In this article, we discuss the 11 best young stocks to buy. You can skip our detailed analysis of young stocks and recent IPOs, and go directly to read the 5 Best Young Stocks To Buy Now.
According to a report published by Wall Street Journal, in 2020, companies raised over $167 billion through 454 initial public offerings, with $67.3 billion raised in the fourth quarter. In 2019, 211 offerings raised over $62.3 billion, shattering the analysts’ expectations. Some of the notable companies that went public in 2020 include Airbnb, Inc. (NASDAQ: ABNB), Snowflake Inc. (NYSE: SNOW), DoorDash, Inc. (NYSE: DASH), and Palantir Technologies Inc. (NYSE: PLTR).
Investing in new companies comes with risks. But what makes a successful investor different from average investors is their ability to spot great companies in their initial stages. Famous stocks like Facebook, Inc. (NASDAQ:FB) and Apple Inc. (NASDAQ:AAPL) are two examples. The former is up about 186% over the last five years, while the iPhone maker has gained more than 400% in the same period.
Our Methodology:
Let’s analyze our list of the best young stocks to buy. The companies mentioned below went public in 2020 and 2021. We took into account long-term growth potential, analyst ratings, hedge fund sentiment and fundamentals while choosing these stocks.
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Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Young Stocks To Buy Now
11. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 16
IPO Date: April 15, 2021
AppLovin Corporation (NASDAQ:APP) ranks eleventh on our list of the best young stocks to buy. The company raised $1.8 billion on its IPO in April 2021, with the share price rising 18.5%. AppLovin Corporation (NASDAQ:APP) gained 41.55% since its IPO.
Southpoint Capital Advisors is the largest shareholder of AppLovin Corporation (NASDAQ:APP) in Q2, with shares worth $263 million. Overall, 16 hedge funds tracked by Insider Monkey have positions in the company in Q2, valued at $987.9 million.
This October, Truist lifted its price target on AppLovin Corporation (NASDAQ:APP) to $100, while keeping a Buy rating on the shares. The firm’s analyst expects strong Q3 results, driven by software and consumer revenues.
Like Facebook, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Snowflake Inc. (NYSE:SNOW), and Airbnb, Inc. (NASDAQ:ABNB), investors and analysts are also paying attention to AppLovin Corporation (NASDAQ:APP) amid the company’s long-term growth potential.
10. Xpeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 19
IPO Date: August 27, 2020
Xpeng Inc. (NYSE:XPEV), a Chinese electric vehicle manufacturer, remains one of the best young stocks to buy. In September, the company reported vehicle deliveries of 10,412 units, with a 199% year-over-year growth. Recently, BofA lifted its price target on Xpeng Inc. (NYSE:XPEV) to $63, with a Buy rating on the shares. The firm’s analyst Hsun Lee also raised his revenue estimates for the company by 7%, 8%, and 10%, over the next three years, respectively.
Xpeng Inc. (NYSE:XPEV) went public on August 27, 2020, raising $1.5 billion. Coatue Management is the company’s largest shareholder, with shares worth $461 million. Overall, 19 hedge funds tracked by Insider Monkey have positions in Xpeng Inc. (NYSE:XPEV), the same as in the previous quarter. The total value of these stakes is $784.6 million. The stock gained 119.9% in the past year.
9. Robinhood Markets, Inc. (NASDAQ:HOOD)
Number of Hedge Fund Holders: N/A
IPO Date: July 28, 2021
Robinhood Markets, Inc. (NASDAQ:HOOD) launched its IPO on July 28, 2021, raising $2 billion. The company sold over 52 million shares, valued at $32 billion. Founded in 2013, Robinhood Markets, Inc. (NASDAQ:HOOD) remains one of the best young stocks to buy.
Robinhood Markets, Inc. (NASDAQ:HOOD) is an American financial services company that also deals in cryptocurrencies through its mobile app. In Q2 2021, the company reported revenue of $565 million, up 131.4% from the prior-year quarter. Monthly active users (MAUs) stood at 21.3 million, presenting a 109% year-over-year growth. This October, Mizuho lifted its price target on Robinhood Markets, Inc. (NASDAQ:HOOD) to $68, while keeping a Buy rating on the shares. The stocks returned 16.97% since its IPO.
