Growth stocks are more enticing for investors who can buy and hold for several years. Many of the common weaknesses like a high valuation can get sorted out if investors hold onto promising companies long enough. This has led to this list of growth stocks to invest in.
However, some growth stocks are overvalued and don’t offer as much upside. Savvy investors have to differentiate between growth stocks that still offer plenty of opportunities from ones that have lofty valuations and fewer opportunities for growth.
Investors can get a head start with their research by considering these growth stocks to invest in.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is the most valuable publicly traded corporation and is still growing thanks to exposure to numerous industries. Artificial intelligence has strengthened the firm’s entire product line. Cloud computing, advertising, and gaming are some of the other growth drivers.
The company’s AI initiatives can lead to new business opportunities in the future. The recently announced Copilot for Security will increase the firm’s market share in the cybersecurity industry.
Revenue and earnings growth remained strong for the corporation in the second quarter of fiscal 2024. The top and bottom lines increased by 18% and 33% year-over-year respectively. Microsoft Cloud was a main revenue driver with net sales up by 25% year-over-year. Microsoft Cloud made up more than half of the company’s total revenue. This makes it one of those growth stocks to invest in.
Microsoft shares have surged by 260% over the past five years and offer a 0.70% dividend yield. An exceptional dividend growth rate over the years can set up Microsoft stock as a solid retirement stock by the time you want to live off dividends, Social Security, and other sources of passive income.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is mostly known for its online marketplace and cloud computing through Amazon Web Services. That’s been a dynamic combination that has helped the company outperform the stock market. Shares are up by 80% over the past year and recent earnings suggest the stock can rally higher.
Net sales increased by 14% year-over-year in the fourth quarter of 2023. The online marketplace and Amazon Web Services each achieved double-digit revenue growth rates. CEO Andy Jassy mentioned that the “regionalization of [Amazon’s] U.S. fulfillment network led to [its] fastest-ever delivery speeds for Prime members while also lowering [Amazon’s] cost to serve.”
Amazon’s streaming service is also a focal point that can deliver meaningful revenue and earnings growth. Jassy believes Prime Video can become a “large and profitable business”which should delight long-term investors. Amazon recently made a big investment in its streaming service by signing MrBeast for a reality competition series.
Bringing in one of the world’s most popular YouTubers should increase demand for Prime Video. The corporation has plenty of capital to invest into its venture thanks to its online marketplace and cloud computing. All in all, it’s one of those growth stocks to invest in.
Intuit (INTU)
Intuit (NASDAQ:INTU) is a fintech conglomerate that has top software services like QuickBooks, TurboTax, and Mailchimp. Steady recurring revenue helps the company regularly grow each year.
The firm reported 11% year-over-year revenue growth in the second quarter of fiscal 2024. Earnings per share more than doubled year-over-year from $0.60 to $1.25 per share. The stock currently has a 65 P/E ratio, but meaningful earnings growth has resulted in a 39 forward P/E ratio.
Forward guidance suggests revenue will increase by 11% to 12% year-over-year. GAAP diluted earnings per share are expected to jump by 11% to 15% year-over-year. Stable double-digit growth rates for both metrics for several years can help Intuit stock rally higher. The fintech company has already been a great pick for long-term investors. Shares are up by 151% over the past five years.
Intuit also offers a low dividend yield with a high growth rate, similar to Microsoft. The yield is currently 0.57% but the fintech company hiked its dividend by 15.4% in 2023.
Chipotle (CMG)
Chipotle (NYSE:CMG) has established itself as a top fast food restaurant chain. The Mexican Grill giant is growing at a fast pace and has plans to open more restaurants this year than it did in the previous year. Chipotle’s projection of 285-315 restaurant openings in 2024 exceeds its 271 restaurant openings in 2023.
CMG has solid fundamentals thanks to its 15.4% year-over-year revenue growth in Q4 2023 and expanding profit margins. Fundamentals have been good, but so has the stock’s momentum. Shares are up by 73% over the past year and have gained 315% over the past five years.
Chipotle’s tasty food and reputation results in many returning customers. Some people regularly visit one of Chipotle’s restaurants each day while others visit it weekly. Many consumers have built a habit of eating at Chipotle often. A vast footprint of more than 3,300 restaurants makes it easier for people to find restaurants and be reminded of the company’s food choices.
ServiceNow (NOW)
ServiceNow (NYSE:NOW) has been trading mostly sideways since mid-January but is up by 213% over the past five years. The cloud computing company offers workflow solutions for enterprises that want to increase their productivity.
ServiceNow has more than 8,100 global customers. An impressive 99% renewal rate demonstrates the effectiveness of ServiceNow’s software solutions. Almost one-quarter of the company’s customers have annual contract values that exceed $1 million. ServiceNow’s customer base also includes approximately 85% of the Fortune 500 corporations.
The firm is still growing its revenue and earnings at a fast pace. 26% year-over-year revenue growth and 97% year-over-year revenue growth in the fourth quarter of 2023 are exceptional. These growth rates helped ServiceNow exceed guidance and raise its outlook for 2024.
The company’s guidance suggests subscription revenue will increase by 24% to 24.5% year-over-year in Q1 2024. Full-year subscription revenue is projected to increase by 21.5% to 22% year-over-year.
Duolingo (DUOL)
Duolingo (NASDAQ:DUOL) is a rapidly growing educational app that helps people learn new languages. While languages has been the company’s focus for many years, it has recently expanded to offer music, math, and other subjects.
Opening the door to additional subjects will help Duolingo attract more users. Even before Duolingo added new subjects, growth has always been an area of strength. The edtech company announced a 65% year-over-year increase in daily active users in the fourth quarter of 2023. Monthly active users were up by 46% year-over-year.
Duolingo’s revenue soared alongside user growth and improved by 45% year-over-year. A simultaneous 51% year-over-year increase in total bookings suggests high revenue growth will continue. Investors were also excited about the company’s $12.1 million in net income which is a significant improvement from a $13.9 million net loss in Q4 2022. It’s one of those growth stocks to invest in.
Revenue and total bookings growth both accelerated in the fourth quarter relative to full-year 2023. The full-year growth rates for revenue and bookings were 44% and 45% year-over-year respectively.
Visa (V)
Visa (NYSE:V) isn’t the most flashy growth stock. The credit and debit card company has been around for decades and offers a straightforward business model. The fintech firm makes money each time someone buys a product or service with a Visa card.
The credit and debit card market is already large. It isn’t exactly a hidden secret, but some of the best growth stocks hide in plain sight. Visa has kept up with the market thanks to a 31% gain over the past year and an 87% gain over the past five years.
Visa boasts healthy profit margins that regularly exceed 50%. The firm strengthened its profit margins even more in the first quarter of fiscal 2024. During that quarter, net revenue increased by 9% year-over-year while GAAP net income rallied by 17% year-over-year. The stock also offers a dividend and has maintained a double-digit growth rate for several years. Visa invested $4.4 billion into share repurchases and dividends in Q1 FY24.
On this date of publication, Marc Guberti held long positions in MSFT and NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
