(Including 3 10X Ideas)
Finding up-and-coming stocks across the market isn’t what it used to be! After all, the ‘upstarts” from a decade ago (Amazon, Facebook, Google…) are now large-caps that are some of the market’s biggest companies!
Simply put, the disruptors of old are quickly becoming the market’s new blue bloods. Both Apple and Microsoft have joined the Dow Jones Industrial Average and sport market caps that exceed a trillion dollars.
Yet, if you look beyond the most popular names in investing, you’ll discover 2021 may be a golden era for the next wave of innovative companies set to change the world. Trends like cloud computing, advanced genomics, artificial intelligence, and e-commerce are all creating a wave of companies that could dominate the coming decade!
So, if you’re looking for what’s next, a group of growth stocks with some of the highest potential in 2021 and beyond, then you’ve come to the right place! Below, we’ve selected 10 of our favorite up-and-coming stock ideas that could ride incredible tailwinds across the next decade.
How to Spot Up-and-Coming Stocks
But, before we begin, we need to answer an important question: how do you narrow down to the right up-and-coming stocks?
The kinds that could see continuing growth year-after-year and become some of the market’s best stocks? To identify our top up-and-coming stocks, we pinpointed three qualities:
- Momentum: Has the stock seen accelerating sales and has the potential to sustain double-digit sales growth for a decade or more to come?
- Upside: Let’s face it, gigantic companies like Apple simply don’t have the same upside potential as small companies in fast-growing industries. We’re looking for stocks that are a fraction of the size of today’s largest companies. While not all the stocks below are small-caps, they’re also a fraction the size of many of the market’s leading stocks.
- Growing Market: Look, you’d rather be selling software than opening a bookstore right now! We scoured companies that are in growing markets that provide powerful tailwinds.
While finding the right stock can sometimes feel like finding a needle in a haystack, using the qualities above can help you filter down to only the most promising opportunities.
We used these qualities to identify seven of our top up-and-coming stocks for 2021. But, before we begin, a brief disclaimer: We’ve only included what we consider to be high-quality companies on this list (you won’t find any penny stocks, for example), yet stock investing does carry risks.
Make sure to do your research, and never invest an amount in any one stock that makes you uncomfortable. Also, if you need a brokerage for buying shares or want to purchase fractional shares across any of these companies, make sure to stop by our page that ranks the best online brokers.
The Top 10 Up and Coming Stocks for 2021
Here’s our list of the top up-and-coming stocks for 2021. They’re all at the forefront of trends in industries ranging from advanced healthcare to video games, to cloud software and real estate.
Zendesk (NYSE: ZEN)
Stock Price: $116.69 (as of close Oct 1, 2021)
- Momentum: Projected to see sales grow by 24% in 2021
- Upside: Market cap of $16 billion. Less than 1/10th the size of cloud computing peers like Salesforce.
- Growing market: The customer service market Zendesk serves is large and expanding. Zendesk estimates its opportunity at more than $25 billion.
Zendesk IPO’d in 2014 as an emerging cloud solution for customer support. In the years since the company first hit the stock market, it has solidified its position as an up-and-coming technology stock by expanding its product suite and customer base.
For example, today Zendesk Chat offers real-time communication while Zendesk Sell Suite helps companies organize their sales teams. The bottom line is that Zendesk grew sales by an incredible 45% compounded rate between 2014 and 2019, and has continued their momentum into 2020.
Zendesk is just crossing a billion in annual sales but believes its total market opportunity could surpass $25 billion.
Pinterest (NYSE: PINS)
Stock Price: $52.62 (as of close Oct 1, 2021)
- Momentum: Wall Street sees sales growing by 44% in 2021
- Upside: With a market cap of $42 billion, Pinterest is still a small fraction of advertising peers such as Facebook or Alphabet
- Growing market: Digital media ad spending is expected to hit $136 billion in 2021, which is growing at a 10% rate.
Pinterest has become the “visual discovery engine” that millions of users engage with every day to discover recipes, travel tips, life advice, and much more.
So, why is Pinterest still up and coming? For starters, the company is producing less than 1/50th of the revenue of Facebook. Yet, it still has the potential for incredible growth ahead. For example, Pinterest saw international users grow 46% year-over-year in its most recent quarter!
