If you were to look up the definition of "roller coaster" in the dictionary, don't be shocked if it depicts a snapshot of the stock market in 2020. In a six-month span, Wall Street has crammed in the fastest bear market nosedive in history, as well as the quickest rally back to new highs from a bear market bottom of all time.
There's no question that volatility can be scary at times, but it also represents a unique opportunity for long-term investors to buy into great stocks at a perceived discount, as 2020 has shown.
Best of all, persistently dovish monetary policy from the Federal Reserve has made loans cheaper than they've ever been. This has virtually rolled out the red carpet for growth stocks and likely secured their outperformance for years to come.
If you have, say, $5,000 to invest that won't be needed for emergencies or to cover bills, may I suggest putting that money to work into one or more of these off-the-charts growth stocks.
Green Thumb Industries
For years, marijuana stocks were virtually unstoppable, but that hasn't been the case for much of the industry for the past 17 months. Growing pains have become a reality for North American pot stocks, with high tax rates in the U.S. and supply chain issues in Canada mucking up the works. But there's no doubt that legal cannabis will be a massive growth driver this decade, which is why investors should strongly consider buying into Green Thumb Industries (OTC: GTBIF).
Green Thumb is a vertically integrated multistate operator that currently has 48 operational dispensaries, but possesses licenses to double its store count to 96 in a dozen states. Many of the states that Green Thumb is focusing on having billion-dollar annual sales potential by mid-decade. This includes Illinois, which became the first state to legalize the consumption and sale of recreational weed entirely through the legislative process, and tourist destination Nevada, which is projected to lead the nation in cannabis spending per capita.
Perhaps my favorite growth metric about Green Thumb is that a majority of its sales are derived from higher-margin derivatives. Though dried cannabis flower is most often associated with legal weed sales, flower is an easily commoditized, low-margin product. The vapes, edibles, and infused beverages that Green Thumb is selling are what'll be responsible for pumping up its margins and profits for years to come.
Wall Street is currently counting on Green Thumb to grow its sales from $216 million in 2019 to an estimated $1.66 billion by 2024.
Another off-the-charts growth stock to consider buying is Trupanion (NASDAQ: TRUP).
Generally speaking, insurance stocks are boring, slow-growth businesses that rely on premium-pricing power to grow. That's not going to be the case with Trupanion, which is a health-benefits insurer for companion animals, such as cats and dogs.
Why companion pets? According to data from the American Pet Products Association, it's been at least a quarter of a century since U.S. pet expenditures declined on a year-over-year basis. That's because pets are increasingly viewed as members of the family, and are being cared for as such. This year alone, an estimated $30.2 billion will be spent in the U.S. on veterinary care and product sales, as well as $10.7 billion on other services, which includes grooming, boarding, and insurance.
The ah-ha moment for Trupanion is that only between 1% and 2% of companion pets throughout North America are currently insured. This means there's a ridiculously long runway to encourage pet owners to purchase coverage for their "family members." And while competition in the companion animal insurance space is bound to pick up, Trupanion has the advantage of already having forged in-clinic relationships with thousands of hospitals.
After delivering roughly $384 million in 2019 sales, Wall Street is looking for Trupanion to claw its way to $1 billion in annual sales by 2024.
Growth seekers should also consider taking their $5,000 and putting it to work in cloud-native software-as-a-service stock CrowdStrike (NASDAQ: CRWD).
On the surface, the big-picture revenue driver for CrowdStrike is the steady demand for cybersecurity protection. No matter how well or poorly the U.S. economy is performing, or how big or small a business is, hackers, robots, and malware don't take vacation days. This creates a transparent demand for cybersecurity solutions that simply doesn't wane, and which has only been magnified by the work-from-home trend precipitated by the coronavirus pandemic.
CrowdStrike's Falcon platform was designed in-house, using cloud-scale artificial intelligence, to help its solutions identify malware and other potential threats to end users. It sounds expensive, but it's actually an effective way to eliminate the high costs typically associated with on-premises cybersecurity solutions. Perhaps it's no surprise that this effective model of identifying threats has led to three consecutive years of triple-digit year-over-year subscription customer growth.
Furthermore, CrowdStrike generated 91% of its revenue in its fiscal first quarter from subscriptions, and has witnessed the number of customers purchasing four or more cloud module subscriptions grow from 36% two years ago to greater than 55% in the April-ended quarter. In short, subscription gross margin is robust (78% on an adjusted basis in Q1 2021), and more of CrowdStrike's clients are adding on new products.
After reporting $481 million in full-year sales for fiscal 2020, Wall Street is forecasting $1.34 billion in revenue for fiscal 2023.
Fourth and finally, investors can put their $5,000 to work in a financial technology game-changer like Square (NYSE: SQ).
Square's best-known for its seller ecosystem and, to a lesser extent, it lending program. For the better part of the past decade, Square has been providing small merchants with point-of-sale devices to process transactions. The dollar amount crossing its networks jumped from a little over $6 billion to $106 billion between 2012 and 2019.
But the standout figure from the seller ecosystem in recent years is that we're seeing a greater number of larger merchants climbing onboard. As a fee-driven platform, bigger merchants are going to offer substantially higher annualized gross payment volume, and therefore much juicier fee-based potential. When coupled with its lending program, Square's more mature operating segments should deliver consistent growth.
Then there's peer-to-peer payment platform Cash App, which has all the makings of becoming Square's primary growth driver within the next year or two. Cash App's monthly active user count has more than quadrupled to over 30 million since the end of 2017, and Cash Card adoption is quickly picking up. Cash Card being a traditional debit card that runs off of a user's Cash App balance.
With Square able to rake in revenue from merchant fees, expedited bank transfers, andbitcoin exchange full-year revenue is expected to soar from $2.3 billion in 2019 to $12.1 billion by 2022.
10 stocks we like better than Square
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Sean Williams owns shares of Square. The Motley Fool owns shares of and recommends CrowdStrike Holdings, Inc., Green Thumb Industries, Square, and Trupanion and recommends the following options: short September 2020 $70 puts on Square. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.