The best high-growth stocks for young investors is our topic today. Many of the high-growth darlings of the pandemic have remained under steady pressure during the first half of 2022. Signs of an imminent recession and geopolitical turmoil continue to drag down broader indices and growth-focused exchange-traded funds (ETFs).
For instance, the iShares Russell Top 200 Growth ETF (NYSEARCA:IWY) and the Vanguard Growth Index Fund ETF (NYSEARCA:VUG) have fallen 27% and 28% year-to-date (YTD), respectively. Meanwhile, the S&P 500 index has fallen 18% over the same period.
Yet, investing regularly over many decades is known to be a great wealth creator for retail investors.
Let’s assume that you are now 25, with $1,000 in savings and that you plan to retire at age 65. You decide to invest that $1,000 in a fund now and make an additional $3,000 of contributions annually at the start of each year. You have 40 years to invest. The annual return is 7%, compounded once a year. At the end of 40 years, the total amount saved becomes goes well over $650,000.
And if you were to increase the amount of annual contributions from $3,000 to $4,000, the total amount saved becomes close to $870,000.
What you’re seeing is the power of time that young investors have and compound interest working together. And that’s why getting the best high-growth stocks for young investors can have an outsized impact on your retirement.
Despite the recent setbacks in equities, growth stocks have historically outperformed the rest of the market in the long run. So when the economy recovers, these shares will once again lead the surge higher.
meone holds the Airbnb logo in front of Dresden, Germany landscape. ABNB stock.
Source: AlesiaKan / Shutterstock
52-week range: $86.71 – $212.58
Online lodging platform Airbnb (NASDAQ:ABNB) leads off this list of the best high-growth stocks for young investors. It matches guests with potential hosts. As it does not own any of the properties, instead receiving commissions from each booking, it operates an asset-light businesses.
In 2021, Airbnb had over 300 million booked nights.
Airbnb reported first-quarter financials in early May. Revenue was $1.5 billion, representing a 70% YOY increase, as travel recovered from the pandemic. Diluted loss per share was $1.95, compared to a loss of three cents the year before. Free cash flow (FCF) was $1.2 billion.
Recently, the company codified a ban on parties and events in the vast majority of their listings. This permanent ban follows the temporary one that has been in force since August 2020. Hosts and community leaders have welcomes the measures and could help the top line in the quarters ahead.
ABNB stock has tumbled 39% YTD. Shares are trading at 51 times forward earnings and 8.9 times sales. Analysts’ 12-month median forecast stands at $174.
Apple (AAPL)
Apple (AAPL) logo on an Apple store in Santa Monica, California.
Source: View Apart / Shutterstock.com
52-week range: $129.04 – $182.94
Apple (NASDAQ:AAPL) is a true giant and one of the Big Four tech companies. It creates some of the best-known brands, such as the iPhone, iPad, iMac, and iOS operating system, as well as numerous apps and software titles. It dominates around half of the U.S. smartphone market.
In late April, Apple released Q2 FY22 results. Revenue was up 9% YOY to $97.3 billion. Diluted earnings per share (EPS) was $1.52, compared to $1.40 the year before. Cash and equivalents totaled $28.1 billion.
The company recently committed to expanding its support for a common password-less sign-in created by the Fast Identity Online (FIDO) Alliance. In conjunction with Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), the expansion will give websites and apps the ability to provide a password-less sign-in option. FIDO authentication will also be possible across multiple devices.
CNBC host Jim Cramer suggests investors own, but not trade, AAPL shares. Many analysts concur. Therefore, Apple is one of the leading companies to belong in a young investor’s portfolio.
AAPL stock has lost almost 17% YTD. Forward price-to-earnings (P/E) and price-to-sales (P/S) numbers are 23.7x and 6.5x, respectively. Wall Street’s 12-month median forecast stands at $185.
Booking (BKNG)
a person opens up Booking.com on a smartphone
Source: Denys Prykhodov / Shutterstock.com
52-week range: $1,669.34 – $2715.66
Travel and leisure tech play Booking (NASDAQ:BKNG) operates such brands as Booking, Priceline, Kayak, and OpenTable. It oversees around 28 million listings globally, and 590 million room nights were booked in 2021.
In early May, Booking announced Q1 earnings. Total revenue was $2.7 billion, a 136% bump YOY. Diluted EPS was $3.90, compared to a diluted loss per share of $5.26 the prior year. FCF was $1.7 billion.
Recently, Booking’s subsidiary OpenTable entered into a strategic partnership with Inline, which provides online restaurant reservations in East Asia. Booking has also made a financial investment in Inline. Wall Street will be keeping an eye on how Booking’s top line will benefit from access to Inline’s portfolio of restaurants.
