The best high-growth stocks for young investors is our topic today. Many of the high-growth darlings of the pandemic have remainedunder steady pressure duringthe 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, theiShares Russell Top 200 Growth ETF(NYSEARCA:IWY) and theVanguard Growth Index Fund ETF(NYSEARCA:VUG) have fallen27% and 28%year-to-date(YTD), respectively. Meanwhile, theS&P 500 indexhas 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 historicallyoutperformedthe rest of the market in the long run.So when the economy recovers, these shares will once again lead the surge higher.
Airbnb (ABNB)
52-week range:$86.71 – $212.58
Online lodging platformAirbnb(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 over300 millionbooked nights.
Airbnb reportedfirst-quarterfinancials 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 toa loss ofthree cents the year before. Free cash flow (FCF) was $1.2 billion.
Recently, the companycodifieda ban on parties and events in the vast majority of their listings. This permanent ban follows the temporary one that has been in force sinceAugust2020. Hosts and community leaders have welcomes the measures and could help the top line in the quarters ahead.
ABNB stockhas tumbled 39% YTD. Shares are trading at51times forward earnings and 8.9times sales.Analysts’12-month median forecast stands at$174.
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