Insights Post

The Next GameStop? Top 3 Company Shares To Watch in Q4 2021

| 27 December, 2021 at 16:22 GMT

In January 2021, a short squeeze resulted in a 1,500% increase in Gamestop’s share price. The gaming retailer’s sudden growth in early 2021 shocked the world of finance;  the company was wilting away, with its earnings in a red zone since 2016,  and suddenly it’s share price started to rapidly grow.

The growth took place due to a coordinated effort orchestrated by a Reddit community called r/wallstreetbets.  The spike was further ignited by Elon Musk’s tweet stating ‘Gamestonk!’.

Gamestock’s unprecedented growth in 2021 may have been impossible to predict but there is a special category of shares that have been steadily trending higher and these are known as growth stocks. Let’s delve deeper into understanding this term and seeing what growth stocks and how they work.

What are growth stocks?

A growth stock represents a share in a company that grows at a significantly higher rate than similar stocks in the market. Normally, issuers of growth stocks want to reinvest any earnings accrued as they want to accelerate the company’s growth in the short term. Investors will earn money through capital gains when they sell their shares in the future, rather than dividends.

Growth stocks will trade at a high P/E ratio (price-to-earnings) and can take place in pretty much any sector. Trading growth stocks is often viewed as risky in comparison to other shares, as the investor’s only opportunity to earn money is when they sell their shares.

Covid-19 has caused a lot of shifts in the markets and there’s a great number of growth stocks with solid fundamentals that remain undervalued but are set to trend higher in 2022. We gathered several perspective scenarios to bring you our two cents on some of the most ambitious looking stocks of 2022:

Volkswagen Group (VOW3)

The German car manufacturer has been innovating over the past year – Volkswagen plans to overtake Tesla’s volume of battery electric vehicles by 2023. The company has recently created a European company exclusively for its battery business and announced the new company would perform a variety of activities, such as processing raw materials and managing Volkswagen’s European gigafactories.

“We already have a strong battery team in Salzgitter made up of 500 employees from 24 countries–and we are continuing to strengthen this team at leadership level,” Thomas Schmall, chief executive of Volkswagen Group Components, said.

Furthermore, the car producer is also looking into the possibility of going public in 2020 with one of its subistadries, Porsche. The IPO could easily result with Porsche being valued at ($81 billion to $106 billion).

Salesforce (CRM)

Nicknamed a pandemic winner, the customer relationship management software company grew significantly in value in the last two weeks. During 2020, the company had to accommodate the world with digital solutions as the world turned to remote working virtually overnight. The company experienced a year of record growth, with its revenue reaching $21.25 billion by the end of 2020.

Despite the stock dropping in November 2021, the stock still outperformed its competitors such as Microsoft Corp. and Adobe Inc. According to Brent Thill, analyst of Jefferies Group, the company is performing well with a high customer satisfaction rate of over 80%.

The analyst commented, “CRM hit the trifecta of taking a breather on large M&A, focusing on integrating Slack, and delivering more margins.” He is encouraged by the outperformance by the stock in relation to a similar software-based ETF, IGV.  

Visa (VIE)

Payment stocks are in the limelight now, particularly due to the ‘Omicron’ variant causing investors to turn to cheaper stocks with a compelling growth outlook in the future. Until now, many payment stocks have underperformed due to investors preferring decentralized finance technologies such as cryptocurrencies. But despite cryptocurrencies like Bitcoin being so-called digital safe haven assets, they are not commonly used for transactions due to them being slow and expensive. Payments with credit and debit cards are considered a far more convenient option and with Visa’s fundamentals, the company has a bright future ahead. Currently, investors can buy Visa’s shares at an attractive price.

What shares do you think will become growth stocks in 2022? 

With conflicting opinions everywhere, sometimes it’s tough to make assumptions on how each growth stock will perform. It’s crucial to follow market trends and keep an open mind when investing in growth stocks.

Volkswagen, Salesforce, and Visa are all available as stock CFDs on all BDSwiss platforms.