Investing in the top stocks to buy can lead to long-term value and get you closer to your financial goals.
However, investors must pinpoint these types of stocks from the thousands of publicly traded corporations. It’s also difficult to pick top seeds that will remain top seeds. Many stocks that thrived during the pandemic have faded and aren’t treated as growth stocks anymore.
Investors looking for long-term winners for their investing brackets should consider these top stocks to buy today.
Elf Beauty (ELF)
Elf Beauty (NYSE:ELF) has been a top contender for many years. The beauty company offers a high-demand product line that uses cruelty-free ingredients. Investors can get an idea of the firm’s demand by looking at the stock’s historical performance. Shares are up by 179% over the past year and have gained 2,000% over the past five years. The stock even has a 39% year-to-date gain.
The cosmetics brand gained 305 basis points of market share in the industry while delivering 85% year-over-year revenue growth in the third quarter of fiscal 2024. Elf Beauty has a regular history of beating guidance and raising its benchmarks. Achieving its 20th consecutive quarter of growth prompted the company to once again raise its fiscal 2024 outlook. Net income reached $26.9 million on a GAAP basis which is a 41% year-over-year improvement.
Despite the big run-up, Elf Beauty only has an $11 billion market cap. The stock also trades at an 86 price-to-earnings (P/E) ratio. The corporation’s 56-forward P/E ratio offers a better perspective of the stock’s value proposition.
Duolingo (DUOL)
Investors who like growth companies in their early innings may want to consider top stocks to buy, such as Duolingo (NASDAQ:DUOL). The company recently became profitable, which is music to any long-term investor’s ears. Duolingo reported a profit in the third quarter, but profit margins expanded significantly in the fourth quarter of 2023.
Duolingo flipped a $13.9 million net loss from Q4 2022 into a $12.1 million in net income in Q4 2023. Profitability isn’t the company’s only strong suit. Revenue increased by 45% year-over-year on the back of daily and monthly active user counts increasing by 65% and 46% year-over-year respectively.
The corporation’s 51% year-over-year increase in total bookings in Q4 2023 suggests financial growth will continue. The company’s guidance suggests full-year revenue will range from $717.5 million to $729.5 million in the full year 2024. The $723.5 million midpoint suggests a 36.2% growth rate from the company’s $531.1 million in total 2023 revenue.
Visa (V)
Consumers frequently use their debit and credit cards to buy goods and services. These cards enable online transactions and are more convenient to carry around than cash. Cardholders also have the opportunity to receive rewards and build their credit scores by making on-time payments. There’s a lot to like about the business model even though it’s been around for decades.
Visa (NYSE:V) is the leader in this industry and currently holds a $560 billion market cap. The stock trades at a 32 P/E ratio and has a 0.74% dividend yield.
As another one of the top stocks to buy, Visa can resist a recession thanks to consumers still using credit and debit cards during any economic cycle. However, the company posts better earnings when consumer spending remains resilient. That was the case for Visa’s first quarter of fiscal 2024. The fintech firm reported a 9% year-over-year jump in revenue and a 17% year-over-year increase in GAAP net income.
Those earnings can help the stock gain more momentum. Shares are up by 31% over the past year and have gained 80% over the past five years.
Costco (COST)
Investors can find great stocks to buy by considering where they and other people shop. Many consumers turn to Costco (NASDAQ:COST) for affordable goods. A Costco membership lets you get inside any store and capitalize on great deals.
Costco has more than 600 locations in the United States and almost 900 locations worldwide. The wholesale retailer has 130.0 million cardholders and serves 73.4 million households. Results from the second quarter of fiscal 2024 indicate the corporation is still expanding. Revenue increased by 5.6% year-over-year with big gains in international markets. E-commerce grew by a meaningful 18.4% year-over-year.
Net income was another bright spot and reached $1.74 billion in the quarter. It’s an 18.4% jump compared to the $1.47 billion in net income during the same period last year.
Shares pulled back after the earnings report and are down by roughly 10%. The stock now trades at a 47 P/E ratio. Investors with longer time horizons can use the dip as a buying opportunity. The stock is up by 51% over the past year and has scored by 206% over the past five years.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has the world’s most recognizable online marketplace and is a leader in the cloud computing industry. The corporation has many fans in Wall Street who currently project a 19% upside from the current price.
The highest analyst price target of $230 per share suggests it can rally even higher. It’s a 31.4% upgrade from the current price level.
As another one of the top stocks to buy, Amazon’s fourth-quarter results demonstrate why the stock can gain value from here. The corporation reported 14% year-over-year revenue growth. Amazon Web Services accounted for $24.2 billion of the company’s $170.0 billion.
This cloud computing segment achieved 13% year-over-year revenue growth, which matched the growth rate of total sales in North America. International markets grew faster at 17% year-over-year across Amazon’s business segments.
The stock has been a great long-term hold. Shares are up by 89% over the past year and have more than doubled over the past five years. Amazon currently has a 41-forward P/E ratio.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has been the most reliable Magnificent Seven stock. The corporation continues to produce solid financial results without experiencing sharp price fluctuations.
The stock’s 62% gain over the past year and its 255% jump over the past five years highlight the firm’s consistency. In the long run, you can only get consistent returns with consistent revenue and earnings growth. Microsoft’s latest financial report indicates investors can expect more success from the company.
Q2 FY24 revenue increased by 18% year-over-year while net income surged by 33% year-over-year. Those growth rates helped the company reach a 35.3% net profit margin. It’s hard to bet against a company that steadily delivers financial strength while capitalizing on key verticals like cloud computing, artificial intelligence, business software, and others.
The company’s investments in artificial intelligence have created new growth opportunities for the company. CEO Satya Nadella mentioned the company has shifted from talking about AI to applying the technology at scale. The firm’s recent launch of Copilot is one of the many ways AI is impacting Microsoft’s long-term future. The stock has been a great pick for long-term investors and looks like it can deliver more gains.
Cava (CAVA)
Cava (NYSE:CAVA) is a Mediterranean fast food restaurant that has received many comparisons to Chipotle (NYSE:CMG). The up-and-coming chain has more than 300 locations spread across 25 states and 209 cities. Most of its restaurants are located in the East Coast, Texas, and Southern California.
Investors are excited about the company’s growth opportunities and financial strength. Full-year Cava revenue increased by 59.8% year-over-year as the company opened 72 new restaurants in 2023. Cava aims to open approximately 50 restaurants in 2024.
Cava has also become profitable and delivered its third consecutive quarter of positive net income. The firm’s $2.0 million in Q4 2023 net income is a significant turnaround from the $18.8 million net loss posted at the same time last year.
The stock is up by more than 50% over the past year and is starting to draw more investors. Cava’s main weakness is its 300 P/E ratio. A forward P/E ratio of 250 is better but still not the best.
However, the valuation can improve as net profit margins improve. Cava hasn’t yet reported a quarter with profit margins above 4%. Cava is in a good position for its net income growth to exceed revenue growth for several years. Rising net income growth will strengthen the long-term valuation, especially for investors with 5-10-year time horizons.
On this date of publication, Marc Guberti held long positions in ELF, MSFT, and CAVA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