BKNG stock has fallen 28% YTD. Shares are trading at 18 times forward earnings and 5.6 times sales. Analysts’ 12-month median forecast stands at $2,600.
Costco Wholesale (COST)
Source: Shutterstock
52-week range: $406.51 – $612.27
Warehouse retailer Costco Wholesale (NASDAQ:COST) operates via a membership model. It has over 830 warehouses spread across 12 countries, with plans to open warehouses in New Zealand and Sweden this year.
Analysts highlight that the company’s success is primarily due to low prices, driven by low overhead costs. Management operate a 14% cap on the markup of items it sells. So in the current high inflationary scene, Costco gets increased attention from consumers.
In late May, Costco presented Q3 FY22 metrics. Net sales totaled $51.6 billion, increasing 16.3% YOY. Diluted EPS was $3.04, compared to $2.75 the previous year. Cash and equivalents totaled $11.2 billion.
The company recently purchased the remaining 45% shares in Costco-Taiwan, which has over three million members. There are a total of 14 Costco-Taiwan stores owned by a joint venture between Costco and the President Group.
COST stock has dropped 9% YTD but still has appreciated almost 26% over the past 12 months. Forward P/E and P/S numbers are 36.4x and 1.07x, respectively. Wall Street’s 12-month median forecast stands at $546.50.
Discover Financial Services (DFS)
the Discover (DFS) logo displayed outdoors
Source: Jonathan Weiss / Shutterstock.com
52-week range: $88.02 – $135.69
Financial services giant Discover Financial Services (NYSE:DFS) operates Discover Bank, the Discover and Pulse networks, and Diners Club International. Its products include credit cards, checking and savings accounts, and loans.
In late April, Discover issued Q1 financials. Total revenue net of interest expense was $2.9 billion, a 4% increase YOY. Diluted EPS was $4.22, compared to $5.04 the prior year.
Recently, the financial group established a strategic partnership with Italy-based Bancomat, gaining access to that country. Bancomat manages Italy’s most widespread and well-known cash withdrawal and payment schemes. As Americans start traveling again internationally, such partnerships will help contribute to top-line growth.
DFS stock has lost almost 8% YTD. The dividend yield is 2.3%. Shares are trading at 7.1 times forward earnings and 2.5 times sales. Analysts’ 12-month median forecast stands at $133.
Masimo (MASI)
a doctor looks at a tablet
Source: Shutterstock
52-week range: $112.07 – $305.21
Medical technology name Masimo (NASDAQ:MASI) focuses on health-monitoring technologies.Its flagship product, the Masimo SET pulse oximetry, is highly regarded globally.
Masimo reported Q1 earnings in early May. Revenue was $304 million, representing 3.2% YOY growth in constant currency. Diluted EPS was 93 cents, increasing from 90 cents the year before. Cash and equivalents totaled $720 million.
Recently, the company announced the limited release of the Masimo W1 health watch for consumers, which measures oxygen saturation, pulse rate, perfusion index, respiration rate, and step count. Wall Street monitors the research and development (R&D) efforts as Masimo as new products will help seal its strong position in these niche area.
MASI stock has tumbled 57% YTD. Forward P/E and P/S numbers are 31.2x and 5.9x, respectively. Wall Street’s 12-month median forecast stands at $145.
Monster Beverage (MNST)
Grocery store shelf with 16 ounce cans of Monster brand energy drinks.
Source: Sheila Fitzgerald / Shutterstock.com
52-week range: $71.78 – $99.89
Energy drinks manufacturer Monster Beverage (NASDAQ:MNST) is my final pick for this list of the best high-growth stocks for young investors. It’s known for Monster Energy, Relentless, Burn, and NOS. Monster is the second best-selling energy drink brand, closely following Red Bull in market share.
Monster released Q1 results in May. Net sales totaled $1.52 billion, up 22.1% YOY. Diluted net income per share was 55 cents, compared to 59 cents the previous year. Cash and equivalents totaled $1.01 billion.
The company recently completed its acquisition of CANarchy Craft Brewery, a craft beer and hard seltzer company. The purchase brings the Cigar City, Oskar Blues, Deep Ellum, Perrin Brewing, Squatters, and Wasatch brands to the Monster portfolio. The move into alcoholic beverages has caught investors’ attention.
MNST stock has lost 1% YTD and has gained more than 2% over the past year. Shares are trading at 35.6 times forward earnings and 9 times sales. Analysts’ 12-month median forecast stands at $100.
On the date of publication, Tezcan Gecgil, Ph.D., did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
