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3 Surefire Growth Stocks to Buy in 2022

By Keith Speights – Dec 31, 2021 at 5:52AM

Key Points

  • Innovative Industrial Properties has a clear-cut path to growth in 2022 by adding more cannabis properties.
  • MercadoLibre's opportunities in Latin America's e-commerce and fintech markets are enormous.
  • PayPal should have several growth drivers in the new year, including Amazon allowing purchases with Venmo.

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Their underlying businesses should have explosive growth potential.

Investors can only hope for growth with some stocks. But for others, strong growth is practically a slam dunk. 

You can't just look at how such stocks performed in a given year, though. Some long-term winners struggled in 2021. However, it could be a much different story in the new year. Here are three surefire growth stocks to buy in 2022.

Four increasingly higher stacks of coins with 2022 on the tops of the stacks and a person holding the final 2 in 2022.

Image source: Getty Images.

1. Innovative Industrial Properties

Innovative Industrial Properties (IIPR 1.97%) again delivered an impressive gain in 2021. Shares of the cannabis-focused real estate investment trust (REIT) soared more than 40%. 

The stock should still have plenty of room to run in the new year. IIP simply has to find more properties to buy from cannabis operators, and then lease them back to the operators. That shouldn't be a difficult challenge.

IIP owned 66 properties coming into 2021. Over the last 12 months, it grew that total by 56% to 103 properties. But the company still only owns properties in 19 of the 36 states that have legalized medical and/or recreational cannabis.

Probably the greatest risk for IIP is that more competition enters the market if federal cannabis laws are changed. However, cannabis reform would also likely help expand the U.S. market -- which could work to IIP's advantage. 

2. MercadoLibre

MercadoLibre (MELI 4.05%) belongs to the group of growth stocks that went in the wrong direction in 2021. Shares of the Latin American e-commerce leader fell close to 20%. However, MercadoLibre's business is as strong as ever.

The company's net revenue in the third quarter of 2021 jumped 72.9% year over year to $1.9 billion on a constant-currency basis. Earnings soared more than sixfold to $95.2 million. MercadoLibre reported solid growth in every aspect of its operations.

Don't expect this momentum to dwindle. Morgan Stanley projects that the Latin American e-commerce penetration rate will double by 2025. But even then, e-commerce will make up only 16% of total retail revenue. No company is in a better position to capitalize on this opportunity than MercadoLibre.

Then there's the fintech business. MercadoLibre CFO Pedro Arnt said in the Q3 call that the company sees "vast opportunities to keep developing our reach into a large market of unbanked and underbanked users throughout Latin America." This could present even greater growth prospects for MercadoLibre than e-commerce.

With the stock trading at historically cheap price-to-sales multiples, 2022 could be a strong rebound year for MercadoLibre. 

3. PayPal

PayPal (PYPL 2.08%) is another growth stock that didn't make investors happy in 2021. The fintech stock ended the year down nearly 20% after rising as much as 30% earlier. But PayPal has several potential growth drivers for 2022 and beyond.

Beginning in January, will allow customers to purchase products with PayPal's Venmo mobile-payment app. Venmo processed around $60 billion in total payment volume in the third quarter, up 36% year over year. That amount is likely to explode much higher in 2022.

Meanwhile, PayPal's self-named app offers more capabilities than ever. The company has rolled out new features, including in-app shopping tools, special customer deals and rewards, and expanded cryptocurrency trading. PayPal is the most accepted digital wallet globally, with 75% of the top 1,500 retailers in North America and Europe allowing online checkout with the app.

The company is also expanding aggressively into buy now, pay later (BNPL). PayPal closed its acquisition of Japanese BNPL leader Paidy in October 2021. Look for this addition to fuel growth in Japan, the third-largest e-commerce market in the world, in 2022.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights owns Amazon, Innovative Industrial Properties, MercadoLibre, and PayPal Holdings. The Motley Fool owns and recommends Amazon, Innovative Industrial Properties, MercadoLibre, and PayPal Holdings. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2022 $75 calls on PayPal Holdings, and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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