The stock market was on a roll in 2021, with the S&P 500 gaining 28% over the past 12 months.Even during very uncertain times, it appears investors still have an opportunity to grow their wealth.
And three red-hot growth stocks that have a lot of potential to build even more wealth for investors in 2022 are Nvidia (NVDA 1.09%), Roblox (RBLX 3.73%), and Shopify (SHOP 4.90%). These companies are leaders in their respective industries, and it's likely that their current growth trajectories are just getting started. Here's why they could win in 2022 and beyond.
Image source: Getty Images.
1. Nvidia
Many tech investors are familiar with Nvidia and its impressive graphics processing chips that are used for everything for gaming, artificial intelligence processing, cryptocurrency mining, and data centers.
Sales growth in the company's two biggest revenue segments in the latest quarter help paint a good picture of Nvidia's momentum. The company set revenue records for both data center sales and gaming sales in the quarter, with the segments rising 55% and 42%, respectively.
And Nvidia's management doesn't think the revenue growth will end there. Management has set its fourth-quarter fiscal 2022 revenue outlook at $7.4 billion, at the midpoint of guidance, which would be a massive 48% increase from the year-ago quarter.
Investors rode a wave of Nvidia's growth in 2021 and pushed its share price up 130% for the year. But don't think that you've missed out on this stock. The graphics processor market will grow an estimated 42% -- to $111 billion --- between 2020 and 2025.
As Nvidia taps into this graphics processor growth over the next few years, investors will have the chance to benefit along with Nvidia's growth in the coming years.
Image source: Roblox.
2. Roblox
It's OK if you've never heard of Roblox before. The online gaming platform launched its direct stock listing in March of 2021. If you're not a gamer, then you might have missed the early stages of this company's growth. But it's not too late to tap into Roblox's rise.
Roblox has amassed a huge following of gamers that now tops 47 million average daily active users.Those users spent a total of 11 billion hours on the platform in the third quarter and, despite the critics, demand for Roblox games hasn't slowed down as kids returned to school and adults returned to work after lockdowns and social distancing.
In the most recent quarter, average daily active users grew 31% from the year-ago quarter, and revenue spiked 102% year over year.
What makes Roblox unique compared to other gaming companies is that the content on Roblox's platform is user-generated. This means that amateur developers -- as well as professional developers -- can all contribute to the games and experiences on the platform.
This formula has been successful thus far, with Roblox attracting more than 9 million developers that have created 24 million gaming experiences and counting.
Video games are already a lucrative business with an estimated $157 billion in global sales in 2020, and could reach $293 billion by 2027, according to Global Industry Analysts.Roblox's unique approach to the gaming market should help continue to set itself apart from the competition. And with the company's already impressive growth, it looks like this gaming platform should have a bright future in the coming years.
Image source: Shopify.
3. Shopify
Most people think of Amazon when e-commerce companies are mentioned. But Shopify is another big name in this space that investors need to know about. The company helps businesses -- both large and small -- set up online shops, and it's been massively successful at doing so.
Shopify's sales jumped 46% in the most recent quarter, and both of its core revenue segments are experiencing significant growth. Revenue from the company's subscription solutions segment rose 37% in the third quarter, and merchant solutions popped 51%.
Shopify has also rapidly expanded its monthly recurring revenue (MRR). In the most revenue quarter, MRR was up 33% from the year-ago quarter.
Shopify has 1.7 million merchants using its platform; while many of them are small and medium-sized businesses, the company continues to add larger customers as well.
The company's Shopify Plus service, which caters to enterprise companies, now accounts for 28% of monthly recurring revenue -- up from 25% in the year-ago quarter.
The pandemic accelerated the need for businesses of all sizes to reach their customers online. Even when the threat of the virus is mostly gone, demand for e-commerce will remain.
E-commerce sales in 2020 reached $469 billion in the U.S. but are expected to continue rising to an estimated $563 billion by 2025, according to Statista. With Shopify already firmly planted in the e-commerce space -- and experiencing phenomenal growth -- the company will likely be able to benefit from the long-term growth of e-commerce.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns and recommends Nvidia, Roblox Corporation, and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.
