When it comes to trading, we all want to make money, but there are a few different ways to go about it. A lot of it can depend on your personality, your time horizon, or how much time you can dedicate to the act of trading. For me, options have never worked very well, but I also don’t want the slow growth of something like Apple (AAPL). So what I need are companies which have a lot of energy behind them and will appreciate rapidly. Here’s how I find growth stocks for my style of trading.
What is a Growth Stock?
Some of the biggest names we know now were once considered growth stocks. Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Facebook (FB) were all growth stocks because there was something about them which was revolutionary, and they had a huge ability to “grow” into their market. Think about a company which is disrupting the status quo, or entering the scene with a product or service which no one has seen before. They are the first to tap the wide open land of opportunity, which will bring increasing earnings reports every quarter. Investors and traders know this, and therefore, the price they buy in at when the stock or company is new should rapidly appreciate in value as the company gains market share and sales soar.
Characteristics of Growth Stocks
Basically as stated above, we’re looking for something new and untapped. Something that has a long runway before competition steps in or before saturation becomes an issue. A growth stock can also be a flash in the pan since something that’s once new and exciting, can become old and obsolete or simply saturated. Think of Blackberry (BB), GoPro (GPRO), Zoom (ZM), and Peloton (PTON).
Blackberry was once the hottest device around, but they were blown out of the water when the iPhone ushered in touch screens. GoPro was the toughest little camera with awesome wide angle lenses and HD resolution, but it was easily copied by other large manufactures which saturated the market and lowered prices. With GoPro being a one trick pony, they had nowhere to turn and thus their stock fell. Zoom and Peloton were both pandemic darlings with nearly instantaneous growth as people had to change everything to indoors and online. But they too are easily replicated business models and their customer base had already grown to what it would ever be. Therefore the lack of sustained growth is what took those stocks down.
So keep in mind, a high growth stock is exactly that. They can burn brightly, but unless they continue to reinvent or find new ways of staying relevant and increasing sales, when the growth declines, so does the stock.
Best Growth Stocks Right Now
To start this section, we should actually identify the sectors that are hot because it’s easier to be a boat in a rising tide, and then find the best names in that tide. Here are a few areas I find to be hot:
- EV’s and alternative energy
- Crypto and its miners
The Electric vehicle space should be a no brainer right now for growth stocks. In fact, the whole sector was so insanely hot last November that anything that was remotely related to the EV space was blowing up. Now that the “fear of missing out” has calmed down, we’re starting to see some survivors still standing. Obviously Tesla (TSLA) is the OG of the space, but with strong newcomers like Rivian Automotive (RIVN) and Lucid Group (LCID), there’s a whole new era being ushered in. Even Ford and GM are catching some energy from their commitment to EV’s.
Alternative energy is also hot as we’re trying to pivot away from fossil fuels; plus all those EV’s need charging infrastructure. So we get names like FuelCell Energy (FCEL), Bloom Energy (BE), Blink Charging (BLNK), Plug Power (PLUG), and Beam Global (BEEM).
I’m sure you’ve heard of Bitcoin by now. Probably even Ethereum. But did you know about the companies which do the work of those blockchains and earn coins for doing so? Well, the bigger those companies get, the more they can mine. And the more they can mine, the more they profit. Then, the more Bitcoin catches on and the coin itself becomes more valuable, the miners will appreciate in value as they can possibly start holding onto the coins they mine. There are also companies which will profit from the crypto ecosphere growing. Here are the names I like to follow: HIVE Blockchain Technologies (HIVE), Bitfarms (BITF), Riot Blockchain (RIOT), Marathon Digital Holdings (MARA), Hut 8 Mining (HUT), Silvergate Capital (SI), MicroStrategy (MSTR), Bit Digital (BTBT), and Coinbase (COIN).
I’ve given you a lot of names here, and while they could all be winners, some may have some shocks to the system, like Marathon Digital Holdings (MARA), that you may want to avoid. Or how do you get into something like Lucid Group (LCID) at the right time? The stock market is a challenging place, which is part of why I like it since we never quite know what’s next and it keeps me on my toes. The kind of activity we’re seeing now, especially with the IWM breaking out after going sideways for over 8 months, is now my kind of market.
If you want to stay on top of all the growth stocks like these, and get my exclusive tips for entering and exiting trades, I invite you to join my Moxie Indicator™ Mastery. It includes live trading, interactive Q&A, and real-time trade alerts. See you there Market Pilots!