10 Companies Changing Right Now That Investors Should Watch

Business is all about change. Companies are always inventing, developing new products and ideas, and competing with one another to offer customers something unique or to find a different way to sell them a product.

That’s why it’s important for investors to be aware of companies that are changing. In the stock market, change usually signals opportunity, and sniffing out these stocks before they’ve really begun to change can lead to massive returns.

If you’re looking for stocks that are transforming, keep reading to see 10 companies you should be watching right now.

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Facebook (NASDAQ: FB) is synonymous with social media and digital advertising, but CEO Mark Zuckerberg has ambitions for the company well beyond its core as a social media platform.

In Facebook’s second-quarter earnings call, Zuckerberg introduced investors to the “metaverse,” or what he described as a virtual environment or a kind of “embodied internet that you’re inside of rather than just looking at.”

Facebook has invested billions of dollars into this project, through both Oculus, its virtual reality headset subsidiary, and Facebook Reality Labs, its research arm devoted to augmented reality and virtual reality.

Because Facebook’s advertising business is so profitable, it can afford to pour money into Facebook Reality Labs, which has barely been monetized but has around 10,000 employees, or about a fifth of Facebook’s total.

If Zuckerberg succeeds in his vision for the metaverse, Facebook could unlock a huge new revenue stream and pioneer the next major computing platform.

ALSO READ: 4 Reasons Facebook Is a Compelling Buy

General Motors (NYSE: GM) is synonymous with American industry. For much of its history, the saying, “As GM goes, so goes the nation,” was more than an expression, it was practically a fact.

Today, however, the company best associated with pickup trucks and Corvettes is revamping its business as an electric vehicle maker.

Last year, the company announced its plan to have 30 electric vehicle models by 2025 as part of its mission of building a future with "zero crashes, zero emissions, zero congestion."

Doing so will mean a dramatic overhaul of its business to shift from making traditional gas-powered vehicles to electric ones. The good news is GM has already made some solid strides in doing so as its autonomous vehicles segment is now valued at more than $30 billion and counts companies like Microsoft, Walmart, Honda Motor, and SoftBank Group as investors.

It’s also gaining traction with its Bolt EV, which sold nearly 20,000 units in the first half of the year.

With investors pricing EV stocks at a premium, a successful transition could jump-start GM’s stock.

IAC/InterActive (NASDAQ: IAC) is a company that’s constantly changing. IAC functions as a holding company that acquires interactive businesses like two-sided e-commerce marketplaces, then develops and grows them, and eventually spins them off.

Some recent examples include Match Group and Vimeo, and the company has also spun off businesses like Expedia, Live Nation Entertainment, and TripAdvisor.

Today, IAC’s biggest business is Angi, the home services marketplace, but the company is also flush with cash following the Vimeo spinoff, setting it up to make new acquisitions.

One of its investments, Turo, has plans for an IPO in the coming months, though the company has yet to make its financial results public.

With a long track record of success by focusing on a business model that lends itself to competitive advantages and high margins at scale, IAC looks poised to continue delivering superior returns.

Since its founding, Stitch Fix’s (NASDAQ: SFIX) business has been based around curating a package of five clothing items, a business that is generating more than $2 billion in annual revenue for the personalized online styling service.

However, Stitch Fix is now moving beyond offering those "fixes" and is allowing new customers to shop a curated selection of clothes directly on its site based on information gathered from their style profile.

Opening the direct buy business seems to signal that the company’s algorithms have become strong enough to recommend clothes to brand-new customers.

The company opened up direct buy to new customers in August, just after new CEO Elizabeth Spaulding took over, and investors will get their first update on the launch later this month when Stitch Fix reports fourth-quarter earnings. If direct buy takes off, the stock could soar.

ALSO READ: Why This Feature Could Be Game-Changing for Stitch Fix

The pandemic has presented vast challenges for most brick-and-mortar retailers, and Bed Bath & Beyond (NASDAQ: BBBY) is no different despite its focus on home goods.

The company began its turnaround efforts when former Target exec Mark Tritton took over the company as CEO in late 2019 with high hopes that he could breathe new life into the struggling retail businesses.

Since then, the company has sold off a number of its secondary banners, including Christmas Tree Shops and World Market, in order to fund its turnaround efforts at Bed Bath & Beyond.

Among its turnaround initiatives are streamlining its selection and cleaning up stores to provide a better shopping experience, and the company is also limiting its trademark coupons.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

AcuityAds (NASDAQ: ATY), the Canadian ad tech company, launched a new product last year that could transform the company.

