In this article we will take a look at the 10 best growth stocks to buy in 2021 and hold for several years to come. Note that all hedge fund data is based on the exclusive group of 800+ funds tracked by Insider Monkey as part of our market-beating investment strategy.
Despite the continuous tussle between growth and value stocks, the fact is that investing in growth stocks with strong fundamentals and long-term potential remains the best way to make profits. Technology companies account for 40% of the S&P 500. Growth stocks account for a huge part of the total returns generated by the broader indices over the last several years. The baffling returns posted by stocks like Alphabet Inc Class A (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. Common Stock (NASDAQ: FB), Twitter Inc (NYSE: TWTR) and Tesla Inc (NASDAQ: TSLA) over the past few years have shown the power of companies that are working on products of consequential value.
Major tech companies and growth stocks like Alphabet Inc Class A (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. Common Stock (NASDAQ: FB), Twitter Inc (NYSE: TWTR) continue to have surprisingly high valuations and metrics. This is because these companies are working on products and services that have a huge demand in the market.
Despite the raucous around soaring valuations, several analysts believe that the rise of tech stocks and their valuations is justified on the back of their spectacular earnings growth, exponential increase in customers and eye-popping spending for future growth. Janus Henderson Investors’ Alison Porter said in an interview with Wall Street Journal that the “digital lifestyle” people are embracing especially after the pandemic is providing further boost to these tech stocks. Porter likes some of the biggest technology companies because of their growth and increasing user base.
Baffling growth of growth stocks have also surprised the smart money, which has now started piling into these stocks. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
In this article, we take a look at some of the best growth stocks to buy in 2021 and hold for several years. These companies are operating in high-growth domains like EVs, ecommerce, SaaS, video games and social media. These stocks have strong fundamentals, as approved by analysts’ reports and market experts.
Photo by Austin Distel on Unsplash
With this context and industry outlook in mind, let’s start our list of the 10 best growth stocks to buy and hold for several years.
Best Growth Stocks to Buy and Hold for Several Years
10. NIO Inc. (NYSE: NIO)
Number of Hedge Fund Holders: 28
NIO Inc. (NYSE: NIO) is one of the most notable EV stocks in the market. The Chinese company’s shares were recently upgraded to Buy from Neutral by Citi, which cited latest data which points to a strong demand. Citi increased its price target for Nio to $58.30. NIO Inc. (NYSE: NIO) shares have gained a whopping 500% over the last 12 months. The stock ranks 10th in our list of best growth stocks to buy and hold for several years.
ARK Invest analyst Sam Korus recently said that China’s latest policy to provide an EV subsidy for vehicles priced at $45,700 or less for all companies instead of those offering battery swapping would help NIO (NYSE:NIO).
Like Sea Limited (NYSE:SE), Alphabet Inc Class A (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. Common Stock (NASDAQ: FB), Twitter Inc (NYSE: TWTR), Bilibili Inc. (NASDAQ: BILI), Cloudflare, Inc. (NYSE: NET) and Roblox Corporation (NYSE: RBLX), NIO Inc. (NYSE: NIO) is one of the best growth stocks to buy now.
As of the end of the first quarter, 28 hedge funds in Insider Monkey’s database of 887 funds held stakes in NIO Inc. (NYSE: NIO), compared to 34 funds in the fourth quarter. D E Shaw is the biggest stakeholder in the company, with 11.4 million shares, worth $443.9 million.
9. Roblox Corporation (NYSE: RBLX)
Number of Hedge Fund Holders: 46
Roblox Corporation (NYSE: RBLX) is one of the best growth stocks to buy in 2021 and hold for long term because the company is operating in an extremely lucrative market: video games. Roblox Corporation (NYSE: RBLX) is a video games storefront. The Cloud-based platform allows people to build and play games. Anyone can make games using the platform of Roblox Corporation (NYSE: RBLX) and monetize them. That’s what sets the company apart from other video game companies. The stock ranks 9th in our list of best growth stocks to buy and hold for several years.
