These are all answers I would probably give when answering the question. A good exercise at the start of each year is to review the stocks you own (or want to buy) to gauge your confidence in their prospects. This is what I did recently. Here are my three most compelling growth stocks for 2021.
Fiverr (NYSE: FVRR) absolutely crushed it in 2020, its shares soaring 730%. Even with this huge gain, the company’s market cap is still only around $ 8 billion.
There are many websites that allow businesses to find freelancers. Many of them are primarily staffing agencies. Freelancers often have to bid on jobs and negotiate contracts. Fiverr’s ecommerce platform is different. It takes a service as a product approach. Freelancers post their skills, experience, and a set price for what they’re going to do. There is no call for tenders or negotiation. Buyers know exactly what they are getting for their money.
This no-haggle approach works very well for Fiverr. The number of active buyers for the company has soared by more than 70% over the past three years – without any sales force. Average spend per buyer jumped nearly 64% over the same period. Fiverr’s revenue growth is accelerating, increasing 88% year-over-year in the third quarter of 2020.
The company estimates that its total addressable market in the United States is approximately $ 115 billion per year. But this market is growing. Due to the COVID-19 pandemic, more people are working remotely and want to work freelance to supplement their income. However, Fiverr isn’t just targeting the US market. It continues to develop internationally. I am very optimistic about the prospects for the company in 2021 and beyond.
Etsy (NASDAQ: ETSY) the stock more than quadrupled last year. The e-commerce platform for handicrafts really clicked with customers during the pandemic. Etsy has particularly benefited from sales of face masks. But I don’t think the momentum will fade once the pandemic is over.
Of course, 11% of Etsy’s third-quarter gross merchandise (GMS) sales came from face mask sales. However, the company’s GMS was up 93% year over year, excluding face mask sales. In my opinion, customers drawn to Etsy in 2020 primarily to buy a face mask will likely come back to the platform to buy other products. In other words, the pandemic will be a long-term growth engine for Etsy rather than providing just a temporary boost.
Etsy’s biggest competitive advantage is its uniqueness. In a 2019 survey, 88% of shoppers said Etsy sold items they couldn’t find anywhere else. Merchants on Etsy are typically small businesses, many of which sell custom craft products. This sets Etsy apart in terms of customer appeal but also in terms of performance: Etsy’s sales are growing more than twice as fast as the Commerce Department’s e-commerce benchmark.
Even with its impressive growth, Etsy still only claims a 5% market share in the annual $ 100 billion market for what it calls “special” products (unique, handcrafted items). But the company’s actual addressable market is probably closer to $ 250 billion per year and possibly even more than that. I fully expect Etsy to continue its successes this year and throughout the decade.
3. Intuitive surgery
Pioneer of robotic surgical system Intuitive surgeryof (NASDAQ: ISRG) business has been hit hard by the coronavirus outbreak. Elective surgeries were postponed for part of 2020. As a result, Intuitive’s revenue fell 22% year over year in Q2 and 4% in Q3. However, its shares still jumped 38% in 2020, with investors expecting better days to come.
I think those better days will come this year. Two COVID-19 vaccines are currently available in the United States with millions of Americans already at least partially vaccinated. There are reasons to hope that life will return to its normal course soon. This means that delayed surgeries will be scheduled again.
Intuitive Surgical derives the lion’s share of its revenue from the sale of replacement instruments and accessories. When more procedures are performed using its da Vinci robotic surgical systems, Intuitive’s revenue grows. I predict that will happen in 2021. What really makes Intuitive Surgical such a compelling title to me is its long-term potential.
Aging populations around the world will lead to increased demand for surgical interventions. Meanwhile, Intuitive continues to launch innovative new products to expand the types of procedures that can be performed using surgical robots. Intuitive’s market opportunity is huge as only a small percentage of procedures can currently be performed with robotic assistance. My opinion is that intuitive surgery is almost a slam-dunk to win in the long run.