Add it all up and Pinterest could still be in the early innings of its growth story. With 442 million users (and counting), we’re confident Pinterest will continue capturing a larger slice of the growing social media advertising market in the decade to come.
Redfin (Nasdaq: RDFN)
Stock Price: $50.97 (as of close Oct 1, 2021)
- Momentum: Wall Street has 2021 projected at 37% sales growth
- Upside: Market cap of $7.5 billion
- Growing market: In 2019 there were $82 billion in U.S. real estate commissions, yet Redfin’s market share of home sales is only about 1% of existing home sales by value!
When the coronavirus pandemic began in early 2020, the last thing on people’s minds was it causing a massive real estate boom. Yet, here we are! Since March lows, the iShares U.S. home construction ETF is up more than 150% and real estate is now running red-hot in cities across America.
What’s causing the boom? For one, the emergence of Covid has led many employers to shift to remote work models. With employees no longer needing to live within a reasonable commute to work, people are simply packing up and creating real estate booms in once-unthinkable places like Bozeman, Montana.
Second, with 30-year mortgage rates now averaging less than 3%, consumers are taking advantage of the decreased monthly payments record-low rates provide.
So, why is Redfin a top up-and-coming stock in this market? First of all, the company has seen incredible growth in recent years. Between 2015 and 2019, sales grew from $187 million to $780 million. That growth also shows few signs of slowing, Wall Street predicts sales could more than triple from today’s levels by mid-decade.
Second, the company has a huge technology lead over rivals. its website has 4X higher traffic than the second-large broker (which means it doesn’t need to spend as much on marketing). In addition, thanks to its technology focus, the company is able to charge much lower commissions than traditional real estate brokers.
Simply put, Redfin has structural advantages over rivals that appear to be accelerating as it grows. Whether today’s real estate boom fades, we believe Redfin has the right strategy to continue stealing market share and growing at high rates across the next decade.
Five Below (Nasdaq: FIVE)
Stock Price: $173.65 (as of close Oct 1, 2021)
- Momentum: Revenue growth of 15-fold across the last decade
- Upside: Market cap of $9 billion. About 1/10th the size of Target.
- Growing market: Discount retailers are expected to grow at roughly twice the rate of superstores like Walmart through 2024.
Here’s a name on this list you probably didn’t expect! After all, more than 14,000 brick and mortar retail stores closed in 2020 as e-commerce’s growth accelerated.
Yet, Five Below, a brick and mortar store found in strip malls across America, could turn out to be an extremely lucrative investment. Consider for a moment that while Sears, K-Mart, Pier 1, and any number of retail brands went bankrupt last decade…
Companies that specialize in discount goods often provided incredible returns. For example, since the beginning of 2010, Ross has returned more than 1,000%! Across that same time, Dollar General returned 842%!
The key idea, if you can sell goods e-commerce companies have a hard time economically selling (try shipping a $3 basketball at a profit) or create a unique ‘treasure hunt’ atmosphere, brick and mortar stores can still be quite successful! That’s exactly the niche Five Below has leaned into, and it’s worked tremendously.
While sales growth took a step back in 2020 due to the coronavirus pandemic and lockdowns that have kept consumers out of stores and shopping online, Wall Street predicts revenue will once again double by 2024.
Especially if your portfolio has become overloaded with high-flying technology stocks, it could be time to give Five Below a look as a way to discover high growth in a market many investors are ignoring!
Fiverr (NYSE: FVRR)
Stock Price: $184.22 (as of close Oct 1, 2021)
- Momentum: Sales grew by 88% in its most recent quarter after growing 41.8% in 2019.
- Upside: Market cap of $7 billion.
- Growing market: Freelance income in the U.S. is an $815 billion market, but only a small fraction has moved online.
The future of work is changing fast. Today’s workers increasingly value flexibility, work digitally, and remotely away from offices. While these shifts are rapidly changing companies that are adopting work-at-home policies, they’re also changing the nature of work. For example, the “gig economy” of freelance workers has absolutely gone bananas during 2020.
That’s where Fiverr comes in. The company built a freelance marketplace where you can get a song produced, a logo designed, find a developer to build your website, and much more!
Prior to the pandemic, Fiverr was already a fast-growing business. In 2019, sales jumped by 41.8%. However, with the pandemic accelerating digital transformation, its platform experienced incredible growth across 2020. Fiverr’s third quarter saw sales soar 87.8% from the prior year.