Roblox Corporation (NYSE: RBLX) stock began trading earlier this year, closing at $69.50 on its first day of trading, raking in a market cap of close to $39 billion. Year to date, the stock has gained 33%.
As of the end of the fourth quarter of 2020, Tiger Global Management LLC owns 40.4 million shares of Roblox Corporation (NYSE: RBLX) worth $2.6 billion. RBLX accounts for 6.02% of Tiger Global’s total portfolio.
8. Cloudflare, Inc. (NYSE: NET)
Number of Hedge Fund Holders: 45
Cloudflare, Inc. (NYSE: NET) is a US-based web infrastructure and web services company. Recently, Morgan Stanley maintained an Equal Weight rating on Cloudflare, Inc. (NYSE: NET) but increased its price target to $91 from $88, adding that the company’s “flywheel” is gaining momentum. The firm also believes that the company’s efforts to expand its solutions will help its growth in the future.
Investment firm Baird also increased its price target for Cloudflare, Inc. (NYSE: NET) to $95 from $102, with an Outperform rating. The firm said that Cloudflare, Inc. (NYSE: NET) “continues to fire on all cylinders.”
Like Tesla Inc (NASDAQ: TSLA), Sea Limited (NYSE:SE), Alphabet Inc Class A (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. Common Stock (NASDAQ: FB), Twitter Inc (NYSE: TWTR), Bilibili Inc. (NASDAQ: BILI) and Roblox Corporation (NYSE: RBLX), Cloudflare, Inc. (NYSE: NET) is one of the best growth stocks to buy now.
With a $117.6 million stake in Cloudflare, Inc. (NYSE: NET), Alkeon Capital Management owns 1.7 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 45 hedge funds held stakes in Cloudflare as of the end of the first quarter, versus 60 funds in the fourth quarter.
7. Bilibili Inc. (NASDAQ: BILI)
Number of Hedge Fund Holders: 53
With over 200 million monthly active users, Bilibili Inc. (NASDAQ: BILI) is often called China’s YouTube. The company is a go-to video sharing and entertainment platform for Chinese teenagers and millennials. Bilibili Inc. (NASDAQ: BILI) stock is an extremely popular growth stock among US investors. It has gained 190% in the last 12 months.
In the first quarter of 2021, the company’s revenue jumped 82% on the year to $595.4 million. Adjusted loss per share came in at $0.29, beating the Street’s forecasts by $0.7.
For the second quarter, Bilibili Inc. (NASDAQ: BILI) expects a revenue of RMB4.25-4.35 billion versus the RMB 4.37 billion consensus.
As of the end of the first quarter, there were 53 hedge funds in Insider Monkey’s database that held stakes in Bilibili Inc. (NASDAQ: BILI), compared to 46 funds in the fourth quarter. Jonathan Guo’s Yiheng Capital, with 4.9 million shares of BILI, is the biggest stakeholder in the company.
Like Tesla Inc (NASDAQ: TSLA), Sea Limited (NYSE:SE), Alphabet Inc Class A (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. Common Stock (NASDAQ: FB), Twitter Inc (NYSE: TWTR), Cloudflare, Inc. (NYSE: NET) and Roblox Corporation (NYSE: RBLX), Bilibili is one of the best growth stocks to buy now.
In its Q4 2020 investor letter, Tao Value highlighted a few stocks and Bilibili Inc. (NASDAQ:BILI) is one of them. Here is what Tao Value said:
“Bilibili (ticker: BILI) similarly reported a blast Q3 2020. Bilibili Inc. (NASDAQ: BILI) reached average MAU of 197m with high 7.6% pay ratio, showing strong user growth and high engagement. Additionally, the high margin advertisement segment showed exceptionally strong trend, growing 126% yoy. Though surprising to many, I think it is a natural outcome of building an ever-more valuable user generated contents platform. If it is not by ads, I believe these values created by Bilibili will accrue to it in other ways. One interesting data point is that management mentioned the average age of new cohorts are still around 20, indicating it is still in its early stage of a long growth runway. I am happy to see this position played out like how I envisioned in original thesis and will be excited to continue to follow its progress.”
