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15 Growth Stocks to Buy This Year

Author: Selena Maranjian | January 16, 2021

Dollar sign made of dollar bills rising out of cracked golden egg

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Dynamic, growing companies

If you're looking for stocks in which to invest, Warren Buffett and many other value investors would recommend that you seek out undervalued stocks. It's hard to argue with that, but you may still want some more dynamic, faster-growing stocks for your portfolio. Here are 15 growth stocks to consider -- some of which are undervalued or reasonably valued, and some of which may have gotten ahead of themselves at the moment.

See which ones appeal to you -- and either buy them or add them to a watch list, in order to grab shares if they fall to a more compelling level.

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.

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A webpage showing Airbnb listings online

Source: Airbnb

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1. Airbnb

Few people these days are not familiar with Airbnb (NASDAQ: ABNB), which permits people to rent out space in their homes to people seeking such space. The company hasn't been trading on the stock market for very long -- it had its initial public offering (IPO) in December, and at the time of this writing is sporting a market value of $89 billion. That's a rich valuation, and it's often a good idea to stay away from IPOs for a year or so, until they have a chance to settle down. Still, there's a case to be made that Airbnb will keep growing. Consider adding it to your watch list, or even jumping in, if you think its valuation is reasonable.

ALSO READ: This Forgotten Stock Could Easily Double in 2021

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Man in business suit signs his signature to paperwork

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2. DocuSign

In the midst of this pandemic, more people than ever are signing important documents in the comfort of their own home -- via services such as DocuSign's (NASDAQ: DOCU). The company had its IPO in early 2018 and has more than quintupled in value since then -- tripling in 2020. Thus, it doesn't look like a screaming bargain today, though it stands a good chance of rewarding long-term investors well. Two factors in its favor are that it has a subscription-based business model and that it's still signing up new costumers: It recently sported more than 800,000 of them and increased its billings by more than 60% year over year in its last reported quarter. Its market value was recently $45 billion.

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Software engineers working

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3. Splunk

Splunk (NASDAQ: SPLK) specializes in data analytics and monitoring, and it has been transitioning its offerings to be cloud-based, and on a subscription basis. That's an attractive business model, as it offers reliable and regular income. But the transition has caused the company's financial reports to take an accounting hit, as revenues are recognized differently. Thus, to many eyes, the stock seems attractively priced -- while others like the company but want to see an even lower price and proof that it's succeeding against its competition.

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Okta sign-in page

Source: Okta

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4. Okta

It's a funny name but not a funny business. Okta (NASDAQ: OKTA) is a specialist in identity and access security, used by many businesses to make sure that only those who are authorized to access various sites can do so. The pandemic year has been good to Okta, as lots of workers working from home needed access to their digital workplaces. The stock more than doubled in 2020 and recently sported a market value near $33 billion.

ALSO READ: 3 Tech Stocks That Could Regain Their Momentum in 2021

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5. Axon Enterprise

You may think you haven't heard of Axon Enterprise (NASDAQ: AAXN), but you may change your mind when you hear that a few years ago, it was known as TASER International, as it makes the Taser stunning devices. The new name helps encompass more of its offerings, such as body cameras for law enforcement, vehicle camera systems, security software, cloud-based evidence management services, and more. With its market value recently near $8 billion, many expect a lot more growth from Axon.

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.

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Netflix streaming on multiple devices

Source: Netflix

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6. Netflix

Netflix (NASDAQ: NFLX) is, like Amazon.com, a stock that often looks very overvalued. But then it keeps on growing, frustrating those who have been waiting for a big drop. In 2020, it advanced more than 60%, and it recently sported a market value near $225 billion -- more than that of Coca-Cola and nearly twice that of IBM. Its bulls still see plenty of room for further growth, as the streaming giant snaps up more customers around the globe and continues to roll out fresh content. (It recently had close to 200 million subscribers worldwide.)

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7. Vertex Pharmaceuticals

Vertex Pharmaceuticals (NASDAQ: VRTX) is a biotech company with a chief focus on treating cystic fibrosis (CF). Its stock got whacked in October on news that it was discontinuing a phase 2 study for an alpha-1 antitrypsin deficiency (AATD) drug, ending the year only up 8%. Vertex has much more going for it, though, such as its leading CF drug, Trikafta, which is bringing in billions annually. The company is aiming to keep adding approvals for it -- in new countries and in new classes of patients.

ALSO READ: 1 Red-Hot Healthcare Stock That Could Double Your Money

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Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting

Source: The Motley Fool

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8. Berkshire Hathaway

Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) may not be a household name, but its CEO, Warren Buffett, is. The company is a huge conglomerate encompassing many diverse wholly owned businesses along with many shares of stock in other companies. The businesses range from energy and insurance to jewelry, candy, underwear, and even an entire railroad, BNSF. The stocks include Apple, Bank of America, and Coca-Cola.

Berkshire itself isn't a classic "growth stock," but it's still worth consideration, as it should hold up better than average should the market crash in 2021 -- and Buffett's investing lieutenants have been filling up on lots of stocks he wouldn't have, due to sticking to what he knows. The Apple investment is a great example. It's a growth stock, and it quickly grew to make up some 48% of Berkshire's entire stock portfolio, while delivering more than $700 million in annual dividends.

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Person shopping online on a tablet

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9. MercadoLibre

MercadoLibre (NASDAQ: MELI) is rather unknown in the U.S., but it's a major e-commerce enterprise in Latin America, recently sporting a market value near $86 billion. As you might imagine, it had a good year in 2020, with the pandemic keeping many people home, shopping online. Indeed, its shares surged about 174%. MercadoLibre isn't just about e-commerce, though -- it also has a growing payment processing business, in Mercado Pago.

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Amazon Prime delivery

Source: Amazon.com

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10. Amazon.com

Amazon.com (NASDAQ: AMZN) surely needs no introduction, recently ranking No. 4 in Fortune's list of the world's most valuable (and, therefore, well-known) brands. (Its brand value: $135 billion.) It's clearly the dominant online retailer in the U.S. and beyond, but it's more than that, too. Its cloud-computing service, Amazon Web Services, is a briskly growing part of its business, and other entities under its roof include Whole Foods Market, Zappos, Audible, Goodreads, and more. It's a major video streaming service, too, and is expanding into new industries as well -- such as healthcare. Amazon stock jumped 76% in 2020, and it looks pricey now, as it often has, but many bulls see Amazon growing and being worth much more than its current $1.6 trillion in the future.

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.

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A pill case full of different colored and shaped pills

Source: Getty Images

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11. Roche Holdings

Some 125 years old, Switzerland-based Roche Holdings (OTC: RHHBY) is one of the world's largest biotechnology enterprises, recently with a market value topping $290 billion. The drugs it develops are focused mainly on oncology, immunology, infectious diseases, ophthalmology, and diseases of the central nervous system. Roche not only is a major player in pharmaceuticals (with cancer drugs Avastin, Rituxan, and Herceptin generating a big chunk of its revenue) but it also has a strong diagnostics game -- and many dozens of formulations in its pipeline, some of which are likely to become new strong sellers for the company in the future. It also has deep pockets with which to ink deals with smaller biotech firms.

ALSO READ: 3 Top Biotech Picks for January

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A Roomba sits in a carpeted room.

Source: iRobot

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12. iRobot

iRobot, with a market value recently near only $2.4 billion, has a lot of room for growth in the burgeoning robotics arena -- and it gained more than 50% last year. It pioneered the home vacuuming robot with its Roomba, and it has sold more than 30 million robots worldwide so far. It has other robots available as well, such as its Braava mopping robot. iRobot is a consumer robot leader, but it's facing some headwinds these days, such as increased competition and a trade war with China that has it shifting its manufacturing to Malaysia. Learn more about the company and see whether you agree with its bulls or its bears.

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The word Growth spelled out with block aligned on an upward sloping line

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13. ARK Innovation ETF

This growth stock, the ARK Innovation ETF (NYSEMKT: AARK), is actually an exchange-traded fund (ETF) -- a mutual-fund-like security that trades like a stock. It belongs here because it's a fund chock-full of growth stocks -- recently including Tesla, Roku, Square, Teladoc Health, Spotify Technology, and many more. Its focus is on relatively smaller technology stocks, and altogether, its holdings helped it jump by more than 150% in 2020. It's not guaranteed to post phenomenal results each year -- no stock in this list is -- and it may have some down years, too, but over the long run, it's poised to reward shareholders well.

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14. Veeva Systems

Veeva Systems (NYSE: VEEV) specializes in helping biotech companies that are developing drugs, using its cloud-based software to guide them through the process and help bring the drugs to market. Better still, it's working on expanding the scope of its offerings to other industries such as cosmetics and chemicals, which greatly expands its growth potential. The company recently sported a market value near $44 billion, and bulls like its prospects.

ALSO READ: 5 Growth Stocks That Will Make You Richer in 2021

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Woman looking at Pinterest images on tablet

Source: Pinterest

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15. Pinterest

If you're not part of the Pinterest (NYSE: PINS) community, you may not have been paying attention to it -- and if you weren't invested in it in 2020, you missed out on a whopping 250%-plus gain. It's not likely to repeat that in 2021, but its long-term prospects seem solid. It boasts close to 100 million monthly active users in the U.S., but more than three times as many outside the U.S. That's a lot of eyeballs to offer up to companies that want to place online ads -- and a lot of people who may be monetized in other ways. The company recently had a market value of $44 billion.

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.

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A man is looking at the words buy and sell, with his hands on his hips, as if deciding.

Source: Getty Images

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What to do

These are just some of many fast-growing companies out there -- a little digging can turn up many more. Should you buy into some or many of these 15? Maybe -- but only after you take a closer look at any that interest you. Many of them are not trading at bargain prices, which can be OK if you plan to hold them for many years -- though, all things being equal, it's better to buy into undervalued companies. If you bought into Amazon or Netflix years ago when they seemed overvalued, you'd be a happy camper now. But you might alternatively have bought into other overvalued companies that ended up growing slowly or even losing ground.

You can be strategic about it, by building a watch list of any companies that you'd like to buy into, and checking it regularly, ready to pounce if and when any fall nearer to bargain levels. You might also compromise: If you want to spend, say, $6,000 on a stock that looks pricey, you could buy $3,000 (or $2,000) of it now and then spend another $2,000 or $3,000 on it in a few months and so on, buying into incrementally. That way, if it falls, you'll be able to get more shares at a lower price later, but if it keeps rising, you'll at least have established a position when it was priced lower.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Selena Maranjian owns shares of Amazon, Apple, Berkshire Hathaway (B shares), DocuSign, IBM, iRobot, MercadoLibre, Netflix, Okta, Roche Holding Ltd. (ADR), Splunk, Square, Veeva Systems, and Vertex Pharmaceuticals. The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), DocuSign, iRobot, MercadoLibre, Netflix, Okta, Pinterest, Roku, Splunk, Spotify Technology, Square, Teladoc Health, Tesla, and Veeva Systems. The Motley Fool recommends Vertex Pharmaceuticals and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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