In this article, we discuss the 5 Best Tech Growth Stocks to Buy Right Now. If you want to read our detailed analysis of these companies, go directly to the 10 Best Tech Growth Stocks to Buy Right Now.
5. NVIDIA Corporation (NASDAQ: NVDA)
P/E Ratio: 79.79
While AMD designs both central processing units (CPUs) and graphics processing units (GPUs), another Santa Clara chip designer, NVIDIA Corporation, is known for inventing the modern-day GPU. NVIDIA is also one of the most fast-paced companies in the world, which is now targeting the emerging AI and machine learning segments. While originally a GPU designer is known for its close relationships with chip foundries, NVIDIA has now diversified its product lineup to launch a new CPU that targets datacenters, provides a virtual environment to several of the world’s biggest companies to finetune their manufacturing systems, and plans to target even more segments through the proposed acquisition of the British chip design house Arm Ltd.
NVIDIA’s shares closed at a price of $48.36 in 2017 and its closing price on Thursday, August 26 2021, was $220.68, which makes for an impressive growth of 356% in three years. More importantly, despite its higher revenue, NVDIA’s P/E ratio of 79.79 indicates that its bets on emerging technology sectors are playing well with investors.
In its Q2 2021 investor letter, Baron Opportunity Fund highlighted a few stocks and Nvidia Corp. (NASDAQ: NVDA) is one of them. Here is what the fund said:
“NVIDIA Corporation is a fabless semiconductor company and a leader in gaming cards and accelerated computing chips. Shares of NVIDIA rose in the second quarter on financial results and guidance significantly above Street expectations, as it benefited from the upgrade cycle in its gaming franchise along with continued AI-related strength driving its data center segment. NVIDIA’s total revenues of $5.66 billion beat Street expectations by $266 million, growing 84% (including the benefit of acquisitions, 65% organic), with its gaming business growing over 100% and its data center business expanding nearly 80%. We remain confident in NVIDIA’s leading position in gaming, data centers, and autonomous machines.”
4. Peloton Interactive, Inc. (NASDAQ: PTON)
P/E Ratio: 157
Peloton is one of the unique firms out there that allows its users to experience a community-based experience while sitting in the luxury of their homes. It offers exercise bicycles and treadmills which are connected to each other and allow video calls. Peloton also offers exercise classes and has a software application that lets users stream their classes.
Peloton’s share price at the end of September 27, 2018, when its shares started trading was $25.24, and its closing price on Thursday, August 26, 2021, was $114 making for 352% growth in three years. Its P/E ratio is 157.
Artisan Mid Cap Fund, in its Q1 2021 investor letter, mentioned Peloton Interactive, Inc. (NASDAQ: PTON). Here is what the fund said:
“Among our bottom Q1 contributors was Peloton Interactive. Peloton’s growth has accelerated throughout the pandemic as consumers replace in-person gym workouts with the company’s connected bikes and online classes. This has increased brand awareness, decreased the need for advertising spending and quickly proved the company’s high-margin, recurring revenue business model. These benefits were on clear display in Peloton’s Q4 results, which showed subscription growth trends remain robust entering 2021. However, this demand, combined with global supply chain bottlenecks, is resulting in bike shipment delays and has led the company to spend $100 million in the coming months to expedite deliveries. While this will pressure near-term profits, we expect trends to improve later this year as the company’s investments in manufacturing capacity bear fruit and as it rolls out a new, affordable treadmill. We trimmed our position early in the quarter based on valuation concerns, but the stock’s subsequent selloff brought the valuation back into an attractive range, in our view.”
3. Square, Inc. (NYSE: SQ)
P/E Ratio: 263.27
Square Inc is a financial technology firm founded in 2009 by Twitter founder Mr. Jack Dorsey and billionaire Mr. Jim McKelvey. Since its inception, the company has grown to be one of the biggest payments firms in terms of revenue, as it displaces well-established players in the sector such as Visa. Square is known primarily for hardware products, such as the Square Reader and the Square Stand, which allow gadgets such as smartphones and tablets to engage in financial transactions. It also has a software application called CashApp which allows individuals and businesses to transfer cash to each other.
Its successful targeting of the growing financial technology sector and the move to cryptocurrency have rewarded Square with momentous share price growth. Square’s shares closed at $34.67 in 2017 and its closing price on Thursday, August 26 2021, was $262.16 making for 656% growth in three years. The share price, combined with the company’s earnings, results in a P/E ratio of 263.27.
