2 Top Growth Stocks to Buy Right Now

In March 1957, the S&P Composite became the S&P 500 as we know it today, an index comprising 500 of the largest U.S. companies, designed to be a bellwether for the broader economy. Since its inception, the S&P 500 has generated an annualized return of approximately 7.4%, a pace that would double your money once every 10 years. That’s not too shabby.

However, if you’re willing to do the research, your portfolio could grow even faster. Of course, every investor has their own process, but I start by looking for companies with a competitive edge, a sizable market opportunity, and healthy top-line growth. Those qualities hint at future share price appreciation — and I think Elastic (NYSE:ESTC) and Unity Software (NYSE:U) check all three boxes.

Here’s what you should know about these growth stocks.

Image source: Getty Images.

1. Elastic

Elastic is a search company. Its platform is designed to log data from any source, then search and analyze that information, helping clients tackle a variety of business-critical processes. Specifically, Elastic offers three software products: Enterprise Search, Observability, and Security.

Enterprise Search is a workplace search engine. It helps clients locate specific items across an ever-growing sea of corporate resources, and also allows developers to embed search bars in mobile apps and websites. For instance, Shopify uses this tool to power its merchant-facing help documentation. Observability and Security extend the power of search to the IT ecosystem, surfacing insights related to the health of applications, networks, and infrastructure. This helps IT and security teams identify performance issues and remediate threats.

So where is the competitive edge? According to DB-Engines, Elastic is the most popular enterprise search product on the market, outranking second-place Splunk by a wide margin. In fact, Elastic surpassed 16,000 customers in the most recent quarter — up 33% from the prior year — and the average customer spent nearly 30% more over the past 12 months.

Building on that momentum, Elastic’s top line is growing quickly, and its free cash flow recently crossed into positive territory.

Source: Ycharts. TTM = trailing-12-months. Note: Q1 2022 ended July 31, 2021.

Management currently puts Elastic’s market opportunity at $78 billion, a figure that reflects the enormous impact of digital transformation.

As enterprises spread more resources across public and private clouds, the ability to search, observe, and secure that infrastructure will become increasingly critical. And Elastic’s best-in-class solution should help the company capitalize on that massive opportunity. That’s why this stock looks like a long-term market-beater.

2. Unity Software 

Unity specializes in content development. Its…