Do you want to boost your portfolio's performance with stocks that can deliver big returns? Most investors would answer yes, but that doesn't mean we can afford to go all in on the most popular growth stocks of the day.
Few of us can afford to make huge bets on risky stocks, but that doesn't mean we have to avoid them altogether. If you have about $200 lying around, all your bills are paid, and your emergency fund is in good shape, you can buy multiple shares of all three of these stocks. Here's how they could make great additions to your portfolio.
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1. Fiverr International
Fiverr International (FVRR 4.07%) was a stock market darling in the early days of the COVID-19 pandemic. Unfortunately, it's fallen a stunning 79% over the past year as investors fret about soaring interest rates and the recession they could lead to.
Fiverr is an important member of the growing gig economy. Freelance developers, writers, designers, and marketers from all over the world offer their services on the Fiverr Talent Cloud. Clients are still climbing aboard despite an increasingly difficult economic environment.
Recently, while many of the world's biggest tech businesses were announcing layoffs, Fiverr told investors its list of active clients grew 3% year over year in the third quarter to 4.2 million. Investors were also encouraged by spending per client, which rose 12% year over year. Clearly, businesses increasingly prefer freelance talent to full-time employees during times of economic uncertainty.
Fiverr is still losing money, but it could turn the profitability corner soon. Fiverr's a much larger business than it was a year ago, but its third-quarter net loss shrank from $14.3 million in 2021 to $11.4 million this year. With a resilient operation that thrives in good economic times and bad, the company's bottom line and its stock price could post significant gains over the next several years.
2. DigitalOcean Holdings
DigitalOcean (DOCN 0.80%) is another gig economy stock that's been beaten down in 2022 despite a business that's growing by leaps and bounds. Shares of DigitalOcean have collapsed by around 77% this year.
DigitalOcean is a cloud service provider that caters to individual developers and small to medium-sized businesses. Developers who can't justify enterprise-level subscriptions with cloud industry giants like Amazon Web Services love DigitalOcean because it allows them to build and deploy applications for free.
Of course, DigitalOcean starts generating significant revenue as soon as the apps on its servers begin generating significant amounts of traffic. Investors are particularly excited about DigitalOcean because its freemium business model is already producing a profit according to generally accepted accounting principles (GAAP).
You can scoop up shares of DigitalOcean for 37.2 times forward-looking earnings expectations at the moment. That multiple is well above average, but so is the company's growth rate. Third-quarter revenue soared 37% year over year. With an already successful freemium business model that could become even more popular in a recession, this stock looks like a smart buy right now.
3. Doximity
Doximity (DOCS -0.85%) operates a fairly exclusive social media platform that only invites physicians, nurse practitioners, and other healthcare professionals to join. Members can't upload their own posts, but the company keeps them coming back with hyper-useful productivity tools.
Doximity Dialer is a way for physicians to contact patients from their personal devices in a setting that complies with strict privacy laws. In the third quarter, around 370,000 active clinicians used the company's telehealth platform more than 200,000 times per day on average.
The advertising industry as a whole is reeling in the face of a looming recession, but this isn't affecting demand for Doximity's niche advertising inventory. Pharmaceutical companies and medical device makers that want doctors to know about their products pushed total third-quarter revenue 29% higher year over year.
Shares of Doximity are trading for around 46 times the amount of free cash flow its operation generated over the past 12 months. That's a high multiple, but strong demand for Doximity's unique ad inventory and productivity tools allowed free cash flow to more than double in the third quarter. With profits growing by leaps and bounds, this stock could steadily grow into its valuation and deliver market-beating gains to patient investors.
