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Best growth stocks to buy in 2022
One of the most popular investment strategies today is to buy growth stocks. This is because these are stocks of companies that can generate robust profits and large price gains by outperforming other stocks within their respective sectors. In this article, we detail what growth stocks are and how to find the best ones.
What are the top growth stocks to buy?
The table below contains our top 5 growth stocks, as chosen by our experienced team of analysts. To see the latest market information for a particular stock, simply click on the relevant link in the table. Otherwise, read on to find out more about each company and why it is on our list.
|#||Stock symbol||Company name|
|1||AFX||Alpha FX Group PLC|
|2||TTD||The Trade Desk Incorporated|
|3||DOTD||Dotdigital Group plc|
|4||PYPL||PayPal Holdings Incorporated|
|5||SEDG||SolarEdge Technologies Incorporated|
Scroll down to see our detailed breakdown of each company, analysing their history, fundamental value, and recent market performance.
1. Alpha FX Group PLC (LON: AFX)
Founded in 2009 and headquartered in London, the United Kingdom, Alpha FX Group is a corporation that provides foreign exchange risk management and alternative banking solutions to over 70 countries in more than 160 currencies.
Its services are primarily tailored towards companies that are exposed to currency market volatility, and its array of services includes currency contracts, option contracts, foreign exchange spot transactions, payments collections and currency accounts services. The Alpha FX business model focusses on a small number of reliable, high-value clients (around 750) rather than becoming distracted by volume and scale.
Since its IPO in 2017, the company has grown rapidly more than 500% thanks to soaring revenue and operating profit. Moreover, this growth shows no sign of slowing down, and it is the 5-year success of AFX that has secured it the top spot on our list.
2. The Trade Desk Incorporated (NASDAQ: TTD)
Incorporated in 2009 and based in Ventura, California, The Trade Desk is a technology company that provides services in the United States and internationally. It offers an innovative, ‘smart’ approach to advertising that is intended to benefit all of humankind.
The company’s signature product is its self-service, cloud-based platform that allows buyers to create, manage, and optimise data-driven digital advertising campaigns in a variety of different channels and advertisement formats. TTD states that this is a ‘media-buying platform built for the open internet,’ and this platform allows users to run smarter campaigns, grow their audience and build custom solutions, all from a single, innovative hub.
The really eye-catching thing about TTD – and the key reason it has secured a spot on our list – is the sheer scale of its growth. From humble origins in 2016, the platform has grown in value by well over 2,500%. Our list of the top growth stocks simply wouldn’t be complete without one of the fastest-growing companies around.
3. Dotdigital Group plc (LON: DOTD)
Incorporated in 1999 and based in London, the United Kingdom, Dotdigital is yet another rapidly-growing, small-cap tech player. The company offers software as a service (SaaS) and managed services to digital marketing professionals worldwide.
The company’s Engagement Cloud is similar to The Trade Desk’s ad hub, and it enables marketers to create, test, and send data-oriented ad campaigns automatically via channels including email, SMS, social media, and more.
DOTD has been around a decade than TTD, and while it is a significantly less valuable company, its growth of over 2,800% over the last 5 years is slightly superior. The main reason Dotdigital is on this list is that its potential for growth remains sizeable. As one of the smallest companies on this list, its ceiling still appears to be some way away, and with companies dealing in data growing at an accelerating rate, DOTD could be poised to benefit.
4. PayPal Holdings Incorporated (NASDAQ: PYPL)
Founded in 1998 and headquartered in San Jose, California, it is likely you know what PayPal is, and you have probably used its secure global payment services before. For those of you who haven’t heard of the company, PayPal is a technology platform and digital payments company that enables digital and mobile payments for both consumers and merchants internationally. The company’s suite of products includes PayPal, PayPal Credit, Braintree, Venmo, Xoom, Hyperwallet, and iZettle.
With around 26,500 employees worldwide and led by well-known CEO, Dan Schulman, it is one of the world’s largest tech companies, growing by well over 600% in the last 5 years and achieving a large-cap status. With cryptocurrency payment offerings potentially on the horizon, and with many more areas for potential expansion, Paypal’s impressive rise to prominence shows no sign of letting up.
PYPL has secured a spot on this list because it combines the stability and reputation of a major stock with the exciting growth credential of a start-up tech company. It is a unique value combination that is hard to ignore.
5. SolarEdge Technologies Incorporated (NASDAQ: SEDG)
Incorporated in 2006 and based in Herzliya, Israel, SolarEdge is an international corporation that designs, develops, and sells some complicated-sounding technology: direct current (DC) optimised inverter systems for solar photovoltaic (PV) installations. In simpler terms, SEDG plays a role in the creation of functioning solar power systems.
With over 3,000 employees and $1.4 billion in revenue, SEDG is one of the leading companies in its expanding sector and having achieved 1,400% growth in the last 5 years, it will no doubt be looking to build on this momentum.
SolarEdge is primarily on this list because of the nature of the industry it occupies. With the ESG thematic growing increasingly significant, a global segue towards clean energy systems to combat climate change appears to be a reality that is drawing closer. SEDG is a company that is likely to be at the front of the pack to benefit from a green energy revolution.
Where to buy the best growth stocks
If you want to know where to find the best growth stocks, check out our table below. We have recommended several trading platforms because of their low fees, ease of use, and innovative features. Simply click on one of the links to sign up and get started.
What is a growth stock?
A growth stock is the stock of a company with earnings and revenue are growing faster than its peers in the same industry. Growth stocks might look overpriced if you analyse them solely based on the fundamentals – such as price-to-earnings (P/E) ratios – and this can indeed be true with some of the options available.
However, growth stocks are companies that reinvest their profits back into the business to generate further growth, which often causes those stocks to keep rising in price. If you find a growing company with a well-concocted business model, it is likely you have found a growth stock worth investing in.
In summary, growth stocks combine superior present-day earnings, revenue, and cash-flow growth with expectations for robust future growth. This kind of fundamental strength gives growth stocks greater potential for big price gains in the future, which is often what attracts investors to them.
Are growth stocks a good investment?
Growth stocks can be a good investment, though it depends on circumstances. Certainly, a stock that demonstrates strong earnings and revenue growth has excellent potential to generate returns; however, it is important to take a close look both at the company you’re investing in and the broader prevailing market conditions.
When a stock is riding high, there’s always the chance this is because it is overvalued due to market sentiment, and it is set for a crash landing. Additionally, bear markets can torpedo even the most promising growth stocks, leaving them to sink to the bottom of the market and leaving you vulnerable to capital losses.
Growth stocks are largely fuelled by market sentiment and expectations, so as a result, it is best to invest in growth stocks when market conditions are bullish because this is when stocks of this type perform the best. You can check out the latest analysis concerning growth stocks throughout the investment sphere below:
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Fact-checking & references
Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.
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