Send me real-time posts from this site at my email
Motley Fool

Got $5,000? These 2 Growth Stocks Are Smart Buys

A lot of growth stocks have seen volatile trading in recent months. Inflation concerns and rising bond yields and interest rates have spooked some market traders and sparked sell-offs in 2021. But the pullback has also created opportunities to build positions in companies hit but the broader market sell-off but still positioned well for long-term success.

Plenty of growth-dependent tech stocks have fallen out of favor since hitting highs in the year's first quarter, but investors can still score with some category leaders. In fact, here are two high-growth tech stocks that are worth buying right now. Let's find out a bit more about them.

Image source: Getty Images.

1. Airbnb

Airbnb (NASDAQ: ABNB) has already reshaped the travel and hospitality industries, and its rapid growth and innovative approach to the short-term rental market have helped the stock be relatively resilient amid market volatility. Even so, shares are down roughly 21% from their all-time highs. The company now has a market capitalization of roughly $108 billion and trades at approximately 19 times this year's expected sales.

Given the market turbulence, it's not necessarily unreasonable to approach the company's growth-dependent valuation with a cautious eye. On the other hand, Airbnb is a great business that appears to have a long runway for expansion, and the passage of time may come to recast the company's current valuation as very cheap.

With the property rental specialist seemingly emerging from the worst of challenges faced amid pandemic times, Airbnb's business is snapping back and posting impressive numbers. The company's second-quarter sales surged nearly 300% year over year and also came in 10% higher than sales in Q2 2019. Even with some challenges still at hand, there's a good chance that the company will post best-ever quarterly revenue performance when it releases results for the third quarter in mid-November.

Airbnb has already helped to make traveling more convenient than ever before, and the company is positioned to benefit as work-from-home and digital nomad trends give people greater flexibility in where they live and how they spend their time. The stock could make big gains in short order as headwinds continue to dissipate, and it continues to offer an attractive risk-reward dynamic for long-term investors.

2. Take-Two Interactive

Video game publisher Take-Two Interactive's (NASDAQ: TTWO) Grand Theft Auto franchise is an absolute money printer. Grand Theft Auto V, which first released in 2013, is not only the most successful video game in history, it's also the single most profitable entertainment release of all time.

The game has been kept alive through a series of rereleases and content updates that have encouraged players to purchase new versions of the game and remain engaged in its highly profitable online mode. Developing content expansions tends to be much cheaper than creating entirely new games, and GTA V's strong core gameplay and an expanding variety of things to experience in its online world have kept players spending on the title's in-game virtual currency.

Grand Theft Auto V has already sold more than 150 million copies, and Take-Two Interactive is set to release another version of the game for Microsoft's Xbox Series X and Series S consoles and Sony's PlayStation 5 this coming March. As a conservative estimate, I think that the upcoming GTA V release will add at least another 10 million units to the game's lifetime sales, and it will also help keep players engaged with Grand Theft Auto Online.

If that's not enough Grand Theft Auto for you, the company is also readying a remastered trilogy of other previously released games in the series. Video games with long product life cycles can be enormously profitable, and Take-Two's ability to keep audiences coming back for more GTA reflects well on the management of the franchise and the long-term staying power of the property.

And, while Grand Theft Auto has been an enormous, industry-shaping success, it's far from the only bankable franchise in Take-Two's stable. In addition to a strong library of smaller series, the company's NBA 2K and Red Dead Redemption franchises are also massive hits, and the publisher has been making acquisitions in the mobile gaming space to bolster long-term growth opportunities on gaming's biggest platform.

Take-Two Interactive has built a leading position in the global gaming industry, and the stock stands out as a great play for investors aiming to benefit from the long-term growth of interactive entertainment.

10 stocks we like better than Airbnb, Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Airbnb, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 17, 2021

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Keith Noonan owns shares of Airbnb, Inc. and Take-Two Interactive. The Motley Fool owns shares of and recommends Airbnb, Inc., Microsoft, and Take-Two Interactive. The Motley Fool recommends the following options: long January 2023 $115 calls on Take-Two Interactive. The Motley Fool has a disclosure policy.


Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue