3 Growth Stocks to Invest $1,000 In Right Now

Key Points

• Shopify is growing and profitable, and it has many varied growth drivers.

• On is challenging the leading names in athletic wear, but it's still establishing its brand worldwide.

• Upstart is back in growth mode, and the stock trades at a much more reasonable valuation.

• 10 stocks we like better than Shopify ›

Growth stocks tend to lead the market in either direction. When the market is in fine bull form, it's the growth stocks that are out in front, pulling it forward. On the flip side, when the market is down, growth stocks, which are usually riskier than the average stock, tend to fall harder.

With the S&P 500 (SNPINDEX: ^GSPC) up a brisk 14% this year, growth stocks as a category are enjoying the gains. The Nasdaq-100, a curated selection of growth stocks, is outpacing it, up 17%.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Ready to invest in growth right now? Shopify (NASDAQ: SHOP), On Holding (NYSE: ONON), and Upstart Holdings (NASDAQ: UPST) are three great stocks to buy.

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1. Shopify: The hidden king of e-commerce

Shopify is an e-commerce giant, but it doesn't sell products to consumers, so you won't see it on the list of top e-commerce retailers. It sells e-commerce services to other e-commerce companies, providing the infrastructure to get online and become successful.

The company has expanded from concentrating on the small business market to offering a complete assortment of commerce services for almost any size business, and it allows the small retailer to compete with the big retail chain while also providing solutions that help the bigger companies win. It has more than 12% of the U.S. market share in e-commerce, which is real competition for Amazon.

E-commerce keeps growing as a percentage of retail sales, and that provides organic growth opportunities for Shopify. Over time, its customers get stronger, bringing in higher revenue, another organic growth driver.

But Shopify has many other ways to boost growth. It continues to launch new features and services for existing customers, fueling greater engagement and sales, and it's launching in new global markets. International sales have more than tripled since 2020. It should also benefit in the near term as interest rates go down and consumers increase spending.

For a growth stock, Shopify is also doing an excellent job of keeping costs down and boosting profitability. In the second quarter, revenue growth accelerated to 31% year over year, and operating income was up 21% with a 9% margin.

The market sees a great future here, and Shopify stock is up 77% over the past year, but expect more from this top growth stock.

2. On: The new favorite in athletic wear

If you haven't heard of On yet, you're either living under a rock, or you live in one of the regions where it's yet to establish its brand. It's still a fairly young company trying to get its name out, but it has low brand penetration worldwide. Where it's more well known, it has developed intense fan loyalty, and coupled with its youth, that means there's a massive long-term opportunity.

Revenue increased in the second quarter, and although the company is known for its footwear, it's generating even higher sales in apparel and accessories. Total sales increased 38% year over year in the second quarter (currency neutral), and shoe sales increased 36% in the second quarter, while clothes were up 76% and accessories increased 143%.

The implication is that people love the brand and want more. On has doubled its brand penetration in the U.S. over the past year, and it's rapidly expanding into affluent and urban areas like Palo Alto, California, and Stockholm.

On positions itself as a premium company, and its higher prices are leading to strong margins. It has the highest gross margin in the industry at 61.5% in the second quarter, an increase from 59.9% last year.

As it expands globally, it's also expanding its product line, with innovations like its LightSpray technology that creates a shoe with a spray gun and a robot. It's also collaborating to generate enthusiasm, like a recent partnership with Levi's that sold out within days.

On has a bright future ahead, and now is a great time to buy.

3. Upstart: AI for better lending

Upstart stock fell off a cliff a few years ago, but it's humbly making its way back at a more attractive valuation as its business recovers from high interest rates.

The company operates an artificial intelligence (AI)-driven lending platform that uses millions of data points and proprietary algorithms to assess credit risk. It claims to approve more loans without increasing risk to the lender, which is a win-win for creditors and borrowers.

Upstart has survived through high interest rates, and it's back on the upswing. Revenue more than doubled in the second quarter, and the company produced $5.6 million in positive, generally accepted accounting principles (GAAP) net income, its first net profit since 2022. At the current price, Upstart stock trades at a price-to-sales ratio of 6, and a forward, one-year P/E ratio of 23.

What makes me more confident about recommending Upstart stock today, beyond the reasonable price, is that it's in a much better position now, having gone through this challenging time. As the company gathers more data from every kind of economic environment, it will be able to manage through similarly difficult periods with more strength in the future. As interest rates go lower, it can expand and grow in good times, and it's launching more products, which provide greater growth opportunities as well as protection.

Upstart is still not the right candidate for the most risk-averse investor, but if you can part with $1,000, you're likely to be well rewarded down the line.

Should you invest $1,000 in Shopify right now?

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Jennifer Saibil has positions in On Holding. The Motley Fool has positions in and recommends Amazon, Shopify, and Upstart. The Motley Fool recommends On Holding. The Motley Fool has a disclosure policy.