Fiverr is expensive today, but it also has the potential to become the leading marketplace in an industry that could grow rapidly for decades to come. There’s no more enviable business model in the 21st century than creating platforms that take a cut of all transactions (just look at how Apple’s done with its App Store!). If you’re looking to get invested in an up-and-coming platform, Fiverr should be at the top of your list!
Take-Two Interactive (Nasdaq: TTWO)
Stock Price: $158.54 (as of close Oct 1, 2021)
- Momentum: Sales have grown at an annualized rate of 18% across the past five years
- Upside: Market cap of $22 billion.
- Growing market: The video game industry is projected to grow at about five times the rate of the overall economy through 2025.
I imagine everyone reading this article has heard of Grant Theft Auto 5. Whether or not you play it, the game has become a mainstay of pop culture. It not only took just three days to break a billion dollars in sales but has now sold more than 135 million copies!
Those are incredible numbers, but the truth is video games continue to increase their impacts across society. The leading maker of video game graphics processors – NVIDIA – is now worth more than $300 billion! Leading video game streaming platform Twitch has seen viewership roughly double to more than 1.6 billion hours per month across the past year!
Those numbers are incredible and demonstrate how video games are rapidly becoming the most influential (and profitable) entertainment platform in the world.
This brings us to Take-Two, the company behind the wildly popular Grand Theft Auto (GTA) series. The release of new consoles like the Playstation 5 should be a boon for video game sales. That’s important because Take-Two plans to release 93 new games within the next five years!
Included among those should be the newest entry in the Grand Theft Auto franchise. While that game will likely shatter sales records, it should also continue pushing the series from a one-time purchase into a franchise that persistently lives online and generates revenue month-after-month.
Editas (Nasdaq: EDIT)
Stock Price: $39.91 (as of close Oct 1, 2021)
- Momentum: Sales grew by 1,533% in the third quarter
- Upside: Market cap of $5 billion
- Growing market: Editas has built a genome editing platform based on CRISPR, one of the most promising healthcare technologies.
The healthcare investing story of 2020 was the race for a coronavirus vaccine. While you may know that multiple companies were successful in creating a vaccine, what’s less commonly known is that the vaccines from Moderna and Pfizer were made possible from an unproven technology named mRNA.
Prior to a vaccine for Covid-19, no mRNA vaccine or drug had ever won approval. So while mRNA is a breakthrough that could literally save the lives of millions of people across the world, it could be just the beginning of a brand-new era in genomic medicine.
Editas is a genome editing company that’s at the forefront of CRISPR technology. While CRISPR is a different technology than mRNA, it has been hailed by MIT Technology Review as “the biggest biotech discovery of the century.” Simply put, it allows for precise editing of DNA from a genome.
What’s less simple is its impacts. While CRISPR has the potential to be transformative, it faces challenges such as editing enough cells to be effective. On that front, Editas recently release positive news, stating its gene-editing candidate EDIT-301 had overcome many obstacles holding its therapies back.
At the end of the day, Editas is risky and its shares will likely experience volatility in the interim. However, studying advancements in genomics could put you at the forefront of one of investing’s most up-and-coming spaces across the next decade.
Where to invest $500 right now
Lots of new investors take chances on long shots instead of buying shares of great companies. I prefer businesses like Amazon, Netflix, and Apple — they’re all on my best stocks for beginners list.
There’s a company that “called” these businesses long before they hit it big. They first recommended Netflix in 2004 at $1.85 per share, Amazon in 2002 at $15.31 per share, and Apple back in the iPod Shuffle era at $4.97 per share. Take a look where they are now.
That company: The Motley Fool.
For people ready to make investing part of their strategy for financial freedom, take a look at The Motley Fool’s flagship investing service, Stock Advisor. They just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you should check out the full details.
3 Growth Stocks with 10X Return Potential
Admit it. You’re here for the big gainers. That’s ok…we’re all captivated by the potential for life-changing returns. A word of caution, however, these stocks aren’t for the faint of heart. Risks abound as they are trying to disrupt established industries. It’s important for investors to ensure they’re taking prudent risks and not overinvesting in these stocks.
