SHOP: 3 Top Growth Stocks to Buy Before the End of the Year

Growth stocks have a new life now that a potentially effective virus vaccine is in the works. Investors appear to be quite bullish about the market’s performance during a Biden-Harris administration.

Though growth stocks pulled back in recent months after an epic climb, this might be the optimal time to jump right back in and ride these ponies to the promised land. However, there are dozens of growth stocks to choose from. Don’t waste your time sorting through the bunch on your own when the experts are here to provide guidance.

Below, I shed light on three intriguing growth stocks investors should consider adding to their portfolio before the year ends: Shopify (SHOP), Cloudflare (NET), and Take-Two Interactive Software (TTWO).

Shopify (SHOP)

SHOP soared up to $1,134 until recent weeks when it dipped down toward $900. Investors should view this pullback as a solid buying opportunity. Though SHOP has provided a 160% gain from 201919, the stock still has the potential to move back toward $1,000 per share or even higher. Consumer behavior has changed, possibly permanently, due to the pandemic. SHOP will benefit from this trend in the months and years ahead.

Look for SHOP’s software to be that much more ubiquitous in the near future as more merchants transition to online sales channels and mobile storefronts. SHOP also facilitates sales on social media storefronts to boot.

The POWR Ratings show SHOP has “B” grades in the Peer Grade and Trade Grade components. The stock is ranked second out of 35 in the Internet – Services industry. Of the 20 analysts who cover SHOP, 10 recommend it as a “Buy,” nine view it as a “Hold,” and only one has it is a “Sell.”

The average analyst price target for the stock is $1,162.12, meaning it has potential 30% upside.

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Cloudflare (NET)

NET, an Austin, Texas-based tech company, protects web applications, including some of the websites you might visit with regularity. This important protection is provided without the addition of costly hardware, software or code alterations. NET has “A” grades in the Peer Grade and Trade Grade components. The stock is ranked third out of 23 in the Software – Security sector. NET has a one-year price return of 300%.

Of the dozen analysts who have performed a deep dive into NET, 10 recommend it as a “Buy,” two recommend investors hold, and none advise selling. NET’s revenue is up 54% on a quarterly basis. There is no doubt the transition to the internet during the pandemic has helped NET rake in the money. NET has an adjusted gross profit margin of 77.4% along with more than $300 million in revenue for the nine months ending September 30 of this year.

If NET pulls back even slightly in the days or weeks ahead, investors would be wise to consider establishing a position.

Take-Two Interactive Software (TTWO)

TTWO is the apple of many investors’ eyes as it has hit its stride during the pandemic. TTWO’s video games sell like gangbusters, yet its in-game purchases are quickly becoming an even larger percentage of the company’s revenue. From Grand Theft Auto to the insanely popular NBA 2K series and beyond, TTWO is firing on all cylinders.

TTWO has “B” grades in the Industry Rank, Peer Grade, Buy & Hold Grade, and Trade Grade components. TTWO is ranked third out of 15 stocks in the Entertainment – Toys & Video Games industry. Of the dozen analysts who cover TTWO, 11 rate it as a “Buy,” one view it as a “Hold,” and none recommend selling.

TTWO has a forward P/E ratio of 37.16, a relatively low figure considering its blazing hot industry. TTWO in-game revenue is up 34% this year alone, making it quite clear its business model is working as planned.

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SHOP shares rose $0.74 (+0.08%) in after-hours trading Tuesday. Year-to-date, SHOP has gained 122.79%, versus a 11.58% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...