Tesla stock has delivered incredible returns for investors in recent years. Its high returns (around 400% over the last year) have made it one of the most popular stocks on the planet.
This year however, Tesla’s performance has been a little underwhelming. Year to date, TSLA stock is only up about 4%. That’s less than the return from the S&P 500 (about 10%).
Here, I’m going to highlight three US growth stocks that are outperforming Tesla this year. All have delivered double-digit returns in 2021, beating the broader market.
Microsoft is beating Tesla
One growth stock that’s doing really well in 2021 is technology powerhouse Microsoft (NASDAQ: MSFT). It’s up about 15% year-to-date.
Microsoft’s strong performance doesn’t surprise me. This is a company with heaps of momentum right now. It’s also a fund manager’s dream – revenue growth is strong (and looks sustainable), free cash flow is fantastic, return on capital employed is high, and the balance sheet is robust. It’s easy to see why Terry Smith (aka ‘Britain’s Warren Buffett’) likes the stock.
Would I buy Microsoft for my portfolio today? Yes. In my view, the stock’s valuation (forward P/E ratio of 32) isn’t stretched. There are risks to the investment case (such as competition from Big Tech rivals). However, overall, I see a lot of appeal in Microsoft. I can see this company getting a lot bigger in the years ahead as its cloud division grows.
Airbnb is crushing TSLA
Another stock that’s beaten Tesla this year so far is Airbnb (NASDAQ: ABNB). Year-to-date, it’s up about 20%.
Airbnb shares have risen in 2021 for a few reasons. Firstly, results haven’t been as bad as some investors thought they would. Secondly, many brokers have raised their price targets recently. Citigroup, for example, recently raised its price target to $197 from $165. Third, investors have piled into the stock on the back of vaccine/reopening optimism.
Would I buy Airbnb shares today? No. Right now, the valuation ($106bn) is a bit high for me. There’s also uncertainty related to Covid-19. That said, this is a stock I’d like to own at some point. If it pulls back, I may buy it for my portfolio.
Fiverr has outperformed Tesla
Finally, freelance employment platform operator Fiverr (NASDAQ: FVRR) has also outperformed Tesla this year. Year-to-date, it’s up about 13%.
Fiverr is another company with a lot of momentum at present. Just look at the company’s fourth-quarter 2020 results posted in February. For the quarter, revenue was up a huge 89%. Looking ahead, the company said it expects continued business momentum with revenue growth of between 46% to 50% for 2021.
Would I buy this growth stock today? Yes. It’s not my favourite play in the freelance employment space – my top pick is Upwork. However, I think Fiverr is worth buying too, due to the fact the freelance employment market is booming right now and looks set to get much bigger in the years ahead.
I’ll point out that Fiverr is a higher-risk, speculative stock. Its earnings are still very low and the valuation is high (the price-to-sales ratio is 27). The stock is likely to be volatile.
I’m comfortable with the risks though. I think the long-term potential here is significant.
