Investing in Up-and-Coming Stocks

Are you ready for a new list of stocks to add to your portfolio this year? Check out our list of the top stocks that are tapping into fast-growing trends. Finding the best up-and-coming stocks isn’t exactly an easy task.

Some companies may be performing well currently but aren’t good long-term bets. Others may end up being good investments, but their current market positions just don’t seem strong enough right now.

In either case, selecting the right companies that could have years of strong performance takes a certain amount of early initiative and long-term patience.

The good news is that you don’t have to find these stocks on your own! We’ve compiled a list of 10 fantastic growth stocks that we think have the potential to lead in their respective markets in 2022 and for many years to come.

How to Spot Up-and-Coming Stocks

Before we jump in, here are two key requirements that we considered before adding a company to this lineup:

  1. Momentum: We first asked the question “Does this company have enough momentum to grow for years to come?” If we didn’t think its sales would continue growing at a significant pace in the coming years, the stock didn’t make the cut.
  2. Growing Market: Any growth stock worth its salt has to be tapping into a potentially huge market. The companies listed below are doing exactly that.

In addition to those key elements, we’ve also added only companies we believe to be high-quality stocks. That means you won’t find any penny stocks here. But that doesn’t mean our up-and-coming stocks are without risk. Investing in the stock market always comes with risk, and betting on high-growth companies adds an extra layer of it that investors should be aware of.

This means you should do your own homework before buying any stock. Not all of the companies on this list will appeal to you. And even the ones that do should undergo some scrutiny to see if they meet your own investing standards.

Top 10 Up-and-Coming Stocks to Invest In

Here are 10 of the top up-and-coming stocks for 2024:

  1. Roblox
  2. Doximity
  3. Upstart Holdings
  4. Lemonade
  5. Lucid Group
  6. Beyond Meat
  7. Airbnb
  8. Stitch Fix
  9. Ethereum
  10. Confluent

1. Roblox (NYSE: RBLX)

Price: $32.9 (as of close May 19, 2024)

  • Momentum: Roblox’s sales increased 102% year-over-year in the third quarter of 2021
  • Growing Market: The global video game market will be worth an estimated $293 billion by 2027

Roblox isn’t your typical video game company. For one thing, the Roblox platform allows its users to create their own games and experiences, in addition to hosting professionally developed games.

This has created a unique gaming experience that’s nearly unmatched by other companies right now. Currently, Roblox has a vast and growing community of 9.5 million developers. Combined, they’ve created 24 million gaming experiences. Talk about decision fatigue!

However, even more, impressive is the number of gamers who are logging into Roblox: more than 47 million daily average users. That’s daily. As in, every single day.

If you’re thinking that gaming is a strange market that only slackers would invest in, may I kindly direct you back up the “growing market” bullet point above?

That’s right, the global video game market will reach a very impressive $293 billion five years from now, up nearly 87% from its current size.

2. Doximity (NYSE: DOCS)

Price: $28.03 (as of close May 19, 2024)

  • Momentum: The company finished its most recent quarter with year-over-year revenue growth of 76%
  • Growing Market: Management believes Doximity’s total addressable market is $18.5 billion.

Unless you’re a doctor or nurse, there’s a good chance you’ve never heard of Doximity. If that’s the case, let me introduce you to one of the most popular medical professional platforms out there.

Doximity built its physician-first tech platform to help medical professionals “collaborate with their colleagues, securely coordinate patient care, conduct virtual patient visits, stay up-to-date with the latest medical news and research, and manage their careers.”

That’s a lot for one platform to get right, but Doximity appears to be doing it successfully. Consider that 80% of U.S. physicians already use Doximity, including more than 90% of graduating U.S. medical students.

OK, so Doximity’s platform is popular. How is the company doing financially?

Fantastic, actually. Sales in the second quarter of fiscal 2022 skyrocketed 76% from the year-ago quarter and the company is profitable — a rarity among growth stocks.

Doximity just went public last year, which means that investors who want a long-term investment in this rising tech stock could have many years of potential growth.

3. Upstart Holdings (NASDAQ: UPST)

Price: $25.41 (as of close May 19, 2024)

  • Momentum: Sales skyrocketed 250% year-over-year in the third quarter of 2021
  • Growing Market: Total addressable market (TAM) for auto loans is $635 billion, and TAM for personal loans is $84 billion

Artificial intelligence (AI) isn’t just for apocalyptic robot takeovers. It can also be used to make applying for a loan easier than ever before.

Upstart says that only 48% of Americans have access to the best lending rates, yet 80% have never defaulted on a loan.

To help make lending better, Upstart uses AI algorithms to look beyond the data points traditional lending companies use to help determine if a person will be approved for a loan. The company says its algorithms are better not only for customers, but also for lending institutions.

Upstart boasts that it has 75% fewer loan defaults at the same approval rates than the major U.S. banks. The company also says that up to 71% of its loans are fully automated.

With its innovative approach to the lending market and its proven ability to grow sales, Upstart could make a fantastic investment for years to come.