Just remember, most stocks won’t see 10X returns. In general, if you hold a diversified portfolio over the long run, something like 20% of your stocks will likely generate 80% of your returns. However, if you have a diversified portfolio and want to add some stocks with a higher risk profile that also have the potential for massive upside… Then we’ve added the following three growth stocks with 10X potential for you.
DermTech (Nasdaq: DMTK)
Stock Price: $31.65 (as of close Oct 1, 2021)
- Momentum: DermTek has inked agreements with major insurers to pay for its skin cancer detection product.
- Upside: Market cap of $1.7 billion
- Growing market: DermTech’s breakthrough pigmented lesion assay (PLA) technology could revolutionize skin cancer detection.
Covid has dominated medical headlines in 2020, but traditionally cancer has been a bigger risk. Every year in the United States more than 1.7 million receive a cancer diagnosis and almost 600,000 die from the disease. One thing we know is faster and more accurate diagnoses save lives and it appears DermTech has found a way to detect skin cancer more accurately (99%) and safer with their PLA technology.
DermTech stock has exploded, giving investors a 4x return in the last year alone (309%), but there are reasons to think the stock has a long runway for growth. The healthcare market is predicated on getting major insurance companies and the federal government to pay for treatment costs.
DermTech had a significant breakthrough in February as Blue Cross Blue Shield of Texas agreed to make PLA available for its approximately 6 million members, building upon its earlier agreements with Blue Shield of California and Blue Cross Blue Shield of Illinois.
Total spending on cancer care was expected to reach nearly $174 billion last year and melanoma was the fifth most common cancer type. The company expects an addressable annual market of $10 billion on these treatments versus a current market cap of approximately $2 billion. If the company executes on its plan, a conservative 2x revenue would value the company at $20 billion or 10 times more than the current market capitalization.
Like all these “10X potential” stocks, DermTech faces risks. Despite the PLA technology’s benefits, it must convince dermatologists PLA patches are a superior substitute. Additionally, the addressable market includes its full five-product lineup. Currently only DermTech’s PLA product is in the commercial stage.
Look for DermTech’s shares to continue to exhibit high volatility but the prospects of disrupting the melanoma diagnostic industry could pay off in a major way for investors.
Magnite (NASDAQ: MGNI)
Stock Price: $28.45 (as of close Oct 1, 2021)
- Momentum: Magnite preannounced connected TV (CTV) revenue grew by 53% in the fourth quarter
- Upside: Market cap of $5.3 billion
- Growing market: Magnite’s digital advertising technology will benefit from the death of pay-TV subscriptions and the rise of streaming-based substitutes.
The “death of television” is upon us! Major networks expect 25 million U.S. households to cut the cord in the next five years, which is the same amount that cut the cord in the last eight years! Cable deliverers like Comcast and Charter are no longer focusing on the service and pushing Internet service instead.
But people aren’t watching less television. Instead, they’re doing so increasingly outside of traditional cable delivery. The growth of streaming media and connected TV is quickly gaining steam.
It’s likely you have a Netflix, Disney+, Roku, or Amazon Prime Video subscription. This is Magnite’s opportunity as a connected TV advertising specialist and the company has inked deals with major publishers, most notably powering the Disney HuluXP digital advertising platform.
Magnite’s connected TV revenue is going gangbusters and the company doubled down on the format by buying competitor SpotX in a $1.17 billion cash-and-stock offer. Increasingly, it’s appearing like Magnite is becoming the sell-side programmatic advertising counterpart to The Trade Desk, which has a $35 billion market capitalization and continues to power higher.
There are very few companies uniquely positioned to benefit from the death of TV to the same level as Magnite.
The risks are that Magnite is an expensive stock, trading at 15 times 2020 revenue including the SpotX acquisition (although the stock will triple from here if it just matches The Trade Desk’s multiples). Additionally, this is Magnite’s second large-scale acquisition in as many years (the company was a merger-of-equals between The Rubicon Project and Telaria), which adds a level of complexity and execution risk.
Finally, the death of TV might not be as bad as advertised and eyeballs remain fixed on large-package cable, hurting Magnite’s opportunities to deliver streaming ads. However, it seems many investors believe traditional television is being replaced and have jumped on Magnite stock, as shares have exploded nearly 4x in the last year alone.
