Bargain Hunting: 2 Top Growth Stocks to Buy Right Now – The Motley Fool

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Throughout the pandemic, investors were quick to put money into the market, and many popular growth stocks reached absurdly rich valuations. But that narrative is starting to shift. Rampant inflation is likely to drive a deceleration in business and consumer spending, and investors are worried about the negative repercussions for corporate revenue and profit growth.
As a result, many stocks have sold off sharply in recent months. Of course, no one likes to lose money, but there is some good news here. With prices falling, many of those richly valued growth stocks are priced more attractively now. Some of them even look like bargains.
Here are two great examples.
Image source: Getty Images.
Twilio (TWLO -4.87%) specializes in consumer engagement. Its platform comprises a suite of communication tools that allow developers to build software with features like text, voice, video, and email. Twilio also offers pre-built applications for cloud contact centers, marketing, and sales, giving clients the ability to engage consumers with personalized communications throughout the customer lifecycle.
Many people may not be familiar with Twilio, but its technology powers everyday interactions like order notifications, password resets, and delivery updates, and its clientele includes well-known brands like Airbnb and Shopify. Better yet, the International Data Corp. recognized Twilio as the communications platform as a service (CPaaS) industry leader in 2021, citing the breadth of its platform and its growth strategy as differentiating qualities.
Financially, Twilio is still unprofitable on a GAAP basis, as the company is spending aggressively to capture market share. But in 2021, its customer base grew 16% to 256,000 active accounts, and the average customer spent 31% more, showing the stickiness of its platform. Revenue rocketed 61% higher to $2.8 billion, representing an acceleration from 55% growth in 2020. In that light, Twilio’s ambitious investments seem to be paying off. And as its business continues to scale, the company should eventually achieve profitability. In the meantime, it has $5.3 billion in cash and short-term investments on its balance sheet, plenty of money to power its growth engine.
On that note, Twilio puts its addressable market at $87 billion by 2023, highlighting its tremendous opportunity. And with shares of the CPaaS market leader trading at 9.5 times sales — way below their three-year average of 20.4 times sales — this growth stock looks like a bargain buy.
MercadoLibre (MELI -4.83%) operates the largest fintech and e-commerce ecosystem in Latin America, a region with nearly twice the population of the United States. Its online marketplace operates across 18 different countries, and in each of its major geographies, it receives more page views and unique visitors than any competing platform.
Beyond its first-mover status, the secret to MercadoLibre’s success is its broad portfolio of value-added services. The company offers solutions for logistics, financing, and digital advertising, all of which simplify commerce and make its marketplace more attractive to merchants. But few innovations have been as impactful as its fintech platform Mercado Pago.
Mercado Pago allows merchants to accept digital payments on MercadoLibre’s marketplace, and it allows consumers to make purchases at a growing number of off-marketplace locations, both in stores and online. That service is particularly important because bank account and debit card penetration is relatively low in Latin America compared to the United States.
Backed by that competitive edge, MercadoLibre has consistently delivered impressive financial results. In 2021, revenue skyrocketed 78% to $7.1 billion, fueled by strong growth in both its commerce and fintech businesses, and the company posted a GAAP profit of $1.69 per diluted share, up from a loss of $0.07 per diluted share in 2020.
Looking ahead, online retail sales in Latin America are expected to reach $160 billion in 2025, according to Statista. As the market leader, MercadoLibre is well-positioned to benefit from that tailwind. And with shares trading at 8.2 times sales, which is near a five-year low, this growth stock is a screaming buy.

Trevor Jennewine owns Airbnb, Inc., MercadoLibre, Shopify, and Twilio. The Motley Fool owns and recommends Airbnb, Inc., MercadoLibre, Shopify, and Twilio. 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.
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