Growth stocks have taken a hit recently. With long-term bond yields rising, investors have shifted their focus to reopening stocks.
Personally, I see the pullback in growth as a buying opportunity. In the short term, growth shares could continue to be volatile. However, the best growth stocks should do well in the long run.
With that in mind, here’s a look at four I bought last week.
Amazon
The largest trade I made was a purchase of Amazon stock. I bought another AMZN share for my portfolio at a cost of around $3,000 – about 15% below its all-time high.
I like Amazon for a couple of reasons. First, it’s a global leader in e-commerce. Second, it’s the global leader in cloud computing. These are two industries with enormous growth potential. Looking ahead, I expect Amazon to grow much larger.
Amazon does trade at a high valuation. Currently, the forward-looking P/E ratio is about 63. This adds some valuation risk in the short term. However, I’m planning to hold this growth stock for at least a decade.
PayPal
My second largest trade was a purchase of some PayPal shares. This is a growth stock I first bought in the crash last year at around $90. Since then, it’s performed very well, rising as high as $310. Recently, it’s pulled back, however. So I grabbed some more shares at $233.
Financial technology (FinTech) is a theme I’m bullish on and PayPal is one of the leaders in this space. It appears to be well-placed to benefit from the shift away from cash. In the fourth quarter of 2020, it added 16m new net active accounts.
Source: Sifted
PayPal stock is still expensive, even after the pullback. Its market-cap is currently about $280bn. That high valuation adds risk. However, I think the long-term growth potential here remains significant.
I also bought some shares in social media company Pinterest last week. This was a new purchase for me. I bought shares between $72 and $75.
You could say this purchase has been inspired by famous fund manager Peter Lynch. He adopted a ‘buy what you know’ strategy – many of his stock ideas were discovered while walking through a mall. What I know is that my wife spends a lot of time on Pinterest. If she’s not ‘pinning’ home renovation ideas, she’s using it for clothing ideas, travel ideas, and recipes.
In my view, Pinterest has the potential to be a big player in e-commerce as it recently formed a partnership with Shopify. However, right now, it’s only making a small profit so it’s definitely more of a speculative purchase.
Upwork
Finally, I topped up my holding in Upwork. It operates the world’s largest freelance employment platform. This is one of my favourite stocks, and possibly the company I’m most excited about from a 10-year view. In the decade ahead, I expect the freelance market to grow substantially.
Upwork recently delivered a great set of results. For the fourth quarter of 2020, revenue was up 32% to $106.2m. However, since then, the stock has fallen. I added some more shares at $42 – more than 30% below its recent highs.
While I’m excited about the long-term potential here, this is another stock that’s speculative in nature. Profits are small, and the share price is volatile. I’m comfortable investing here, but this kind of stock isn’t suitable for everyone.