4. Lemonade (NYSE: LMND)

Price: $17.97 (as of close May 19, 2024)

  • Momentum: In-force premiums paid by customers increased 84% year-over-year in third quarter of 2021
  • Growing Market: The company recently started tapping the $300 billion U.S. auto insurance market

Let’s stick with the AI theme for just another second and take a look at how Lemonade is using artificial intelligence to liven up one of the most boring markets out there: insurance.

The company uses AI to help customers find policies for everything from homeowners to car insurance.  Not only does Lemonade’s platform allow customers to find insurance that’s cheaper than they’d likely be able to find on their own, but it also uses its smart AI assistant to process claims as well.

Lemonade is rapidly growing its user base, increasing its customer count by 45% year-over-year in the most recent quarter. And the dollar amount of in-force premiums (IFP) — a fancy term insurance companies use for policies that are active and being paid — increased 84% compared to the same quarter of fiscal 2020.

What’s even more impressive about Lemonade’s fantastic third-quarter results is that the company just launched its car insurance offering recently. This means it still has plenty of room to benefit from this massive $300 billion market.

And with more than 1.4 million customers already using Lemonade, we think this company’s AI-based insurance platform is just getting started.

5. Lucid Group (NASDAQ: LCID)

Price: $2.84 (as of close May 19, 2024)

  • Momentum: Deliveries started at the end of 2021, but Lucid already has more than 17,000 vehicle reservations
  • Growing Market: The global EV market will reach an estimated $918 billion in 2028

It’s nearly impossible to write about up-and-coming stocks and not have an electric vehicle (EV) maker on the list. The EV market is still in its early stages, but the shift toward battery-powered vehicles is well under way.

By 2030, more than half of new car sales in the U.S. will come from EVs. And one promising bet on this rapidly expanding automotive market is Lucid Motors.

Lucid just went public in mid-2021. And while its share price has been volatile at times, the company’s long-term potential is huge. Lucid is aiming for Tesla’s dominance in the EV market, and it’s doing so by making one of the most luxurious vehicles you’ve ever seen — with a battery range to match.

Right now, the company sells only one car, its Air sedan. It just started delivering the $169,000 version of the vehicle, called the Dream Edition, toward the end of 2021.

While it boasts some impressive interior appointments, it’s the car’s optional 118kWh battery pack delivering up to 1,111 horsepower or 520 miles of range that’s truly impressive. Already, the Air has earned Motor Trend‘s “Car of the Year” award.

The company has plans for the eventual release of an all-electric SUV.

Vehicle production will ramp up this year, and Lucid says it will deliver 20,000 Air sedans (albeit a less expensive version than the Dream Edition) by the end of 2022.

6. Beyond Meat (NASDAQ: BYND)

Price: $7.19 (as of close May 19, 2024)

  • Momentum: Net sales increased 13% year-over-year in third quarter of 2021
  • Growing Market: Plant-based meat products market will reach an estimated $23 billion by 2024

Whoa! A plant-based meat company on a list with EV makers and tech stocks? I know; it surprised me too. But ignoring this fast-growing market — and how Beyond Meat is competing in this space — just seems like a mistake at this point.

Beyond Meat’s plant-based burgers, meatballs, sausage, and chicken can be found in more than 112,000 grocery stores and restaurants.

The company has made huge inroads into the restaurant space. It has partnerships with fast-food chains, including a recent collaboration with KFC to offer a Beyond Fried Chicken meal in the company’s restaurants nationwide.

Beyond Meat increased sales by 19% in the first nine months of 2021, compared with the same period in 2020, and there’s plenty more room to grow. The plant-based meat market will be worth an estimated $23 billion in the next several years

Investors should know that Beyond Meat’s share price has been on a wild ride since the company went public a few years ago. But if Beyond Meat can continue to successfully grow into this market and expand its partnerships as it just did with KFC, it could be a long-term winner.

7. Airbnb (NASDAQ: ABNB)

Price: $145.66 (as of close May 19, 2024)

  • Momentum: Revenue is up 70% compared to the year-ago quarter
  • Growing Market: Total addressable market for combined short-term stays, long-term stays, and experiences is $3.4 trillion

I know, I know; Airbnb doesn’t exactly seem like an up-and-coming stock, considering it’s already a household name in the short-term rental space. But the company’s share price hasn’t exactly performed well since it went public last year. So Airbnb still has massive upside potential in 2022 and beyond.

Sure, the pandemic is still causing some headaches for the travel industry as a whole. But it won’t last forever. Even in the most recent quarter, Airbnb’s gross booking value (GBV) was up 48% from the year-ago quarter.

Even more impressive is the fact that the company’s third-quarter GBV was up 23% from the same period in 2019 (that means GBV is up significantly compared to pre-pandemic levels).

Revenue is growing at an impressive rate as well, increasing 70% in the most recent quarter on a year-over-year basis and up 36% from the third quarter of 2019. Not to mention that gross profit skyrocketed 280%.