2. Tesla, Inc. (NASDAQ: TSLA)
P/E Ratio: 372
Tesla, Inc, simply known as Tesla, is well known globally for two reasons. The first is the fact that it is the first American auto manufacturer which has managed to not only develop a mass production system, and the second is its chief executive officer Mr. Elon Musk, who is known for his pledged drive to change the future by making electric vehicle ubiquitous and making life interplanetary through his second company, Space Exploration Technologies, Corp (SpaceX).
Tesla is also known for struggling to smooth out its manufacturing processes, and 2020 has been the first year that saw few problems for the company on this front. However, even as the company sets up a strong base in China and regularly pushes out vehicles, its true growth potential lies in a future where Musk wants a cheap electric vehicle affordable to the bulk of the global population.
These aspirations have fueled Tesla’s price to new highs. Tesla’s shares closed at $62.27 in 2017 and its closing price on Thursday, August 26 2021, was $701, making for eye-popping 1026% growth in just three years. And while the share price soars to new highs, investors are happy as they’ve rewarded Tesla with a P/E ratio of 372.
In the Q2 2021 investor letter of Worm Capital, the fund mentioned Tesla, Inc. (NASDAQ: TSLA). Here is what the fund said:
“Tesla underperformed in the quarter, but we maintain our high conviction in the long-term thesis on each business model. Much like art or writing, investment research is a continuous process—it never really ends. Prices can move in either direction in any given quarter, but our advantage often comes from knowing the businesses so well that short-term fluctuations in pricing shouldn’t affect our decision-making. On high conviction positions, this patience is often rewarded, which is why research is so valuable to our process…
..Tesla is in a class of its own. What many in the market seem to (still) not understand is that Tesla is not a car company so much as a complex manufacturing firm—with significant recurring software potential—growing, in our view, at a targeted rate of 50-100% YoY over the next several years. Unlike any other automotive firm in existence today, Tesla alone is a vertically integrated hardware and software business developing state-of-the-art manufacturing techniques that will revolutionize the auto industry (i.e. its Giga Presses, 4680 cells, etc.). It is a generational company and we anticipate it will eventually be the largest company in the world. Many of the conventional narratives around competition displacing Tesla’s lead are fundamentally flawed, and the many headlines surrounding Tesla’s approach to autonomy are frustratingly superficial. (As an aside, we highly recommend watching Andrej Karpathy’s, Tesla’s head of AI, his recent presentation from June: “Tesla details its self-driving Supercomputer that will bring in the Dojo era”)”
1. HubSpot, Inc. (NYSE: HUBS)
P/E Ratio: 518
The growth of the Internet provides traditional advertisers with a far greater medium to reach their potential customers. HubSpot is one such company that seeks to connect advertisers to their customers. It was founded in 2006 and provides a wide array of services to customers that include advanced data analytics, search engine optimization, and marketing tools.
HubSpot’s shares are one of the biggest growth stories out there, especially for the industry in which it operates. The company’s shares closed at $88.4 in 2017 and its closing price on Thursday, August 26 2021, was $684 making for a staggering 677% growth in three years. HubSpot reported $1.32 in non-GAAP EPS at the end of its previous fiscal year and a GAAP EPS loss. Based on its share price and the non-GAAP EPS, its P/E ratio is 518.
n the Q2 2021 investor letter of Alger, the fund mentioned HubSpot, Inc. (NYSE: HUBS). Here is what the fund said:
“HubSpot provides a cloud-based marketing and sales software platform that enables small and mid-size businesses (SMB) to attract new potential customers, convert them to paying customers and retain them. HubSpot targets its services to companies with 10 to 2,000 employees and seeks to attract visitors to its clients’ digital content through inbound marketing techniques. It then seeks to convert visitors into leads, close leads into customers, and improve engagement and customer services. The stock outperformed during the second quarter after the company reported accelerating growth momentum at scale during the first three months of this year. The headwinds HubSpot experienced during the pandemic created a setup for the company to emerge from the crisis in a much stronger strategic position than before. Management raised fiscal year 2021 revenue guidance by $77 million, a 6.5% increase, after just one quarter into the fiscal year, implying accelerating growth into the rest of the year. We believe HubSpot currently has potential to revise upward annual revenue guidance throughout the year. In addition, the company has been expanding its services and has moved from simply helping small businesses grow better to providing what we believe is the best-of-breed customer relationship and customer experience platform for companies interested in building scale.”
You can also take a peek at the 10 Stocks that Crushed Earnings Expectations and 10 Must-Watch Earnings Reports.
