Investing in Up-and-Coming Stocks

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Most investors know the big-name growth stocks that have produced monster returns for their investors over the years. Their success has made them household names. While many of these companies will likely continue growing, most don’t have the same upside potential they once did.

Because of that, investors seeking untapped upside need to look elsewhere for the next wave of the best up-and-coming business stocks. The following list contains some of the most intriguing emerging growth stocks that aren’t yet household names.

Image source: Getty Images.

Top up-and-coming stocks

One of the best long-term investment strategies for increasing wealth is investing in stocks of companies rapidly expanding their businesses by tapping into new market opportunities such as solving major problems. Those who invest money in emerging companies often reap the highest rewards. However, not every up-and-coming company is successful, making this strategy a higher risk. Still, the reward can be well worth taking the risk of investing in an emerging company since one big win can produce game-changing returns.

With that upside potential in mind, here’s a list of 11 up-and-coming stock ideas investors might want to consider:

Up-and-Coming Stock

Ticker Symbol

Market Cap

What It Does

Bill.com Holdings

(NYSE:BILL)

$28.8 billion

A software company that helps automate the receipt and payment of bills and invoices.

Coinbase Global

(NASDAQ:COIN)

$58.4 billion

The largest cryptocurrency exchange.

CrowdStrike Holdings

(NASDAQ:CRWD)

$63.6 billion

A cloud-based cybersecurity company.

Docebo

(NASDAQ:DCBO)

$2.9 billion

A cloud-based learning management platform.

Fastly

(NYSE:FSLY)

$5.4 billion

Operates a global content delivery network.

Lemonade

(NYSE:LMND)

$4.7 billion

An AI-powered insurance company.

Opendoor Technologies

(NASDAQ:OPEN)

$11.6 billion

A real estate technology company focused on iBuying.

Snowflake

(NYSE:SNOW)

$92.6 billion

A cloud-based data storage platform.

Teledoc Health

(NYSE:TDOC)

$23.1 billion

A telehealth provider.

Upstart Holdings

(NASDAQ:UPST)

$19.5 billion

Helps financial institutions make AI-driven lending decisions.

Zscaler

(NASDAQ:ZS)

$40.0 billion

A cloud-based cybersecurity company.

Data source: Company websites and Ycharts. Market cap data as of Sept. 7, 2021.

Here’s a closer look at these emerging companies.

Bill.com

Bill.com is a fintech company that helps small and medium-sized businesses optimize their payment systems. The company’s software automates the receipt and payment of bills and invoices. It works seamlessly with most popular accounting programs and makes it easy for companies to approve payments. 

The artificial intelligence (AI)-enabled, cloud-based company increased its revenue by 51% in fiscal 2021 and had more than 121,000 customers on its platform at the end of its fiscal year, which was a jump of 24%. Those numbers should continue growing as Bill.com expands its existing platform and acquires new ones.

In 2021, the company acquired Divvy, a leader in spend management for small and medium businesses, and Invoice2go, a leading mobile-first accounts receivable provider, to continue expanding its reach. With more small and medium-sized businesses seeing savings from using Bill.com’s platform, the company should continue growing at a fast pace.

Coinbase Global

Coinbase Global is the largest cryptocurrency exchange in the U.S. It allows users to buy and sell cryptocurrencies such as Bitcoin (CRYPTO:BTC) and Ether (CRYPTO:ETH). The platform completed its initial public offering (IPO) in 2021. 

During the second quarter of 2021, Coinbase averaged 8.8 million monthly recurring retail transactions, up 44% from the first quarter. Trading volume hit more than $462 billion, up from only $28 billion in the prior-year period. That helped push its net revenue up over $2 billion, a more than 10-fold increase from 2020’s second quarter. As more people start trading cryptocurrency and other digital assets, Coinbase will likely continue thriving.

CrowdStrike Holdings

CrowdStrike Holdings is a cloud-based cybersecurity platform. It relies on big data and AI to prevent supply chain attacks and ransomware threats and protects against intellectual property and data theft.

Cybersecurity is a rapidly expanding market given the growing threats. Brandessence Market Research and Consulting sees the global cybersecurity market topping $400 billion by 2027, up from a mere $17.6 billion in 2020. CrowdStrike is an early leader in cloud-based cybersecurity, putting it in a great position to capture a large share of this fast-growing opportunity.

Docebo

Docebo is a software-as-a-service (SaaS) company offering cloud-based educational and training resources to businesses. Its software includes the Learn learning management system. This solution allows businesses to train their workers and educate customers. 

