The top two growth stocks are still worth buying

After the market’s uptrend appeared to be stagnating earlier this year, many growth stocks are picking up steam. As of this writing, the S&P 500 is up 4% year-to-date.

While this market optimism is great for investor portfolios, it is more difficult to find good stocks to buy. After all, by paying higher prices for stocks, investors are likely to earn lower returns in the long run than if they were able to buy them at a reduced price. But close examination still reveals some high-quality companies whose stocks continue to look attractive, even after their recent highs.

Image source: Getty Images.

1. Apple

A surprising stock that is still worth buying after decades of massive stock price appreciation is Apple (NASDAQ: AAPL). The company’s latest earnings report showed how – despite its market cap of $ 2.3 trillion today – this company remains in growth mode. During the holiday season, which is Apple’s first quarter of fiscal 2021, revenue jumped 21% year-over-year to $ 111 billion. Earnings per share climbed 35% to $ 1.68.

But even these financial numbers don’t fully reflect Apple’s momentum. Consider its momentum in its new segments, services and wearable devices.

Apple’s services segment, which has a gross profit margin of about double what the tech giant earns from its hardware sales, is growing even faster than the company’s consolidated revenue. Service revenue in the holiday quarter increased 24% year over year. The strength of this segment is critical as it includes App Store sales, Apple native subscription services, AppleCare and other software and services that are good sources of recurring revenue for Apple.

Then there’s Apple’s clothing, home and accessories business – a hardware segment that includes sales of AirPods, Apple Watch, HomePods, and other accessories. This segment saw its revenues increase by 30% compared to the same period of the previous year.

If you think Apple’s growing days are behind, think again.

2. Pinterest

A small business that is growing much faster than Apple Pinterest (NYSE: PINS). The visual and multimedia search platform looks more and more like an advertiser’s dream platform. Highly engaged users spend their time on the platform researching products and browsing photos. What more can an advertiser expect from their target audience?

It’s no surprise that advertisers are flocking to the platform, especially as user engagement continues to improve. Supported by a 37% year-over-year increase in the number of monthly active users of Pinterest in the fourth quarter, its ad revenue grew 76% year over year.

Of course, investors have to pay a premium to get into a growth story like this. Pinterest has a market cap of $ 51 billion, despite sales of just $ 1.7 billion in the past 12 months. Keep in mind that this prominent figure is changing rapidly. On average, analysts forecast 2021 revenue of $ 2.5 billion and 2022 revenue of $ 3.4 billion.

These two established tech companies are arguably still worth their high prices. Volatility is of course to be expected. But in five to ten years, we’ll probably look back and even see those high levels as good entry points into these growth stocks.