Intellicheck (NASDAQ: IDN)
Stock Price: $8.47 (as of close Oct 1, 2021)
- Momentum: Intellicheck grew sales 40% year-over-year in the third quarter.
- Upside: Market cap of $206 million
- Growing market: Identity theft costs the global economy more than $25 billion and as transactions continue to move online, those figures are expected to increase.
Intellicheck is the first stock that’s appropriate to discuss the risks before the opportunity. That’s important because, at a market cap of little more than $200 million, this is firmly a small-cap stock and lacks the resources of larger companies. Additionally, Intellicheck stock is thinly traded, meaning a large order could temporarily move the company significantly higher or lower. Simply put, this could be a volatile stock, which is why we recommend a small position as a speculative investment.
The opportunity is huge, however. Identity theft is a massive problem. Nearly one in seventeen Americans are victims of identity theft with the projected global cost coming in more than $25 billion in the last year alone. If you think this doesn’t affect you, it’s likely just a matter of time! In the massive 2017 Equifax breach, 150 million citizens – nearly half of all Americans – had their names, social security numbers, and date of birth exposed!
And even if you’re not directly paying for identity theft, you are indirectly doing so in the form of higher prices for products and higher interest rates on credit cards.
The pandemic has created a perfect environment for fraud, a significant increase in the number of unemployed has created a sense of desperation as well as a huge jump in person-not-present ecommerce transactions. Businesses need a solution to ensure the customer is legitimate and not an identity thief.
That’s where Intellicheck’s host of authentication solutions comes into play. The company has a 25-year history of authenticating identifying documents for government facilities like military bases and has been the verification provider for the association of DMVs across the US, Mexico, and Canada.
Why now? It’s on account of a change in the company’s business model that’s driving top-line results. The company has changed to a software-as-a-service (SaaS) model that bills according to the price per scan. SaaS revenue has exploded from $2.7 million in 2018 to nearly $9 million in the last twelve months.
When Wall Street finds out the critical service Intellicheck provides and its growth potential amid a massive total addressable market, it’s possible this stock could explode.
Adding Up and Coming Tech Stocks to a Portfolio
Now that you’ve seen the list of our top up-and-coming stocks for 2021, the next step is building a portfolio that balances upside potential while also managing your risk.
So, where do you start?
First of all, while stocks like Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), and Microsoft (Nasdaq: MSFT) may now be among the market’s largest stocks, they also offer stability. Each stock has high profitability – something often not found in up-and-coming stocks – and a long track record of success.
You may want to begin by establishing what percent of your portfolio you want in larger, more stable companies. You can also invest in ETFs that offer broader market exposure.
Once you’ve determined what percent of your portfolio should be allocated across either ETF or larger and more stable stocks, the next step is to decide which up-and-coming stocks are best. We recommend beginning by thinking about what trends are most important across the next decade.
- Compare the best online brokers
- See our list of the best stocks to buy for beginners
- Check out our top five 5G stocks
In the seven stocks above, we’ve provided ideas across social media, cloud computing, the “gig economy,” and genomics. However, that’s just a sample of the world-changing trends that could reshape the world in the decade ahead. In addition to the stocks we’ve discussed, here are some trends worth additional research.
Work from home policies have put cybersecurity back at the forefront of technology spending. After all, if entire workforces are now working remotely and outside closely controlled company networks, you can imagine how the value of security software has rapidly increased across 2020!
So, what cybersecurity companies are worth a look at? Stocks like Crowdstrike, Zscalar, and Cloudflare all have exposure to cybersecurity spending and are among our favorite ideas. More risk-averse investors could also look at Splunk, a stock that’s seen recent sell-offs but has significant upside if cybersecurity spending continues taking off.
AI can be difficult to invest in, but many semiconductor companies offer “pure-play” exposure. We recommend looking into both NVIDIA (Nasdaq: NVDA) and AMD (Nasdaq: AMD) as stocks that can benefit from its continuing rise.
Many stocks are benefiting from changing consumer demand trends. For example, Peloton saw sales increase by 232% in the third quarter of 2020. While the pandemic is fueling much of these gains, it’s important to remember that companies like Peloton are also seeing the growth of their subscribers grow like wildfire. This recurring revenue should fuel growth for years to come, even if a coronavirus vaccine leads millions back to gyms across the country.