About a year ago, “growth” became a dirty word on Wall Street. Say nothing of aggressive growth stocks. Companies that were growing revenue at the expense of profits saw their shares tank as investors braced for higher interest rates and fled to the relative safety of value stocks.
Yet, bear markets don’t last forever. And aggressive growth stocks have an important role to play in almost every portfolio. Companies with strong track records of growth and innovation tend to deliver higher returns, albeit with higher risk.
With the S&P 500 up about 10% from its bear market low, made just two weeks ago, it appears many investors have gotten their appetite for risk back. If you’re one of them, here are three aggressive growth stocks to buy now.
Palantir Technologies (PLTR)
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Shares of big data analytics company Palantir Technologies (NYSE:PLTR) are down 66% over the past year, mainly due to concerns about its slowing growth, lack of profitability and the broader tech wreck.
In early August, PLTR stock sold off following the release of the company’s second-quarter results. Revenue rose 26% to $473 million, which was in line with expectations. However, management’s full-year sales and profit forecast disappointed the Street. For 2022, Palantir estimates it will see adjusted income of about $342 million on revenue of about $1.9 billion. This was well below the $527.9 million in adjusted income and $1.98 billion in revenue analysts were expecting.
However, Palantir did see its commercial revenue increase 46% year over year in the second quarter. U.S. commercial revenue growth was even more impressive, rising 120% from a year ago, as the company saw its U.S. customer count jump to 119, up from 34 clients in the second quarter of 2021.
Palantir’s customer count will continue to rise as more companies look to benefit from the insights gleaned by data analytics. Most recently, Palantir inked a multiyear partnership with Hertz (NASDAQ:HTZ). Palantir will create a platform for the car rental company to help it manage and operate its fleet more efficiently.
While PLTR stock has lost two-thirds of its value in the past 12 months, shares are up 33% from their 52-week low, made in May. Given Palantir’s excellent growth prospects, investors should take advantage of the opportunity to buy the dip.
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MercadoLibre (NASDAQ:MELI) is one of the leading online retailers in the rapidly growing Latin American market. According to Statista, e-commerce sales in Latin America are estimated to rise from around $85 billion in 202o to $160 billion in 2025. That’s a compound annual growth rate of 13.5%. With its massive user base of roughly 140 million people as of last year and its user-friendly interface, MercadoLibre is positioned to capitalize.
The company’s network of online storefronts provides entrepreneurs and businesses with an easy and affordable way to reach new customers. And with its digital payments company Mercado Pago at its core, MercadoLibre can manage payments effectively. In short, MercadoLibre has all the tools it needs to continue dominating the Latin American e-commerce market.
Revenue rose 52% in the second quarter on a year-over-year basis and net income surged 81% to $123 million, driven by robust growth in both its e-commerce and digital payments businesses. Analysts are calling for revenue growth of 47% this year and 26% next year. Meanwhile, they are forecasting earnings per share will increase by 306% in 2022 and 58% in 2023.
MELI stock is down 44% over the past year. Yet, shares are trading 39% above their 52-week low, made in mid-June. Investors clearly are coming back around to this long-term growth play.
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Shares of e-commerce platform Shopify (NYSE:SHOP) have been clobbered over the past year, falling 80%. Yet, the company remains a leader in a high-growth space and could deliver outsized returns when investors start rewarding growth once again. According to Statista, global e-commerce sales will hit $8.1 trillion by 2026, up 56% from last year.
Much like Palantir, investors have punished Shopify for its slowing growth rates. Revenue growth, which was 86% in 2020 and 57% in 2021, is expected to be around 23% this year and next.
That said, Shopify remains a dominant player in the e-commerce space, as it adapts and evolves in response to changing trends and market conditions. With strong management, innovative technologies and a proven track record of success, Shopify should be able to weather this difficult period.
Shares have already bounced 23% from their 52-week low, made in mid-October, but there’s still time to get into this aggressive growth stock.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.