Like Facebook, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Snowflake Inc. (NYSE:SNOW), and Airbnb, Inc. (NASDAQ:ABNB), Robinhood Markets, Inc. (NASDAQ:HOOD) is also one of the notable stocks in 2021.
8. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 21
IPO Date: December 15, 2020
Upstart Holdings, Inc. (NASDAQ:UPST) presented a positive hedge fund sentiment in Q2, as the number of hedge funds tracked by Insider Monkey reported having stakes in the company stood at 21, up from 13 in the previous quarter. The total value of these stakes is over $2.13 billion.
Upstart Holdings, Inc. (NASDAQ:UPST), one of the best young stocks to buy, provides a cloud-based AI lending platform to improve credit access. This September, Piper Sandler lifted its price target on Upstart Holdings, Inc. (NASDAQ:UPST) to $300, with an Overweight rating on the shares, highlighting the company’s consumer loan segment.
Founded in 2012, Upstart Holdings, Inc. (NASDAQ:UPST) went public on December 15, 2020, and raised $180 million. The company’s shares jumped 47% on the first trading day.
Vulcan Value Partners mentioned Upstart Holdings, Inc. (NASDAQ:UPST) in its Q2 2021 investor letter. Here is what the firm has to say:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
7. Amplitude, Inc. (NASDAQ:AMPL)
Number of Hedge Fund Holders: N/A
IPO Date: September 28, 2021
Amplitude, Inc. (NASDAQ:AMPL) went public on September 28, through a direct listing and raised $1.77 billion. The shares rose 9% on the first trading day.
Amplitude, Inc. (NASDAQ:AMPL), one of the best young stocks to buy, is a product analytics platform that helps a wide range of businesses to track visitors using collaborative analytics. In Q2 2021, the company reported revenue of $39.3 million, up 66% from the prior-year quarter. Amplitude, Inc. (NASDAQ:AMPL) gained 16.49% since its IPO.
6. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 26
IPO Date: September 23, 2020
Palantir Technologies Inc. (NYSE:PLTR) gained 8% on October 6 after it won an $823 million contract from the U.S. army. A software company specializing in big data analytics, Palantir Technologies Inc. (NYSE:PLTR) delivered a 152.4% return to shareholders in the past year.
ARK Investment Management is the largest shareholder of Palantir Technologies Inc. (NYSE:PLTR) in Q2, with shares worth $808.7 million. As of Q2 2021, 26 hedge funds tracked by Insider Monkey were bullish on Palantir Technologies Inc. (NYSE:PLTR), compared with 32 in the previous quarter. The total value of these stakes is over $1.3 billion.
This August, Wolfe Research raised its price target on Palantir Technologies Inc. (NYSE:PLTR) to $25 while keeping a Peer Perform rating on the shares. In Q2 2021, Palantir Technologies Inc. (NYSE:PLTR) posted an EPS of $0.04, beating the estimates by $0.01. The company’s revenue for the quarter stood at $375.6 million, showcasing a 49.1% year-over-year growth.
Guardian Fund released its second-quarter 2021 investor letter and mentioned Palantir Technologies Inc. (NYSE: PLTR) in it. Here is what the firm has to say:
“The success of the private sector to innovate in order to help people through the lockdowns and to produce vaccines at record speed at scale has been impressive. The fact that almost every public institution was struggling to be effective no matter how hard some of the people worked, shows the fundamental need of the public sector to become data-driven and invest in data infrastructure.
Government institutions have to partner with enterprises such as Palantir to become digitalnative. The public sector will always struggle to attract the most talented engineers as compensations cannot be justified with tax money and therefore this must be a partnership with specialized private enterprises. This is a great opportunity for Palantir especially as it has already shown to be capable of working with demanding and complex public institutions entrusting it to work on the most critical and sensitive matters.
The news section of Palantir’s website gives insight in where new business is coming from. The main opportunity is in enterprise software and the faster onboarding time and increased self-service of clients is a positive sign. We believe Palantir is becoming one of the more important global software companies.
In addition, Palantir has quietly become a significant investor, investing well over USD 200 million in eight companies. Thereby, it is following the lead of companies like Tencent, Alphabet, and Shopify of establishing valuable investment portfolios.”
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Disclosure. None. 11 Best Young Stocks To Buy Now is originally published on Insider Monkey.
