Investing in growth stocks can be a great way to build wealth via the stock market over the long term. Companies that are growing faster than average tend to be rewarded by the market, meaning that they can potentially deliver powerful gains for investors over time.

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How to find the best growth stocks

One way to find top growth stocks is to look for companies in high-growth industries that are poised to benefit from long-term trends. By focusing on growth industries such as e-commerce, cloud computing, and video gaming, and finding businesses that are leaders in their industries, it’s possible to identify stocks that have significant growth potential.

5 top growth stocks to consider now

In this guide, we are going to highlight five top growth stocks to consider for Q2 2021. The stocks are:

  • Microsoft
  • Chewy
  • Pinterest
  • Teladoc Health
  • Fiverr

All five of these companies are growing at a strong rate at present and look poised to profit from one or more dominant digital trends in the years ahead.

Microsoft (MSFT)

MSFT stock chart

Past performance is not an indication of future results.

  • Microsoft is one of the world’s leading technology companies. It has exposure to a number of high-growth markets including cloud computing (Azure), remote work (Office, Teams, SharePoint), video gaming (Xbox), and social media (LinkedIn).
  • Microsoft is powering the remote work revolution. Teams, for example, enables employees to work together regardless of where they are physically located. SharePoint, meanwhile, empowers teamwork by streamlining access to data.
  • Recently, the tech giant launched ‘Viva’ – an employee experience platform designed to enhance the work-from-home experience. Looking ahead, it is planning to launch a talent platform called ‘Marketplaces’ to take on the likes of Upwork and Fiverr.
  • Microsoft is seeing strong growth in its cloud division. In the second quarter of fiscal 2021, commercial cloud revenues jumped 34% year over year to $16.7 billion.
  • The company is also seeing excellent growth in its gaming division with Xbox content and services revenue up 40% in Q2. In November, the company launched Xbox Series X and Series S. CEO Satya Nadella described these launches as the most successful console launches in the company’s history.
  • Results for the quarter ended 31 December 2020 were strong overall. Revenue was up 17% to $43.1 billion while diluted earnings per share (EPS) were up 34% to $2.03.
  • Next earnings release: Q3 results, 29 April 2021

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Chewy (CHWY)

CHWY stock chart

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  • Chewy is an online retailer that is focused on pet care. Through its website, it sells pet food and treats, pet supplies, and pet medications. Its mission is to be the most trusted and convenient online destination for pet parents and partners everywhere.
  • Chewy looks set to benefit from two dominant growth themes – the growth of the pet care market (which is growing at about twice the rate of global GDP) and the growth of e-commerce.
  • Attitudes towards pets have changed dramatically in recent decades and today pets are very much seen as family members. This ‘humanisation’ of pets has been a game-changer for the pet care industry. In the US last year, pet owners spent around $100 billion on their animals.
  • Chewy’s Q3 results, posted in December, were very strong. Net sales were up 45% year on year to $1.8 billion while adjusted EBITDA rose 118% year over year to $5.5 million.
  • For the fiscal year ending 2 February 2022, Wall Street analysts expect sales growth of approximately 25%.
  • Next earnings release: Q4 results, 1 April 2021

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Pinterest (PINS)

PINS stock chart

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  • Pinterest is a social media company that offers a visual discovery engine. Its engine allows people to find inspiration for their lives, including home and style ideas, travel ideas, and recipes.
  • Pinterest experienced strong growth during the coronavirus. In 2020, it added over 100 million monthly active users, taking its Global Monthly Active Users (MAUs) to 459 million at year end.
  • The social media company has the potential to be a big player in the e-commerce space. Last year, it formed a partnership with Shopify that allows Shopify merchants to upload their entire product catalogues to the Pinterest platform and create clickable product pins to drive customer traffic to their e-commerce portals. One of its priorities in 2021 is to make the platform more shoppable.
  • In February, The Financial Times reported that Microsoft tried to acquire Pinterest recently.
  • In Q4, Pinterest generated revenue of $706 million, up 76% year over year. Average revenue per user during the quarter was up 29% per $1.57. 2020 revenue was up 48% year over year to $1.69 billion.
  • Next earnings release: Q1 results, 20 May 2021

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Teladoc Health (TDOC)

TDOC stock chart

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  • Teladoc Health is a virtual healthcare company whose mission is to transform the healthcare experience. Through its platform, members can resolve healthcare needs via on-demand or scheduled visits with licensed doctors spanning multiple specialties.
  • Virtual healthcare is a win-win situation for both customers and healthcare professionals. It’s more convenient for patients, and it allows healthcare professionals to see more patients.
  • The virtual healthcare market is expected to grow substantially in the next five years. According to Mordor Intelligence, the market is set to be worth around $168 billion by 2026, up from $38 billion in 2020. That represents annualised growth of nearly 30% per year. This means Teladoc is well placed for long-term growth.
  • Teladoc’s most recent quarterly results were very impressive. For Q4, revenue was up 145% year on year to $383.3 million with total visits up 139% to 3.0 million. For the  2020 year, revenue was up 98% year over year to $1,094.0 million with total visits up 156% to 10.6 million.
  • For 2021, Teladoc expects total revenue of around $2.0 billion with total visits of between 12 million and 13 million. It advised in February that it sees “strong momentum” across its business in 2021 as the market embraces the breadth and depth of its unique capabilities.
  • Recent share price weakness could be a great buying opportunity.
  • Next earnings release: Q1 results, 4 May 2021

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Fiverr (FVRR)

FVRR stock chart

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  • Fiverr operates an online marketplace for freelance employment services. Through its platform, freelancers can offer services to businesses worldwide.
  • Fiverr is benefitting from the growth of the ‘gig economy’ which is growing three times faster than the traditional job market right now. Today, one in three professionals is actively choosing to freelance while more than six out of 10 millennials regard the gig economy as a viable alternative to full-time work. By 2027, experts predict that 87 million people will be freelancing in the US, accounting for over 50% of the total workforce.
  • The reason the gig economy is growing so quickly is that gig work offers benefits for both workers and businesses. For individuals, it offers the opportunity to become an entrepreneur or consultant, with the ability to work on one’s own schedule. For businesses, it provides the ability to quickly inject new skills and capabilities into the company, scale up and down rapidly, and reduce labour costs.
  • Fiverr posted a strong set of Q4 results in February. For the quarter, revenue was up 89% to $55.9 million. For the year, revenue was up 77% to $189.5 million.
  • The company has advised that it expects continued business momentum in 2021 with revenue growth of between 46% and 50%. It expects the elevated engagement levels shown in 2020 to last “well beyond” the pandemic.
  • Next earnings release: Q1 results, 13 May 2021

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Charts sourced from eToro platform 02/04/2021. All trading carries risk. Only risk capital you can afford to lose.

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