If someone were to just look at the S&P 500 (SPY  ) and Dow Jones Industrial Average (DIA  ), they would conclude that 2021 is following the same path as 2020. However, there is a big difference if one looks under the surface.

The most notable development is the weakness in certain parts of the market that were big outperformers last year such as SPACs, cannabis stocks, remote working stocks, and cryptocurrency miners. While the S&P 500 is up 12% YTD, many stocks in these sectors are down by more than 50%.

Although many of these stocks have had nice bounces in the last couple of weeks, there is little indication that the rotation is over. However, once the rotation ends, there will be fantastic opportunities in some growth stocks. Here are three names worth monitoring:


Zillow (ZG  ) is down by nearly 50% since its peak in mid-February. The stock is certainly overvalued with a $28 billion market cap and $3.4 billion in revenue. However, there are some really attractive qualities about the stock which increase its chances of being a long-term winner.

For one, the company already has a dominant market share in terms of online real estate listings. This means that it will be able to generate increasing amounts of revenue via advertising. It's also seeing increasing traction with its iBuying platform. Ultimately, Zillow is the leader in real estate tech and should thrive with the industry's disruption.


Cloudflare (NET  ) is following the same playbook as many of the biggest winners in technology. It has a free or low-cost version of its product to prevent DDOS attacks which have become the industry standard for many websites. From this, the company offers higher-value products and services related to cybersecurity or "edge computing".

Cloudflare is definitely overvalued with a $25 billion market cap and $500 million in revenue. However, the company continues to grow at an impressive rate and has massive margins. Further, it's choosing to prioritize growth rather than near-term results. Given its huge market opportunity and its ability to regularly develop new products and features for customers, investors should keep the stock on their radar.


Paypal's (PYPL  ) stock has basically been flat since last December. Yet over the last six months, it's maintained its torrid growth pace. Further, the outlook for "digital wallets" continues to be quite bullish, and the company is working on increasing the number of products and services for account holders.

Additionally, its crypto-buying option has been very successful in terms of increasing user growth. While this isn't going to add significantly to its bottom-line, it's essentially a way to grow with zero "cost of customer acquisition". Shares are also getting attractive on a valuation basis with a forward PE of 44, 30% revenue growth, and 23% profit margins.