Many investors are drawn to growth stocks for their potential to beat the gains of the broader market. And while these types of companies can experience more volatility, they also have the ability to bounce back and become fantastic long-term investments.
If you're searching for a few companies that look like smart places to invest $5,000 right now, consider what Block (SQ 5.04%) and Confluent (CFLT 4.31%) have to offer.
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1. Block
Block, formerly known as Square, has been a fantastic growth stock over the past few years as the company builds out its position in the fintech market.
The company got its start with its point-of-sale payment terminals but has since expanded well beyond that market to include its popular peer-to-peer payment app, Cash App, and blockchain technology.
The company released strong full-year 2021 results on Feb. 23, in which gross profit reached $4.4 billion, an increase of 62% compared to 2020.
Block's Cash App is particularly important to the company because it brings in nearly half of the company's gross profit. In addition to its massive popularity -- Cash App had more than 44 million transacting accounts in December -- Block is expanding the app's usefulness, having recently added a buy now, pay later feature. This will help Block tap into this fast-growing market, which could be worth $20 billion by 2028.
And finally, Block is continually moving into the cryptocurrency and blockchain space. Users can buy and sell Bitcoin through Cash App, and the company is investing in blockchain technologies that could help make financial transactions faster and more secure and help build out the burgeoning decentralized finance (DeFi) market.
While Block's stock price has fallen significantly over the past six months -- along with many other technology stocks -- investors should focus on the company's long-term prospects and not the current instability of the broader market.
2. Confluent
You may never have heard of Confluent before, but the company's cloud-based data platform is helping thousands of companies better understand the gobs of data they generate.
Confluent's platform helps companies sift through their consumer data and make actionable and timely decisions based on it. One prime example of the usefulness of its services came during the pandemic when Instacart needed to quickly expand its business.
The grocery delivery company used Confluent to help it manage its real-time grocery delivery demand from the influx of 500,000 new customers it added over a several-week period.
This type of real-time data forecasting is very important to the 3,000 customers Confluent already has, and it's helping the company tap into several markets it believes will be worth $91 billion by 2024.
In the fourth quarter of 2021, Confluent's sales spiked 71% from the year-ago quarter, and its cloud sales surged 211% year over year. The company is also building out a strong base of customers with average recurring revenue of $100,000 or higher, jumping 43% in the most recent quarter.
Originally surging following its mid-2021 initial public offering (IPO), Confluent's stock has fallen with the broader tech sector. But long-term investors should keep their eye on the company's ability to increase sales and its growing customer base and consider snatching up shares at a discount right now.
