The great thing about investing is that it doesn't take a lot of money to get started. The share prices of many quality companies are low enough that even as little as $1,000 is enough to begin building a portfolio. By finding a brokerage that allows fractional shares, even less money can be enough to begin. 

Whether you're new or experienced, and regardless of how much money is available, the next logical question is what stocks to buy. Luckily, there is an abundance of great companies to choose from. For investors looking for the best growth stocks to buy right now, DigitalOcean (DOCN -0.27%), Arista Networks (ANET 0.64%), and Adobe (ADBE 0.26%) are great choices. 

1. DigitalOcean

Competing with cloud services from the likes of Amazon, Alphabet, and Microsoft isn't easy. However, looking at the results DigitalOcean puts up each quarter, it might appear less difficult than one might assume. By offering an inexpensive and easy-to-navigate suite of cloud infrastructure services, DigitalOcean has carved out a niche in the small and medium-sized business market that holds up nicely against the cloud giants.

Part of DigitalOcean's success has been growing the number of larger customers. Consider the growth of customers paying more than $50 per month and their contribution to overall revenue.

 

Q4 2020

Q4 2021

Q4 2022

Customers paying more than $50/month

80,000

99,000

144,000

Revenue contribution

80%

84%

86%

Data source: DigitalOcean.

It's clear that the products and services DigitalOcean is offering are attracting more customers over time, but the rate of growth is also accelerating. This large customer cohort grew 25% between the fourth quarter of 2020 and Q4 of 2021 but then increased by 45% in this past year. 

2. Arista Networks

Unlike DigitalOcean, which is competing with tech giants, Arista Networks relies on them. While Arista has over 90,000 customers, 10% of its sales come from Microsoft and Meta Platforms. This makes sense; Arista sells switches and routers that businesses of all sizes rely on to power their networks. 

According to Forrester Research, Arista is the leader in this space, and the financial results provide further evidence of this leadership position. Revenue for the full year of 2020 was $4.4 billion, an increase of 49% over 2021. This isn't a new phenomenon; since 2017, Arista's revenue has increased at a compound annual growth rate of 22%. 

While top-line growth is always good to see, Arista has also become much more efficient over time. In the fiscal year 2018, the company posted an operating margin of 36.7%. That metric was 41% in 2022. When businesses increase their operating margin that significantly, it's typical to see improvement on the bottom line as well. Earnings per share for FY 2022 were $4.58 compared to just $1.40 in FY 2017. 

3. Adobe

Anyone who has used Photoshop or opened a PDF has interacted with an Adobe product. The company reports in three segments, but its Digital Media segment accounts for nearly three-quarters of total revenue. Adobe's Creative Cloud (home of Photoshop, Illustrator, etc.) and its Document Cloud (featuring PDF software as well as the e-signature business) put up consistently strong revenue growth each year.

 

FY 2021

FY 2022

Growth

Creative Cloud revenue

$9.5 billion

$10.5 billion

11%

Document Cloud revenue

$2 billion

$2.4 billion

20%

Data source: Adobe.

This alone would constitute a strong business worthy of an investment, but another 23% of Adobe's revenue is from its Digital Experience segment. The products in this segment's Experience Cloud are business software offerings that help businesses with things like data analytics, customer optimization, and marketing workflow. While these products would be less familiar to the average investor, their growth suggests a strong value proposition for Adobe customers. 

 

FY 2021

FY 2022

Growth

Digital Experience revenue

$3.9 billion

$4.4 billion

13%

Data source: Adobe.

The bottom line for investors

While no valuation metric is perfect, it's insightful to compare price-to-sales ratios (P/S) to their historical average. On that basis, DigitalOcean and Adobe are below their average five-year P/S multiple, while Arista trades slightly higher than its average. 

DOCN PS Ratio Chart.

DOCN PS Ratio data by YCharts.

Considering the strength of each of these businesses, the current valuation presents a compelling buying opportunity. An investor with $1,000 would do well to own all three and hold them for the long term.