphics, programming, marketing, and writing. Fiverr also provides value-added services to freelancers, including tools for learning and task management.

That breadth differentiates the company in a highly fragmented market, and Fiverr reinforces that advantage with artificial intelligence. Using data collected across its platform, the company is able to make personalized recommendations and surface relevant search results for buyers, a feature that becomes more powerful over time. As a result, the average buyer spent $234 during the most recent quarter, up 20% from the previous year.

Even more impressive, Fiverr's take rate now sits at 28.4% -- double Upwork's take rate of 14.2% -- demonstrating the value created by its platform. And that has fueled strong growth on both the top and bottom lines.

Source: YCharts. TTM = trailing-12-months.

This year, the gig economy is expected to hit $348 billion, but that figure will grow at 14% per year to reach $455 billion by 2023. Fiverr is already well-positioned to capitalize on that tailwind, and management is executing on a strong growth strategy. For instance, the company recently acquired Stoke Talent, a platform that helps businesses onboard, budget, and pay freelancers That acquisition could be a significant growth driver for several reasons.

First, it moves Fiverr upstream in the freelancing industry, allowing the company to serve larger enterprises. Second, it means Fiverr can provide services to organizations that already have a freelancer workforce in place. And third, it allows Fiverr to monetize the offline freelancing market, which is orders of magnitude larger than the online market.

In short, Fiverr is shaping the future of work, and the company has established itself as a leader. That's why this stock is worth buying.