Dec 11, 2021
The market continues to have an insatiable appetite for growth stocks. For example, data from investment firm Wilshire shows that growth stocks have nearly doubled the performance of value stocks over the past five years.
And while some growth-oriented high-fliers have pulled back recently amid omicron fears, CNBC’s Jim Cramer continues to dig the group as a whole.
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Earlier this week, the Mad Money host highlighted some of his favorite stocks from the new CNBC Next Generation 50 Index
His top pick is ecommerce gorilla Amazon due to the massive upside of its cloud computing segment.
He likes Apple, too, because of the company’s brand strength among millennials.
Moreover, Cramer pointed out how the electrification of transportation would continue to drive Tesla forward.
But Cramer also highlighted a few smaller 'junior' growth stocks worth considering. Here’s a quick look at three of them — one could be worth pouncing on with some of your extra cash.
Enphase Energy (ENPH)
Renewable energy has been one of the market’s favorite investment themes in recent years. As a result, companies like Enphase have delivered outsized returns.
Enphase is one of the world’s leading suppliers of solar energy storage systems. At the beginning of 2020, the company’s shares were trading at around $29 per share. Today, they’re at $215.
That’s a gain of over 640%.
Cramer still sees plenty of upside ahead. In fact, he believes Enphase is the only player in the solar panel space worth owning for the long term.
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In Q3, Enphase generated $351.5 million of revenue, nearly double the $178.5 million earned a year ago and marked a new record.
For Q4, management expects revenue to be in the range of $390 million to $410 million.
Enphase shares trade in the triple-digits. But you can get a piece of the company using a popular stock trading app that allows you to buy fractions of shares with as much money as you are willing to spend.
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Affirm Holdings (AFRM)
Affirm is one of the major players in the growing “buy now, pay later” space, which allows consumers to split the payment of their purchases into future installments.
Business is booming at Affirm, and Cramer has taken notice.
In the September quarter, Affirm’s active consumers rose 124% year over year to 8.7 million. Meanwhile, active merchants on the platform jumped from 6,500 to 102,000.
Gross merchandise volume surged 84% to $2.7 billion for the quarter. Total revenue came in at $269.4 million, marking a 55% increase from a year ago and smashing Wall Street’s expectations.
Affirm also recently announced an expanded partnership with Amazon. Customers will be able to use Affirm for all eligible U.S. purchases of $50 or more on Amazon. At the same time, Affirm will be integrated into Amazon Pay’s digital wallet in the country.
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In exchange, Amazon will receive multiple tranches of warrants to buy Affirm’s class A common stock.
Etsy (ETSY)
In the ecommerce world, custom and vintage goods marketplace Etsy still lives in the shadow of industry titan Amazon.
But Cramer highlighted Etsy’s differentiated offering and appeal to millennials as reasons that set it apart.
He said that Etsy is the platform where “young people like to buy presents that are often more environmentally friendly than what you get in a store.”
“They like the connection with the creator, too.”
In Q3, Etsy’s top line improved 17.9% year over year to $532.4 million. For Q4, management is projecting revenue of between $660 million and $690 million, which at the midpoint, would translate to year over year growth of around 10%.
Since the beginning of 2020, Etsy shares have soared roughly 400%.
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But Cramer warned Etsy isn’t for investors who want a “smooth ride,” referring to the high volatility of the company’s shares.
If you don’t feel comfortable picking individual winners and losers, you can always build a diversified portfolio automatically by using your “spare change.”
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Look beyond the stock market in 2022
At the end of the day, stocks are volatile. Even Wall Street experts aren’t right 100% of the time.
Diversification is key. And you don’t have to stay in the stock market to get it.
If you want to invest in something without the violent swings of the S&P 500, take a look at some hidden alternative assets.
Traditionally, investing in things like exotic vehicles or multi-family apartments or even litigation finance have only been options for the ultrarich.
But with the help of new platforms, these kinds of opportunities are now available to retail investors, too.
More: Jim Cramer's net worth
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
