5 Fast Growing Stocks To Buy Now

Everyone knows the most basic principle of investing: buy low, sell high. Of course, that’s easier said than done.

Choosing stocks that are on their way up is a challenge, because the only predictable feature of the market is that it is unpredictable.

Certainly, you can look at any number of data points that offer a glimpse into the company’s potential. However, in the end, the stock selection process is as much an art as it is a science.

Some of the most commonly cited figures in evaluating stocks include the following: 

• Earnings Growth – Look for earnings that grow consistently over time, even if the year-over-year change isn’t substantial.
• Competitive Edge – What sets this company apart from others in the industry? 
• Debt-to-Equity Ratio – The company’s level of debt as compared to shareholder equity shouldn’t be significantly higher than industry peers. 
• Price-to-Earnings Ratio – How expensive is the stock relative to company earnings? How does this measure up to industry peers? Is the stock overvalued, undervalued, or right on target? 
• Dividend History – Consistent dividends are always a good sign, particularly when the company has a history of increasing the amount. 
• Leadership – What do you know about the company’s top brass? Are they highly qualified for the post and do they understand the industry? Do they have a history of making smart decisions and creating successful strategic plans? 

The problem with most of these metrics is that they simply don’t apply to fast-growing startups. New companies often operate at a loss for several years, and they certainly don’t pay dividends. How can you tell which stock will be the next Amazon (AMZN), Apple (AAPL), or Facebook (FB)? 

Analysts spend their careers finding just the right balance between fact and intuitive judgment. The best develop an instinct for picking stocks that hold significant profit potential. Some of the most insightful analysts agree that these are five fast-growing stocks to buy now.

Futu Holdings Is Like Robinhood For Hong Kong

Hong Kong-based Futu Holdings’ service is quite similar to the US-based Robinhood investment app in that it offers wholly digital wealth management and brokerage accounts.

In a single year, Futu went from less than $10 per share to over $70 per share. That is the very definition of a fast-growing share price but the fundamentals back up the explosive stock movement. 

During its third quarter 2020 earnings call, Futu’s management announced the company had added 115,000 paying users – a year-over-year increase of 137 percent – for a total of more than 400,000.

Of course, when the potential users are considered, 400,000 is just a drop in the bucket. In June 2020, market experts estimated that there are a total of 167 million retail investors in China. If Futu Holdings is successful in capturing even a small percentage of that market, rapid growth is practically guaranteed. 

Meanwhile, Futu (FUTU) is demonstrating its ability to make the most of its success by delivering strong returns and consistent revenue growth. Futu Holdings counts the massive Chinese company Tencent as one of its biggest financial backers, which should reassure anyone interested in buying shares. 

Mohawk Group Knows What You Want (Before You)

It was only a matter of time before computers got to know consumer behavior well enough to predict preferences and trends.

That day is here, thanks to Mohawk Group, which has developed a system that knows what people want before they are aware of it themselves. 

Mohawk’s platform, better known as AIMEE (AI Mohawk E-commerce Engine), takes in extraordinary amounts of data. It then applies machine learning algorithms to spot patterns.

AIMEE simultaneously uses Natural Language Processing to measure consumer sentiment. Then, with the help of human Mohawk Group employees, it puts all of this information together to identify the products people want. 

Mohawk (MWK) has put together a complex supply chain and taken on manufacturing partners to get these products of the future to market in eight months or less. To date, the company has seven brands that cover home and kitchen, consumer electronics, beauty, and appliances. 

More than 250 products have come to market so far, and Mohawk is currently introducing new items at a rate of two per month.

Mohawk boasts net revenue growth of 100 percent year-over-year for the past five years, and by all indications, that figure is likely to rise. If it does, those who buy now will see impressive returns. 

Upstart Uses AI To Offer Loans

The entire economy depends on consumers having access to cash. Banks have traditionally held a tight grip on lending, and those who needed money had to meet strict criteria.

Income, credit history, and collateral determined who could borrow at affordable interest rates. It goes without saying that individuals with financial challenges paid far more for their loans. 

Fintech company Upstart leveraged the power of Artificial Intelligence to develop better formulas for measuring credit risk. That means more approvals and lower rates for borrowers, as well as less bad debt for banks.

To date, Upstart has originated more than $7.8 billion in loans – more than 69 percent of which were fully automated. 

In addition to managing loans directly, Upstart now shares its technology with financial services providers. That’s had a big impact on bottom-line results.

The company reported a 44 percent increase in revenue year-over-year for the first three quarters of 2020, as well as a net income of $5 million for the same period.

Compare that to the loss of $6.5 million in the first three quarters of 2019, and it is clear why investors are excited about Upstart. 

Bandwidth Is Taking On Twilio And Winning

There is an app for just about every brand these days, and consumers are relying on this technology to connect with entertainment, services, and shopping more than they ever have before.

The ability to communicate from within apps is a must, but developers have discovered clear, glitch-free talk and text features aren’t easy to design.

After trying and failing to create high-functioning in-app communications software, most companies decided to outsource this task. 

Twilio (TWLO) might be the best-known in-app communications provider, but it isn’t the only game in town.

Bandwidth is rapidly gaining market share, and it has started to catch the eye of investors. It offers the same type of cloud-based communications infrastructure, but from an investment perspective it has something Twilio doesn’t.

Bandwidth share prices are far less expensive – so much so that many analysts believe they are undervalued. 

Over the first three quarters of 2020, Bandwidth (BAND) achieved 35 percent revenue growth year-over-year.

Not only that – the pace at which revenue is growing has increased. In the third quarter alone, it was up 40 percent year-over-year for a total of $84.8 million.

Bandwidth leadership expects 2020’s year-end results to come in 40 percent higher than 2019’s. That’s impressive when compared to 2019’s year-end revenues, which were just 14 percent higher than 2018. 

Inspire Medical Systems Is Growing Fast

Healthcare is getting smarter, and medical device companies are taking full advantage of new technology.

They are creating innovative products that solve common problems in a manner that is less invasive and more effective than ever before.

Inspire Medical Systems is on the short list of companies introducing cutting-edge technology without getting a lot of investor attention – yet. 

Inspire’s signature device – an internal sleep-apnea solution – manages a common issue without the expense and inconvenience of traditional equipment. Gone are the masks, hoses, and noise of CPAP machines. Instead, the Inspire system relies on a small implant that is controlled with a remote control. 

Since March 2020, Inspire’s share prices ranged from a low of $40.53 to a high of $216.98. That was due, in part, to the November announcement that Inspire’s sleep apnea device would be included in the German hospital reimbursement system beginning in 2021. 

For the first three quarters of 2020, Inspire announced revenue of $35.8 million. That represents a year-over-year increase of 72 percent. The business is still operating at a loss, but many industry experts agree that won’t be the case much longer. 

During the third quarter earnings call, management announced they were increasing their full-year guidance to a total of $110 – $112 million.

If the company achieves this target, full-year revenue growth will total between 34 percent and 37 percent. That’s the sort of progress investors like to see when in search of fast growing stocks to buy now. 

Fast Growing Stocks to Buy Now: The Bottom Line

While the market itself can generally be relied upon to gain value over time, there simply aren’t any individual stocks that can be considered a sure thing.

Some, like blue chip companies, are more reliable than others, but investors in search of big rewards have to be open to big risks.

These five companies show signs that their share prices are on their way up. If you are open to risk, they are good choices for fast-growing stocks to buy now.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.