6. Array Technologies, Inc. (NASDAQ: ARRY)
Number of Hedge Fund Holders: 30
Array Technologies (NASDAQ:ARRY) is one of the best growth stocks to buy in 2021 and hold for long-term gains because it’s operating in the solar energy space. The company provides solar tracking systems that move solar plates for an optimal orientation to the sun. In May, Credit Suisse upgraded Array Technologies (NASDAQ:ARRY) stock to Outperform from Neutral with a $31 price target. The firm’s analyst Michael Weinstein said that large tracker manufacturers can navigate tough commodity price problems better than the smaller ones. The stock ranks 6th in our list of best growth stocks to buy and hold for several years.
A total of 30 hedge funds tracked by Insider Monkey were bullish Array Technologies (NASDAQ:ARRY) at the end of the first quarter, up from 29 funds a quarter earlier.
Like Tesla Inc (NASDAQ: TSLA), Sea Limited (NYSE:SE), Alphabet Inc Class A (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. Common Stock (NASDAQ: FB), Twitter Inc (NYSE: TWTR), Bilibili Inc. (NASDAQ: BILI), Cloudflare, Inc. (NYSE: NET) and Roblox Corporation (NYSE: RBLX), Array Technologies is one of the best growth stocks to buy now.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned Array Technologies, Inc. (NASDAQ: ARRY). Here is what ClearBridge Investments has to say about Array Technologies, Inc. in its letter:
“Array Technologies (NASDAQ:ARRY), meanwhile, also announced a secondary offering that weighed on sentiment. However, we believe the long-term fundamentals for renewables are attractive, and our solar stocks in fact raised guidance for 2021. Global commitments to solar and wind continue to grow, and the stocks should benefit from legislative catalysts such as the pending U.S. bill focused on infrastructure, the proposed CLEAN Future Act, which would provide support for material emissions reductions, and the Green Act, which would boost tax credits for renewables, storage and electric vehicles.”
5. Sea Limited (NYSE: SE)
Number of Hedge Fund Holders: 98
Sea Limited (NYSE:SE) is a growth powerhouse operating businesses which have a huge long-term growth potential, including Shopee (ecommerce), Garena (mobile games), SeaMoney (digital payments), among others. Sea Money is also among the stocks which the best-performing hedge funds are buying.
BofA recently upgraded Sea Limited (NYSE:SE) from Neutral to Buy and upped its price target for the stock to $340 from $260. The firm said Sea Ltd’s Shopee is surpassing growth estimates in Southeast Asia and achieving “rapid success” in Latin America. BofA also likes the success of the company’s game Free Fall.
Tiger Global Management LLC is one of the 98 hedge funds tracked by Insider Monkey having stakes in SE at the end of the first quarter. The fund owns over 9.5 million shares of the company.
In its Q1 2021 investor letter, ClearBridge Investments highlighted a few stocks and Sea Ltd (NYSE:SE) is one of them. Here is what the fund said:
“Singapore-based Sea maintains leading positions in Southeast Asia in video games and e-commerce and operates an emerging digital payments and banking business. While the company is investing heavily into e-commerce and payments, this growth is being funded by its highly profitable gaming segment. We see a long runway for growth across Sea’s businesses with multiple opportunities like e-commerce expansion in Latin America not fully factored into the valuation today. The company also has a well-respected management team that has successfully executed in expanding its total addressable market. Along with existing holding Alibaba, Sea provides exposure to secular growth trends in emerging markets that are harder to replicate through U.S. stocks.”
4. Intuit Inc. ( NASDAQ: INTU)
Number of Hedge Fund Holders: 53
Intuit Inc. ( NASDAQ: INTU) is one of the best growth stocks in the SaaS space as it’s behind some of the most popular Cloud-based finance software like TurboTax, Mint and QuickBooks. Intuit stock has gained 27% year to date.
The company’s revenue in fiscal Q3 jumped 40%. For the fourth quarter, the company expects a revenue in between $2.29 billion – 2.33 billion, well above the consensus of $1.85 billion.