The company had nearly 2,500 customers using its system in the middle of 2021, an increase of about 500 over the past 12 months. That helped drive 76% revenue growth for the software company. It’s adding new customers to its platform all the time, which should continue driving robust revenue growth. 

Fastly

Fastly operates a global content delivery network (CDN). It has an infrastructure-as-a-service business model, providing customers the infrastructure they need to quickly and reliably transmit data. It aims to make the internet faster by using solid-state caching systems. While more expensive than traditional magnetic disks, they’re faster and more reliable and secure.

As more customers use its CDN, Fastly will make more money from its existing network. Given the growing importance of speed and network security — Fastly acquired Signal Services in 2020 to expand its security portfolio — the company has a lot of room to run.

Lemonade

Lemonade is a tech-based insurance company. It uses an AI-powered platform to make it easier for customers to buy insurance and process claims. Customers can buy a new insurance policy in a matter of minutes. Meanwhile, Lemonade can process claims in a few seconds instead of the days it often takes traditional insurance companies to process and pay out claims. 

The company is growing briskly. Its customer count passed 1.2 million in the middle of 2021, up 48% year over year. It’s also collecting a higher premium per customer (up 29% year over year) as it expands its offerings to include renters’, home, life, car, and pet insurance. With the insurance industry ripe for disruption, Lemonade can squeeze out a lot of growth by grabbing more market share.

Opendoor Technologies

Opendoor is a real estate technology company primarily focused on iBuying. It allows people to purchase and sell homes directly on the platform instead of from each other. That makes the process smoother for all involved, taking away a lot of the stress of the home buying and selling process.

About $1.6 trillion of homes change hands in the U.S. each year, representing a massive opportunity for Opendoor. As it continues expanding its home purchases, Opendoor will showcase its platform’s ease to more buyers and sellers, which could take iBuying mainstream.

Snowflake

Snowflake operates a cloud-based data warehouse platform. It offers companies solutions to store all the data they collect while also making it easily accessible. 

The company is growing briskly. Snowflake’s annual revenue soared 124% in its fiscal year 2021, powered by new customers and expanding sales to existing ones. Snowflake sees a massive $90 billion future market opportunity for its cloud data platform, significantly more than the existing $14 billion annual data warehouse market. Its ability to capture this growing opportunity will probably allow it to continue delivering strong financial results.

Teledoc Health

Teledoc is a videoconferencing platform that allows patients to access medical professionals. It’s more convenient and less expensive than in-person visits to a doctor’s office. The company is building an end-to-end virtual healthcare platform to make it even easier for people to access the medical care they need. 

The company’s revenue grew an impressive 109% year over year in 2021’s second quarter, while patient visits topped 3.5 million, up by 28%. One factor driving that growth was its 2020 merger with Livongo, a chronic care management company. That acquisition is a key to Teledoc’s strategy of becoming a go-to virtual healthcare solution. As the company offers more ways to virtually connect with medical professionals, Teledoc should be able to continue expanding its revenue at a rapid pace. 

Upstart Holdings

Upstart provides an AI-driven tech platform that allows financial institutions to make smarter lending decisions. The company’s platform takes more than 1,000 variables into account when evaluating a potential borrower, a much more robust system than traditional credit-score-based approvals. That allows it to quickly approve more loans (71% receive instant approval) at lower rates than traditional underwriting programs. 

Upstart is growing at an unbelievable rate. Its revenue skyrocketed an astounding 1,018% year over year in 2021’s second quarter. The company is just scratching the surface of its potential. Upstart started in the small personal loan market ($84 billion in opportunities) but has since expanded into the $635 billion auto loan market.

The fintech company has the potential to wade even deeper into the $4.2 trillion U.S. consumer credit market in the future, giving it lots of room to continue expanding its consumer finance offerings while also increasing its customer count. That should power continued robust growth for Upstart investors.

Zscaler

Zscaler is a cloud-based cybersecurity platform. Increasingly, employees and customers need to access information stored in offsite data centers instead of a central server. Further, they’re often accessing it from remote locations instead of at the office. Zscaler helps them securely access this information remotely. 

The company has an audacious goal. Zscaler wants to secure 200 million users and 100 million workloads. That’s up from around 20 million as of the middle of 2021. It aims to achieve that bold target by bringing new customers into its network and upselling existing ones as it expands into new geographies and segments while also increasing its functionality and providing new platform solutions.

These up-and-coming stocks are worth a closer look

These tech-powered companies are all working to provide innovative solutions to solve some of the biggest problems facing other businesses and consumers. That positions these up-and-comers for robust growth in the coming years. Because of that, investors should at least consider putting them on their watch lists.