Based on that growth, it’s not hard to imagine how well Airbnb will perform when the pandemic is in the rearview.

8. Stitch Fix (Nasdaq: SFIX)

Price: $2.35 (as of close May 19, 2024)

  • Momentum: Sales jumped 19% year-over-year in the first quarter of fiscal 2022
  • Growing Market: Stitch Fix estimates its addressable market will reach $220 billion by 2025

It’s no surprise that clothing and retail companies took a major hit over the past few years as the pandemic essentially eliminated any need for dressing nicely.

Online apparel company Stitch Fix has felt the results of that. Its share price has tumbled about 68% over the past 12 months. So why put this beaten-down stock on an up-and-coming list? Because we believe it still has the potential to bounce back.

Not only is Stitch Fix tapping into the fast-growing trend of online apparel shopping, but it also recently started offering an AI-based algorithm to suggest clothing ideas and styles to customers.

The company’s innovative approach to selling clothes online is already paying off, even if investors haven’t reaped the rewards yet.

Sales in the most recent quarter were up 19% from the year-ago quarter, and Stitch Fix has 4.2 million active clients (up 11%). Additionally, the company’s net revenue per active client jumped 12% year-over-year in the first quarter of fiscal 2022.

Of course, there’s no guarantee that Stitch Fix’s share price will start reflecting the company’s recent strong performance. But investors may want to keep this up-and-coming apparel stock on their radar if the company can continue expanding its business in the years ahead.

9. Ethereum (CRYPTO: ETH)

Price: $3105.67627241 (as of close May 19, 2024)

  • Momentum: Ethereum’s value has increased 178% over the past 12 months
  • Growing Market: Current size of the crypto market is roughly $2.3 trillion

Ethereum isn’t a stock, but you can invest in it. When compiling a list of up-and-coming investments, it feels a little odd not to have a cryptocurrency in the mix.

While nearly all investors know a little something about Bitcoin, Ethereum may be a bit more of a black box. So let’s quickly shed light on this fast-growing cryptocurrency.

The first thing to know about Ethereum is that the blockchain (and its Ether token) are helping to create entirely new markets. Developers have used Ethereum’s blockchain to create decentralized apps (dapps) that are part of the larger decentralized finance (DeFi) market.

DeFi has the potential to make lending and borrowing money easier and directly between individuals, instead of relying on financial institutions. But one of the best examples of Ethereum’s DeFi uses right now is for non-fungible token (NFT) markets.

NFTs can be any digital assets, including music or images. Ethereum’s blockchain allows people to buy and sell these goods safely among themselves, with the blockchain permanently recording the sale.

Ether is already the second-largest crypto after Bitcoin, but we still consider it up-and-coming because the entire cryptocurrency market is in its early stages. This means that, while investors will have to stomach a lot of volatility with an Ether (or any other crypto) investment, it likely has plenty of potentials to continue growing in the coming years.

10. Confluent (NASDAQ: CFLT)

Price: $32.23 (as of close May 19, 2024)

  • Momentum: Sales spiked 67% year-over-year in the third quarter of 2021
  • Growing Market: Total addressable market will be $91 billion by 2024

A few years back, the phrase “big data” was everywhere. Companies talked up the idea that they could use data to improve everything from customer service to improving products. The problem is, while collecting data is easy (thanks, internet!), actually utilizing that data has proved much more difficult.

That’s where Confluent comes in. The company has created a cloud-based platform that helps companies go far beyond storing data and instead gives them real-time decision-making capabilities based on the data they have.

For example, Ticketmaster has used Confluent’s technology to build machine learning systems that decide in real-time who are ordinary customers and who are fraudulent ticket scalpers.

Netflix is also a customer, as is Goldman Sachs, PayPal, Walmart, and about 3,000 other companies.

In the most recent quarter, Confluent’s sales skyrocketed 67% year-over-year, and its customers with more than $100,000 annual recurring revenue (ARR) increased by 48%.

Even with these impressive results, management is optimistic that Confluent’s growth days are still ahead. They expect the company’s addressable market to nearly double between now and 2024.

Adding Up-and-Coming Tech Stocks to a Portfolio

The great thing about the stocks on this list is that there’s lots of potential upside for investors. But investors need to remember to balance out that potential upside with more stable investments.

Why do that? Because up-and-coming companies can experience significant share price volatility. If you invest only in growth companies, your portfolio is at greater risk of losing money if some of those investments don’t pan out as expected.

To balance out some of that risk, make sure to invest in more stable companies that are not only leaders in their respective markets but also very profitable. Apple is a good example.

You should also consider investing in an exchange-traded fund (ETF) that gives you exposure to the broader market. Both stable companies and ETFs will help balance your portfolio as you add higher-growth stocks to the mix.

And as always, don’t invest in any sector or company you don’t fully understand. Do lots of research before buying a stock, and make sure you understand exactly how the company works, how it makes money, and what its potential risks are.

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