3 Growth Stocks to Invest $1,000 in Right Now

Key Points

• Upstart's growth following its 2023/2024 slowdown looks like it’s going to stick this time around.

• Yes, MercadoLibre missed last quarter's earnings expectations. Now take a step back and look at the bigger picture.

• Apple shares have performed poorly since late last year thanks to misfires on the artificial intelligence front. The past, however, isn't its future.

• 10 stocks we like better than Apple ›

Got some idle cash you're ready to put to work for a while? Although the market's rally to record highs -- and steep valuations -- might make it feel like there's not much worth stepping into at this time, worthy opportunities are out there. You just have to dig deeper to find them, and perhaps look a bit off of the beaten path.

With that as the backdrop, here's a closer look at three growth stocks to consider scooping up sooner than later, while each is still underpriced thanks to recent but unmerited weakness.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

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1. Upstart

Yes, Upstart (NASDAQ: UPST) shares stumbled on Wednesday in response to its second-quarter report. Although revenue of $257.3 million topped analysts' expectations of $226.5 million and adjusted per-share earnings of $0.36 beat expectations of only $0.25, the Q2 earnings call highlighted lingering risks like inflation and competition. Investors took that ball and ran with it, dragging UPST shares down 19% for the day.

The market, however, arguably lost all perspective on the matter. Revenue still doubled year over year, and the company went from an operating loss of $55.5 million in the comparable quarter a year earlier to operating income of $4.5 million this time around.

Best of all, Upstart's guidance for the rest of the year also suggests this degree of growth should persist at least through the end of the year. Indeed, analysts are calling for a top line of more than $1.5 billion for 2027, versus this year's projected revenue of just over $1.0 billion while annual per-share profits are expected to grow from $1.51 to $3.12 during the same three-year span. It looks like Upstart's business is here to stay.

But what is its business? In simplest terms, Upstart is a new kind of credit-scoring bureau.

Although plenty of banks and lenders still rely on information from Equifax, TransUnion, and Experian when making lending decisions about potential borrowers, their credit-risk assessments aren't necessarily the most accurate anymore. Using an artificial intelligence algorithm that considers more than 1,600 different data points, Upstart's approach allows for 43% more loan approvals with no more defaults than the more commonly used scoring system from credit bureaus.

Lenders are finally catching on, too. The total number of loans the company's tech facilitated jumped 159% last quarter as well.

2. MercadoLibre

Much like Upstart's stock, MercadoLibre (NASDAQ: MELI) shares initially tanked in response to Monday afternoon's release of its second-quarter earnings. Revenue of $6.79 billion beat estimates of $6.67 billion, but earnings of $10.31 per share fell well short of the expected $11.93.

Although the stock fought its way back to a gain on Tuesday, it's been rough sailing ever since. The stock's now down about 5% from its post-earnings peak, and more than 12% below May's record high and still testing new multi-week lows.

As with Upstart, investors may be missing the much bigger bullish picture here.

See, MercadoLibre is an all-encompassing e-commerce platform that's often compared to Amazon, frequently referred to as "the Amazon of Latin America" in a nod to its growing dominance of the region's e-commerce arena.

If it wants to truly become the Amazon of that particular market, though, it must do there what Amazon did here. That's offering free shipping even if it hurts profit margins -- which it did last quarter. But in the long run the trade-off is worth it, particularly given the fragmented nature of Latin America's online shopping industry, making it still up for grabs.

And the opportunity is enormous. With broadband internet and smartphones just now becoming common in the region, Payments and Commerce Market Intelligence expects Latin America's e-commerce industry to double in size between 2023 and 2027, when it will be worth more than $1 trillion.

The thing is, MercadoLibre is clearly cashing in on this growth. Although it missed its second-quarter earnings estimates, revenue was up 34% year over year. And while operating income only improved a relatively modest 14%, the reason is neither surprising nor troubling -- it was the free shipping it offered to Brazil's consumers that ate into its profit margins. Again, the short-term pain is worth the long-term growth the free shipping perk sets up.

3. Apple

Finally, add Apple (NASDAQ: AAPL) to your list of growth stocks to buy if you've got $1,000 (or more) you're ready to put to work.

No, it's not off the beaten path the way Upstart and MercadoLibre are. Apple is currently the world's third-biggest publicly traded company, sporting a market cap of nearly $3.3 trillion. Like MercadoLibre and Upstart, though, Apple's stock is undervalued thanks to unmerited weakness since late last year.

Blame its fumbled entry into the era of on-device artificial intelligence, mostly.

When Apple Intelligence was first unveiled in June of last year, consumers as well as investors were excited that the tech would turn their iPhones and iPads into stand-alone generative AI devices. September's introduction of the newest mobile devices capable of running Apple Intelligence stoked further optimism. Then October's actual release of Apple Intelligence tech was met with cheers.

By December, however, consumers and analysts were largely in agreement that the onboard AI tool just didn't live up to the hype. Apple's stock has been struggling since, in the shadow of failure that the world's not accustomed to seeing from this iconic company.

There's hope on the horizon, though. While it took a painful wake-up call to get the ball rolling, Apple has spent the past several months restructuring and rethinking its entire approach to consumer-facing artificial intelligence. It's also likely come to appreciate that it's better to wait until a new tech is fully ready before launching it. In this vein, the company now says the next version of its AI-powered digital assistant Siri won't be released until early in the coming year, just to make sure it's truly ready.

While it's been a relatively ugly stretch for the company, just bear in mind that stocks reflect their underlying company's future rather than their past. And Apple's future looks bright in light of Precedence Research's outlook for the intelligence virtual assistant market, which it expects to grow at an average annual pace of 24% through 2034.

The irony is that investors are already seeing glimmers of hope from Apple even before it's fully regrouped. Last quarter's top line was up 10% year over year, led by iPhone revenue growth despite plenty of nay-saying about the most recent versions of the device.

Analysts are still calling for a slower growth pace ahead, but AAPL stock's strong rally since the late-July release of last quarter's results suggests investors may be expecting more. The thing is, in this instance, the trading crowd may well be right.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, MercadoLibre, and Upstart. The Motley Fool recommends Experian Plc. The Motley Fool has a disclosure policy.