It’s easy to get why investors flock to growth stocks.
I mean, what’s not to love? They give investors and traders an exciting story to tell by offering them the chance to achieve outsized profits.
With small-cap stocks showing strength, it looks like that idea is here to stay…
And I have three growth stocks for 2021 on my radar I believe will experience more favorable upside in the foreseeable future.
But before we jump into my top growth stocks for 2021, there is something most people don’t realize…
Growth stocks tend to trade above fair value as a result of having a higher potential for upside moves. As I’ve always said, whenever you see the potential for outsized returns, there’s also a higher potential for risk. These stocks are no different.
This is exactly why growth stocks, more often than not, trade substantially above their intrinsic value, or the value of what an asset is worth, and have a higher-than-average sensitivity to certain stock market moves.
But with that in mind, most people will agree that growth stocks are where investors have seen the most reward over the past decade.
The market is not rewarding value investors like Warren Buffett nearly as much these days. Everyone is chasing pure momentum.
While I do believe there will be a time for value stocks — especially after we see a correction and recovery cycle — it doesn’t look like the market is in a rush to turn bearish anytime soon.
Federal stimulus checks and near-zero interest rates are running the show right now. And since smaller stocks are gaining strength, momentum could remain the favorite for quite a while.
Check out my short video on my top growth stocks for 2021 and be sure to leave a comment in the section below before you head out. Also, don’t forget to subscribe to my YouTube channel so you can be notified as soon as I post my next video.
If you’re ready to dip your toes into growth stocks in 2021 but don’t want to expose yourself to individual equities just yet, you’re going to love my third recommendation. It’s actually an ETF, which means your risk is lower but your gains are still concentrated in momentum.