Not every stock you buy will be a winner. However, when you take the time to thoroughly research and understand each company you buy, and ensure that it aligns with your personal investing philosophy and financial goals, you can build a portfolio that fits with your preferred balance of investments over the long term.
As you diversify your basket of holdings and invest in companies across a range of sectors, you can benefit from the market's various cycles and the different growth stories each stock offers. If you're looking for top growth stocks to buy right now, whether the next bull market is weeks or months away, here are two to put on your potential buy list.
1. Upstart
Upstart (UPST 2.76%) operates an artificial intelligence (AI)-powered platform that connects consumers with lending products, which include personal loans and auto loans. The company operates in a total addressable market valued at around $4 trillion and growing, but faces few direct competitors operating at its size and scale.
Nosebleed interest rates, higher risk of default, and a less elastic funding environment than prior periods have driven Upstart's top and bottom lines down in recent quarterly reports. Still, its overarching competitive advantage -- its AI-powered model -- continues to demonstrate its long-term potential and bring lending partners to the table. In the first quarter of 2023, Upstart's model went through 23 different upgrades, including the single largest improvement in accuracy since the company was founded. Currently, 84% of all loan approvals are automated, so no humans are involved in the process at all.
Upstart's platform leverages more than 100 billion cells of performance data, while approval decisions revolve around more than 1,500 data points, including the traditional FICO score and many others. The diversity of the data that support Upstart's loan approvals and denials has enabled its model to deliver 173% more approvals than traditional lenders at the exact same rate of loss.
Beyond its personal loan program, which has seen a roughly 100% surge in lending partners onboarded in the past year alone, Upstart has also seen rapid adoption of its auto lending products and software. As of the end of the first quarter, nine original equipment manufacturers were using Upstart's software to facilitate vehicle buying. Upstart is also getting ready to start offering home equity loans on its platform later this year.
Although the average home equity loan takes a little over a month to fund, management has said that it is targeting a funding period of five days, while applicants can expect online approval in as little as 10 minutes. Importantly, Upstart targets a loss rate for this new product of under 1% annually. With so much room to expand in multiple core segments of the lending market, Upstart's journey may just be starting up. For investors, that could pose a compelling buying moment.
2. Chewy
Chewy (CHWY 2.99%) may look like an online pet products store at first glance, and while that's part of its core business model, this is really just one piece of the puzzle. The company's flagship e-commerce platform sells everything from pet food to pet toys to supplies for larger animals like livestock. It sells thousands of brands, including its own private-label products as well as a wide assortment of third-party products.
Beyond products, Chewy offers a range of services geared toward pet owners and pet-adjacent companies, like the brands that sell on its platform. Pet owners can access everything from telehealth services to Chewy's online pet pharmacy (which processes both standard and compounded medications) to its growing selection of pet health insurance plans through partnerships with companies like Trupanion and Lemonade.
Last year, the company also launched the beta version of a sponsored ads program. The program is designed to help brands that it carries advertise to the millions of customers shopping on Chewy's platform. While advertising dollars are still constrained across a range of industries right now, this could open up another steady segment of revenue and profits for Chewy in the future with minimal overhead cost to its business.
Chewy leverages an extensive fulfillment network spread around the country to ship customer orders. This network is so efficient that it can serve more than 80% of the U.S. population with overnight delivery. While e-commerce companies built around physical products involve a historically capital-intensive business model, Chewy's growing collection of online services and expanding network of automated fulfillment centers can offer resiliency to this business over the long run.
Among the many benefits attributable to automated fulfillment centers, these assets can seriously scale down shipping costs and boost productivity, both of which are vital to the success of any e-commerce business that wishes to remain competitive in a fragmented space. And Chewy isn't sacrificing profits for growth, as it's brought in net income of $53 million over the trailing 12 months. The pet stock looks like an intriguing play on the future of this industry, and one that may just be getting started in its growth story.
