The Motley Fool

Growth stocks are rising again. Here are 2 I’d buy today

Image source: Getty Images.

For most of the second quarter, growth stocks have been out of favour. With the world reopening after Covid-19, investors have focused on cyclical/value stocks in an effort to capitalise on the pick up in economic growth.

Recently however, growth stocks have begun to make a comeback. This month, for example, the S&P 500 growth index is up about 4%. By contrast, the S&P 500 value index is down about 2%.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

I wouldn’t be surprised to see this trend continue in the second half of 2021 as investors refocus on secular growth trends. With that in mind, here’s a look at two top growth stocks I’d buy today.

A top growth stock for 2021 and beyond

One of my top picks in the growth space is Upwork (NASDAQ: UPWK). It operates the world’s largest freelance employment platform. This matches highly-skilled workers, such as software developers, lawyers, graphic designers, and copywriters, with businesses that have projects that need to be completed. Last year, Upwork generated revenue of $374m, up 24% year-on-year.

Looking ahead, I believe Upwork has significant growth potential. In the short term, the company should benefit as the global economy picks up speed and businesses hire staff to expand. I think many of those businesses will turn to the freelance market for flexibility. Meanwhile, in the long run, the company should benefit as the freelance market grows. Experts believe that between now and 2025, the global freelance platform market will see growth of around 16% per year.

There are risks to the investment case, of course. One to consider here is the threat of competition. Upwork faces competition from a number of companies including the likes of Fiverr, Toptal, and PeoplePerHour. Another risk is the stock’s quite volatile.

I’m comfortable with these risks however. I think this growth stock has an attractive risk/reward profile. I’ve made UPWK a substantial holding in my own portfolio and I plan to hold the stock for the long term.

A top cybersecurity stock

Another growth stock I’d snap up today is Okta (NASDAQ: OKTA). It provides identity management solutions to businesses. It has a blue-chip customer base that includes the likes of WPP, Renault, FedEx, and Pret. Last year, the company generated revenue of $835m, up 42% year-on-year.

Okta lies at the intersection of two massive growth industries – cloud computing and cybersecurity. Across the world, companies are rapidly moving to the cloud in an effort to enhance their agility and reduce costs.

At the same time, they’re focusing heavily on cybersecurity. They need to ensure that those using their platforms are who they say they are. This is where Okta comes in. Its solutions enable businesses to securely connect their employees with their cloud-based platforms.

While I believe Okta has attractive long-term growth prospects, there are some risks to be aware of. One is in relation to the company’s valuation. At present, Okta has a market-cap of $36.6bn and a forward-looking price-to-sales ratio of 30. That’s high. If future growth is disappointing, this stock could take a significant hit. The recent $6.5bn acquisition of Auth0 also adds risk.

Overall however, I think Okta has a considerable long-term appeal. I think this stock is a good way to play the cybersecurity growth story.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Edward Sheldon owns shares of Fiverr International, Okta, and Upwork. The Motley Fool UK owns shares of and has recommended FedEx, Fiverr International, and Okta. The Motley Fool UK has recommended Upwork. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.