Illumin, as the new platform is known, gives advertisers real-time, easy-to-use insights into their campaigns to help them adjust and optimize their ad campaigns as needed.

Less than a year into its launch, Illumin generated more than a sixth of the company's revenue in the second quarter, or $5.2 million out of a total of $30.3 million.

Management has said that Illumin is growing faster than expected, and management expects it to one day make up the majority of the company’s sales.

AcuityAds is also seeing phenomenal growth in connected TV, which grew more than 400% in the most recent quarter.

Looking ahead, both connected TV and Illlumin should continue to remake the company and drive outsize growth.

GameStop (NYSE: GME) has been one of the most closely watched stocks this year since it skyrocketed back in January on a combination of a short squeeze and gamma squeeze that kicked off the meme stock movement.

Now, GameStop is seeking to make changes to its business, building on the attention it’s gotten this year and the capital it’s been able to raise.

The company is closing unprofitable stores and investing in its e-commerce business, and it’s also building out a new non-fungible tokens platform on Ethereum, showing it's tying its future to another high-growth business. It’s unclear at this point what that business is, but NFTs have a wide range of potential applications in online video games, making the company a good fit for the fast-growing market.

Chewy co-founder Ryan Cohen has also joined its board and is helping to drive a transition to e-commerce, which has partly encouraged investors in the stock.

ALSO READ: 3 Ways to Invest in Meme Stocks Safely

Arguably, no fintech company has been as disruptive as Square (NASDAQ: SQ). A few years ago, the company was little more than the eponymous piece of hardware small businesses used to accept credit card payments.

Today, Square is a digital payments giant worth more than $100 billion with thriving businesses in small business lending, peer-to-peer payments, and collecting transaction fees on retail sales.

The company has also moved aggressively into cryptocurrency, buying $50 million in Bitcoin last October, and allowing users on Cash App to transact in Bitcoin. Additionally, Square is building a new business dedicated to decentralized finance to make it easy to transact with cryptocurrencies like Ethereum.

Finally, the company just acquired Afterpay, a buy now, pay later leader, for $29 billion, making a big move into financing.

With exposure to multiple channels of growth in the fintech sector, Square is sure to be at the forefront of the future of payments.

Home services marketplace Angi (NASDAQ: ANGI) has long been the leader in its category, connecting homeowners with painters, plumbers, landscapers, and other service providers, but the company has never quite fulfilled its potential. Profitability has been hard to come by, and the marketplace model hasn’t worked as well in home services as it has in other categories.

That could soon change. Angi rebranded in March and is quickly growing its pre-priced services business, Angi Services, which sells homeowners a pre-priced service and then finds a service provider to do it. That differs substantially from the company’s traditional business of generating leads for service providers.

In its most recent quarter, Angi Services revenue jumped 127% to $73 million, and that growth came with no incremental marketing spend. Additionally, the company recently launched a membership service, Angi Key, giving customers 20% off of fixed-price projects for $30 a year.

With the growth of Angi Services and the Key membership program, Angi could be a much different company in just a few years.

Times have been tough for legacy tech companies as many have lost ground to more nimble cloud-native companies. IBM (NYSE: IBM) is one such example, as the stock has basically treaded water over the last decade while tech stocks in general have thrived.

IBM has been in the midst of a seemingly never-ending transition, selling off its hardware businesses to pivot to cloud services, but that transition has been slower than expected and legacy segments have remained a drag on the company.

However, that transition is about to take a big step forward as IBM will soon spin off its managed infrastructure services unit, dubbed Kyndryl, worth an estimated $19 billion.

That will help isolate the slower-growing parts of IBM’s business and make the company's stock more attractive to investors.

With revenue growth remaining sluggish, up just 3% in its most recent quarter, IBM could use any help it can get.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

As the pace of technology advances, change is only going to accelerate in the business world. In general, successful companies need to be both changing and adaptable to changes in the outside world, such as the pandemic.

When investing in a new company, it’s always worth asking what is changing about it, what’s changing around it, and what isn’t changing.

Breakout stocks are often the ones that are changing faster than the competition, or are better at anticipating change. Seeking those out can help you find some of the top stocks of the future and achieve market-beating returns.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of AcuityAds Holdings Inc., Ethereum, Facebook, Match Group, Square, Stitch Fix, and Target. The Motley Fool owns shares of and recommends AFTERPAY T FPO, AcuityAds Holdings Inc., Bitcoin, Ethereum, Facebook, Match Group, Microsoft, Square, Stitch Fix, and TripAdvisor. The Motley Fool recommends Chewy, Inc. and Live Nation Entertainment. The Motley Fool has a disclosure policy.