3 Safe Growth Stocks To Buy In December

Growth stocks have dominated since the end of the Great Recession more than 12 years ago. Historically low lending rates and a persistently cautious US Federal Reserve have given fast-moving businesses access to cheap capital that they have used to hire, acquire and innovate.

The thing is, even if growth stocks are responsible for propelling the stock market to new heights, great deals can still be found. For long-term investors, the following three surefire growth stocks are all bargains to buy in December.

square

The first surefire growth stocks to recharge patient investors in December after falling 25% since August are fintech giants square (NYSE: SQ).

Over the past few months, Square has come under pressure for a variety of reasons. There are concerns about the role cryptocurrencies could play in the payments space and, more recently, there have been concerns about higher inflation rates, which are adversely affecting consumer spending. High-premium growth stocks tend to be hit hardest when inflation picks up.

While this might be a tangible concern for some fintech stocks, Square has proven that it is in a class of its own – which is why it carries such a high valuation premium.

For more than a decade, the company has relied on its seller ecosystem as a source of bread-and-butter growth. This segment provides point-of-sale solutions, loans, and analytics that help businesses succeed. In the seven years leading up to the pandemic, the gross payment volume (GPV) processed on the Square network grew by an average of 49% over the year from $ 6.5 billion to $ 106.2 billion. Based on Square’s third-quarter GPV of $ 41.7 billion, the company has an annual run rate of nearly $ 167 billion.

What is remarkable about the seller ecosystem is the involvement of larger companies. Once a tool used almost exclusively by small / independent traders, two-thirds of Square’s Q3 GPV came from sellers with an annualized GPV of at least $ 125,000. Since the seller ecosystem is predominantly a fee-paying segment, this steady shift will gradually increase gross profit over time.

But the long-term growth opportunity that should make Square a surefire investment is its peer-to-peer digital payment platform Cash App. In just three years until December 31, 2020, the number of monthly active users (MAU) of Cash App more than quintupled from 7 million to 36 million.

What makes Cash App so fascinating are its margins. For the quarter that ended in June, Square noted in its letter to shareholders that it made $ 55 gross profit per monthly active customer but spent around $ 5 to purchase each MAU cash app. There is no question that Cash App will overtake the seller ecosystem in terms of profit potential in the long run.

The icing on the cake for Square is the upcoming “buy now, pay later” acquisition of the company, valued at $ 29 billion additional payment. Purchasing Afterpay will create a closed payment system that connects the seller ecosystem with the Cash App. This costly business ultimately aims to expand its ecosystem and strengthen long-term margins.

Image source: Getty Images.

Novavax

Another surefire growth stock that investors can rest assured of in December is drug developers Novavax (NASDAQ: NVAX).

Novavax is one of what appears to be an army of drug makers in a group interested in making a vaccine or treatment for Coronavirus Disease 2019 (COVID-19). But unlike most of the others, the company’s lead vaccine (NVX-CoV2373) appears to be in the top tier of effectiveness.

In March and June, Novavax released the results of two large-scale studies with its COVID-19 vaccine. In the UK study, NVX-CoV2373 found a vaccine efficacy (VE) of 89.7%, which included the original strain of SARS-CoV-2 virus that causes COVID-19, as well as the UK variant. There was also the USA / Mexico Phase 3 study that returned 90.4% VE. With the ecxeption of Modern and Pfizer/BioNTech, whose first large-scale US studies found corresponding VEs of 94.1% and 95%, Novavax looks like it will step in as the clear No. 3 option in the COVID-19 vaccine space.

Despite these positive clinical results, Novavax’s share price has been more or less in vain since late January. This has to do with delays in filing emergency approvals (EUAs) in key markets as well as production setbacks. Wall Street and investors have been quick to pounce on delays in getting the NVX-CoV2373 to market.

However, Novavax appears to be overcoming many of its delays. The company recently received its first EUAs in Indonesia and the Philippines and has applied for EUA approval from the World Health Organization, Canada, Australia and the UK, to name a few key markets.

It is important for investors to understand that COVID-19 looks like an endemic disease. The variability of the virus, coupled with the need to vaccinate billions of additional people worldwide, makes it very likely that Novavax will generate recurring revenue from this indication rather than just one-off vaccinations.

Novavax’s growth story should also flourish thanks to innovation. It is a leading candidate to develop a combined COVID-19 / influenza vaccine and get it to market faster than its competitors.

All of these factors make Novavax a screaming bargain in the biotech space.

Image source: Getty Images.

Pinterest

A third surefire growth stock to buy in December is the social media platform Pinterest (NYSE: PINS).

It’s not glossing over that Pinterest was a dud in 2021. Shares are down nearly 40% year-to-date, with the stock hovering at a 14-month low. This weakness is due to the fact that Pinterest’s MAU has declined sequentially for each of the last two quarters (from 478 million in the first quarter of 2021 to 444 million in the third quarter of 2021).

To say the obvious, Pinterest would never sustain its MAU growth rate, which it saw during the pandemic. With COVID-19 vaccination rates soaring in developed countries, it’s no surprise that people are leaving the home more often. It’s worth noting, however, that Pinterest’s MAU growth has been within historical norms over a period of three or five years.

It is far more important for investors to realize that even with more modest short-term MAU growth, we are seeing almost no slowdown in monetization of Pinterest’s user base. For the quarter that ended in September, global average revenue per user (ARPU) rose 37% while international ARPU soared 81%. International ARPU remains low enough ($ 0.38 in the third quarter) to double many times over this decade and fuel sustained double-digit growth.

What has made Pinterest a desirable place for advertisers is its transparent operating model. While other social media platforms collect information with users’ likes and search histories, the whole premise of Pinterest is for users to post about the things, places, and services that interest them. With this vital data, Pinterest just needs to connect users with the merchants who can meet their needs. It goes without saying that merchants are willing to spend big bucks to reach motivated buyers.

Pinterest is downright inexpensive after its retracement. It can hit 30 times Wall Street’s forecast earnings per share for 2022, but sales are still growing 25% or more annually. It’s the perfect growth stock to add in December and hold onto for the next 5 to 10 years.