Best growth stocks for 2021: five companies to watch
Our list of the five best growth stocks for 2021 feature a COVID-19 vaccine manufacturer, a global credit card giant, and an online pet food store.
The best growth stocks tend to deliver share price gains that outperform the rest of the market – and beat the competition when it comes to revenues and profits. Ferreting out stocks with growth potential can take a lot of work – and fundamental analysis, as well as scrutinising financial updates whenever they emerge, delivers the best chance of finding the most promising opportunities.
In this article, we’re going to look at some of the best stocks for long-term growth. Do remember that it’s always worth doing your own research before making a purchase, and that this is far from an exhaustive list. During the extraordinary stock market rally last year, some of the biggest gainers – the likes of Zoom and Tesla among them – appeared to take many traders by surprise.
Growth stocks to buy right now: Five contenders
Topping our list of high growth stocks is BioNTech. The company is known to millions after teaming up with Pfizer to develop a coronavirus vaccine, which is now being administered around the world. Examining its recent financial results helps to powerfully illustrate why this stock is winning plaudits right now.
Revenue in the three months to December 31 came in at £292.4m – a stark contrast to the £23.7m seen over the same period in 2019. Across the whole of 2020, this stood at £408.6m, also markedly higher than the £92m generated a year earlier. Now take a look at net profit. This reached £311m over Q4, as opposed to the £49.3m plunge into the red seen over the same period in 2019.
At present, BioNTech has been contracted to produce 1.4 billion doses of its COVID-19 vaccine, and it’s estimated that this will result in revenues of £8.3bn in the process. The company is also expecting that revenue will grow as additional contracts emerge throughout the year, and has an ambitious target to ramp up manufacturing capacity to 2.5 billion doses for the whole of 2021.
The stock has more than doubled over the past 12 months – from $52 on April 6, 2020 to $113.87 at the time of writing. However, this is more than 10 per cent off the record highs of $131 seen in December, which is when the company’s vaccine was starting to be rolled out over in the UK.
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Also making the list of the best growth stocks for 2021 is Etsy. The craft supplies platform had an extraordinary run in 2020 as the world looked for new sources of entertainment during the coronavirus lockdown. The surge in demand was also powerfully illustrated in its financial results. Revenues in Q4 stood at $3.6bn – a 117.7 per cent rise on the same period in 2019. The rise in net income was even more dramatic, with a 374.7 per cent surge to $143.8m. When it comes to the whole of 2020, revenues rose 106.7 per cent to $10.3bn, and there was a 264.2 per cent boost to net income, which hit $349.2m.
Guidance for the first quarter of 2021 is equally optimistic, with more triple-digit gains expected. Looking ahead, Etsy’s CEO Josh Silverman added:
“While Etsy's growth in 2021 is likely to decelerate off of last year's high levels along with the rest of e-commerce, we have more conviction than ever to invest in our business for the long-term, building top of mind awareness in the hearts and minds of consumers, with an ambition to outperform e-commerce and gain market share.”
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Although Mastercard may not immediately spring to mind when you think of the best growth stocks in 2021, the company is about to unveil radical features that could transform the way we make purchases.
The credit card giant recently announced that it is planning to support cryptocurrencies – giving consumers the freedom to make payments with digital assets if they want to. Support will also be given to merchants. Although we don’t know which coins are going to be accepted when this service launches, it seems highly likely that Bitcoin and Ethereum will feature.
Although PayPal has also unveiled similar functionality, Mastercard’s role as a giant in the fiat ecosystem makes this especially significant. The company has a presence in bricks-and-mortar businesses that PayPal cannot match. MA’s share price currently stands 37 per cent higher than it did a year ago. The burning question now is whether Mastercard will enjoy an advantage as an early mover in this fast-evolving space – futureproofing itself if Bitcoin continues to cement itself as a leading asset.
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4. NextEra Energy
Other contenders for the best growth stocks include NextEra Energy, which has been handily outperforming its peers in the sector. The company has been investing aggressively in new infrastructure for wind and solar energy, an area that Joe Biden is keen for the US to expand upon in the coming years. Earnings per share are expected to rise by 7 per cent in 2021, and it has built up a solid track record of growth in recent years.
Looking back at 2020 in Q4 results, NextEra Energy’s chairman and CEO Jim Robo explained:
“We achieved approximately 10.5 per cent growth in adjusted earnings per share year over year and delivered a total shareholder return of approximately 30%, significantly outperforming both the S&P 500 and the S&P 500 Utilities Index. We delivered this terrific performance while continuing to manage the ongoing effects of the pandemic and navigating an unprecedented hurricane season.”
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Last but not least, you wouldn’t normally think that an online pet food retailer would end up featuring in a list of the best growth stocks. But when you examine the fundamentals of Chewy, you can start to see why it’s proving so popular right now.
At one point in February, the stock had almost quadrupled from the lows of $31.78 that were seen last April. With the company managing to surpass expectations on Wall Street, further momentum is expected because of how pet ownership has ballooned during COVID-19. The brand is now nearing 20 million customers after a 43 per cent boost in users over Q4. What’s more, figures also suggest that online pet food sales have plenty more room to grow in the years that lie ahead.
FURTHER READING: Novavax stock forecast: why 2021 is shaping up to be a big year