Growth stocks have the potential to outperform the stock market. These corporations often exhibit high revenue and earnings growth for multiple years.
While growth stocks tend to be more volatile than the average investment, individuals with lengthy time horizons can ride out the sharp price fluctuations. Buying and holding promising growth stocks with a 5-10-year horizon can lead to meaningful long-term returns. These top growth stocks can take your portfolio to new highs.
Visa (V)
Visa (NYSE:V) is a leading fintech firm specializing in credit and debit cards. The company makes revenue from each transaction and has generated solid returns for investors. Shares are up by 5% year-to-date and have gained 60% over the past five years.
The firm trades at a 33.5 P/E ratio and offers a 0.76% yield. High net profit margins have been a constant for this company, which reached 53% in Q2 FY24. Revenue and net income both increased by 10% year over year.
Visa has been initiating many stock buybacks to reward long-term investors. Share repurchases and dividends came to $3.8 billion in the quarter. Growth in payments volume, especially cross-border volume, fueled the recent gains.
Wall Street is enthusiastic about the stock and rated it a Strong Buy. The average price target suggests the stock can gain an additional 16% from current levels.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a diversified portfolio. Through this stock, investors get exposure to gaming, social media, artificial intelligence, business software, cloud computing and other industries.
Many of the company’s segments exhibit year-over-year revenue growth, but Microsoft Cloud is the main growth driver. Revenue for this segment increased by 23% year-over-year in Q3 FY24. Microsoft Cloud generated $35.1 billion of the company’s $61.9 billion in total revenue. Overall sales increased by 17% year-over-year while net income surged by 20% year-over-year to reach $21.9 billion.
Continued demand for artificial intelligence solutions should lead to elevated revenue growth for several quarters. Microsoft has been a leading stock, up 12% year-to-date and more than tripled over the past five years.
Microsoft trades at a 36 P/E ratio and offers a 0.72% yield. The tech conglomerate has maintained an annualized dividend growth rate of 10.60% over the past decade.
Amazon (AMZN)
Like Microsoft, Amazon (NASDAQ:AMZN) is well-diversified. Amazon Web Services is the leading cloud computing platform and helped the company reach $143.3 billion in Q1 2024 revenue. That’s a 13% year-over-year improvement. Amazon Web Services was a standout that achieved 17% year-over-year revenue growth.
Amazon’s online marketplace is still the company’s main revenue driver. The segment exhibited double-digit growth rates in domestic and international markets. Amazon also offers exposure to gaming, advertising, streaming, groceries, artificial intelligence and other industries.
The stock has been a key component of the S&P 500 for several years. Investors have been pretty happy so far, with an 18% year-to-date gain and a 96% 5-year gain. Amazon currently trades at a 49.5 P/E ratio and is expanding its profit margins.
Wall Street is bullish on the stock and rated it as a Strong Buy. All 43 analysts rated the stock as a Buy and projected a 25% upside from current levels.
On this date of publication, Marc Guberti held long positions in MSFT and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
