10 Best High-Growth Stocks for Young Investors
[Editor’s note: This story was previously published in November 2018. It has since been updated and republished.]
No investment strategy suits all the people all the time. This is particularly true for young investors in their 20’s and 30’s. Youth not only has social advantages; it can provide significant margin for your portfolio to grow. As such, high-growth stocks are ideal for the young-adult, millennial demographic.
Talk to any financial advisor, and more often than not, they apply the Pareto principle for 20- or 30-somethings. Colloquially known as the 80-20 rule, advisors recommend that young investors have 80% of their portfolio in stocks, and the remainder in safer, interest-yielding assets. When it comes to millennial stock allocation, spring chickens should really consider high-growth stocks.
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Time is money, and in many cases, time is more valuable. That’s because time can “buy†you money, but never the opposite way around. In this case, a younger investor’s additional working years can help mitigate investments that have gone awry. Moreover, extra time allows riskier investments to fully expand to their potential.
But don’t just look into risk-reward ratios for their own sake. Instead, as a young investor in his or her 20s or 30s, you should broaden your horizon. While I’m not against trading current trends, this is a perfect chance to advantage longer-term growth forecasts.
With that in mind, here are the top 10 high-growth stocks for young investors.
Amazon (AMZN)
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Whenever discussions about high-growth stocks arise, Amazon (NASDAQ:AMZN) invariably makes most analysts’ lists. What’s not to like here? Not only does AMZN leverage an enviable track record in the markets, management continues to forge ahead into new frontiers. Amazon is a disruptor among disruptors.
But sometimes, high-growth stocks are so obvious that it’s not. We all know the adage that what goes up must come down. This applies to any investment, and AMZN is no exception, just look at its 4.2% drop in the past month.
As I previously discussed, AMZN is on the verge of unprecedented greatness. Those of you who are in your 20’s and 30’s have some recollection of a time when e-commerce didn’t overwhelmingly dominate the retail sector. But we’re so close to a generation coming of age that has no clue about the prior brick-and-mortar hegemony.
When Generation Z enters the workforce en masse, they will buy through Amazon and other e-commerce channels, no question. That’s why you must consider AMZN stock.
Carvana (CVNA)
Source: Carvana
Carvana (NYSE:CVNA) takes a brilliant concept and brings it into fruition. Generally speaking, millennials don’t share the same love for the automobile as did prior generations. Part of the decline in interest is the haggling over the price that used to be a given when buying a new car.
Enter Carvana. CVNA combines the tech wizardry that young people love with a centuries-old retail industry. Rather than negotiate with pushy or unsavory salespeople, buyers can instead browse cars online. When they find one they like, CVNA delivers their vehicle to their driveway. Plus, Carvana offers a money-back guarantee to soothe concerns about buying a car sight (almost) unseen.
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Considering that young people do nearly everything online, Carvana is likely the future of car buying. That’s one reason to buy CVNA stock. The other? Margins. Once the company firmly establishes itself, it has the potential to earn serious bucks. That’s because CVNA charges a premium for its convenient services.
So far, though, customers are willing to pay it, and that trend will continue with Gen Z coming aboard.
TriNet Group (TNET)
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For those of you who have worked in Fortune 500 companies, you realize the intensity of large-scale organizations. In order to handle the needs of tens of thousands of workers, the biggest companies employ the best human-resources team. But what the needs of small and mid-sized businesses? That’s where TriNet Group (NYSE:TNET) comes in.
TNET provides full-service HR for companies that are still in their growth phase. Essentially an outsourced HR firm, TNET offers comprehensive services for smaller organizations, but without the massive overhead. Therefore, management can concentrate their resources on their expansion strategies.
TNET stock also makes sense from an industry trend point of view. Experts predict that by the year 2020, an astounding half of the U.S. workforce could be comprised of freelancers. Additionally, small businesses that employ fewer than 100 workers are not only becoming more prominent, they’re collectively hiring millions annually.
This new digital economy will require HR services. As a result, you’ll want to keep a close eye on TNET stock.
Canopy Growth Corp (CGC)
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The legal-marijuana industry generates significant controversy. However, one thing cannot be denied: high-growth stocks levered towards cannabis have been growing. One such name is Canopy Growth Corp (NYSE:CGC). Year-to-date, CGC shares are up over 53%.
I’m digging CGC primarily because it’s the most well-capitalized marijuana investment. Canopy sported a $10 billion-plus market cap, substantially higher than Aurora Cannabis’ (NYSE:ACB) $6.2 billion. As InvestorPlace’s own Bret Kenwell pointed out, that market cap rivals several well-known companies, including Macy’s (NYSE:M) and Chipotle (NYSE:CMG).
Ultimately, Kenwell advised to wait for a correction on CGC before jumping onboard, and that may now have happened. Either way, young investors must keep CGC on their short list.
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By the time millennials are looking at retirement, marijuana will have lost its Schedule I classification — likely long before this point. History shows that the Prohibition era failed to curb Americans’ desire for alcohol. History will eventually prove the same for cannabis.
Indeed, as the Pew Research Center demonstrates, attitudes towards legalization have shifted positively. It’s only a matter of time before the government listens to the will of the people. When that day comes, CGC will explode even higher.
Square (SQ)
Source: Via Square
Square’s (NYSE:SQ) appeal is immediately recognizable to anyone who observes business trends. As we discussed for TriNet Group, small businesses have grown rapidly since the Great Recession. Given the nature of technology in our lives, companies today value agility and specialization more than outright size.
What makes SQ stock a compelling investment is that it evens the playing field for small businesses. Square provides portable credit-card readers that attach conveniently to your smartphone. That enables entities ranging from sole proprietors to small corporations to quickly setup a payment platform.
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Another factor driving SQ stock for the longer term? An increasing number of Americans are going cashless. According to a CNBC report late-last year, 50% of surveyed individuals reported they only carry cash half of the time they’re out and about. Those that do carry cash usually hold $50 or less.
Logically, this means we should see fewer cash-only businesses moving forward. And the types of businesses that would have once been cash only will likely gravitate towards Square’s unique and convenient solution. Despite SQ stock pulling back from September highs and bottoming out at the end of December, it has added 25 percent this year and keeps moving up.
Control4 (CTRL)
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I first covered Control4 (NASDAQ:CTRL) in late July of this year. Since then, CTRL stock has jumped as much as 47% in the markets only to come tumbling down, giving back those gains and plenty more. But this just makes this a buy the dip opportunity. Like the other mentioned names, CTRL will likely gain on broader social trends, making it a strong pick for young investors.
Control4 specializes in home-automation solutions, providing clients with interconnectivity benefits along with security. Given that anything can happen these days, people love the peace of mind of having an integrated smart-home system.
But beyond the practicality that Control4’s products and services provide, its target audience is extremely receptive to the company’s offerings. Experts forecast that by the year 2020, home automation will become a $40 billion industry. Further, 47% of millennials own smart-home products. And 81% of prospective homebuyers are likely to select a home that has installed automation services.
General Electric (GE)
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