In addition to long-term stock price appreciation, the company also offers a 0.50% dividend yield.
Fisher Asset Management currently owns 1.3 million shares of ISRG, worth $941.96 million. ISRG occupies 0.66% of Fisher’s overall equity.
Ensemble Capital, in their Q1 2021 investor letter, mentioned Intuit Inc. ( NASDAQ: INTU). Here is what the fund said:
“Notable detractors to the Fund’s returns this quarter (included) Intuitive Surgical. Intuitive Surgical’s (6.3% weight in the Fund) growth slowed in 2020 as COVID hit the brakes on many elective surgeries. Given continued COVID-related risks in the US and Europe in 2021, it’s still unclear as to when elective surgeries recover to more normal levels. As such, hospitals may be holding off on planned surgical robot investments until demand rebounds. That said, in Asia, where COVID has been well contained, Intuitive Surgical’s procedures and systems utilizations improved, which bodes well for recovery in the US and EU. Most procedures can’t be delayed indefinitely or canceled, so we continue to expect a resumption of strong, durable growth as the pandemic recedes.”
3. G1 Therapeutics, Inc. (NASDAQ: GTHX)
Number of Hedge Fund Holders: 12
G1 Therapeutics is a small molecule therapeutics company focusing on treating cancer. The stock has gained 20% year to date.
Earlier in June, the company’s rintodestrant showed anti-tumor activity in patients with advanced breast cancer when combined with Ibrance.
In the first quarter, the company’s Q1 GAAP EPS came in at -$0.65, beating the Street’s forecast by $0.42. Revenue in the quarter totaled $14.22 million, above the consensus by $13.44 million.
With several products in the pipeline and growth catalysts on the horizon, G1 Therapeutics, Inc. ranks 3rd in the list of the best growth stocks to buy in 2021 and hold for several years.
The company is also getting the attention of the smart money, as 12 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the first quarter, down from 16 funds a quarter earlier.
2. Invesco NASDAQ Next Gen 100 ETF (NASDAQ: QQQJ)
Number of Hedge Fund Holders: N/A
QQQJ is one of the best growth ETFs to buy in 2021 and hold for several years. The ETF has gained 25% in the last 12 months. Its holdings include some of the best growth tech stocks like CrowdStrike Holdings, Inc. (NASDAQ: CRWD), Roku, Inc. (NASDAQ: ROKU), Citigroup Inc. (NYSE: C), Zebra Technologies Corporation (NASDAQ: ZBRA), Garmin Ltd. (NASDAQ: GRMN), Zscaler, Inc. (NASDAQ: ZS), and Etsy, Inc. (NASDAQ: ETSY).
1. Chewy, Inc. (NYSE: CHWY)
Number of Hedge Fund Holders: 32
Chewy Inc is an ecommerce company focusing on selling pet food and supplies. The stock has gained 60% over the last 12 months. Chewy (NYSE:CHWY) said its adjusted EBITDA in the first quarter jumped 27% YoY to $77.4 million, while total sales increased by 32% in the period.
For the second quarter, the company expects revenue of $2.15 billion to $2.17 billion, versus the consensus estimate of $2.14 billion.
As of the end of the first quarter, there were 32 hedge funds that hold a position in CHWY compared to 38 funds in the fourth quarter. The biggest stakeholder of the company is Zevenbergen Capital Investments, with 1.3 million shares, worth $109.9 million.
You can also take a peek at 10 Best Dividend Stocks to Buy According to Billionaire George Soros and 10 Best Stocks to Buy According to Bruce Berkowitz’s Fairholme Capital.
Correction: Previous version of this article mistakenly mentioned Intuitive Surgical, Inc. (NASDAQ: ISRG) instead of Intuit Inc. ( NASDAQ: INTU).
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Disclosure: None. 10 Best Growth Stocks to Buy in 2021 and Hold is originally published on Insider Monkey.
Correction: Previous version of this article mistakenly mentioned Intuitive Surgical, Inc. (NASDAQ: ISRG) instead of Intuit Inc. ( NASDAQ: INTU).
