Choosing long-term growth stocks to buy and hold in this ever-changing market is challenging as the November 2023 market is much different than that of the recent past. Uncertainties abound, and growth investors have more reasons to be cautious today than in previous years.
That said, many growth stocks still provide investors with excellent upside potential and high-quality fundamentals. Seeking out companies that should outperform as markets recover is the best bet right now. However, investing in growth stocks carries risk so monitoring company news and investor sentiment is crucial.
Currently, these top three firms offer the potential for substantial share price growth thanks to their strong industry positions.
Alphabet (GOOG, GOOGL)
Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) shares have maintained a positive trend for over six months, driven by progress in its generative AI like the Bard platform. Recent quarterly results led to a slight stock price dip due to disappointing cloud computing unit growth, but Alphabet’s focus on generative AI and the rebounding digital advertising business may sustain the stock’s trajectory.
Alphabet’s Q3 results exceeded Wall Street predictions. With 11% year-over-year (YOY) overall sales growth, the company achieved earnings per share (EPS) of $1.55 and revenue of $76.79 billion, surpassing expectations. Online advertising led the way, generating $59.65 billion, a 9% increase YOY.
Alphabet’s dominant position in the world of online advertising places it at the top of the list of current growth stocks to buy.
Meta Platforms (META)
Like Alphabet, Meta Platforms (NASDAQ:META) also posted stellar Q3 results. The company reported a remarkable 23% YOY revenue increase to $34.15 billion and a staggering 164% YOY income increase to $11.5 billion. But despite soaring sales, Meta expects higher expenses going into 2024. Nonetheless, it remains a top growth stock with dividends that investors should be keeping an eye on.
Meta showcased financial vigor, boasting 3.36% YOY revenue growth, a 138.38% market capitalization surge, and a remarkable 52.37% levered free cash flow YOY expansion, outpacing the sector’s 1.62% median. Its earnings before interest and taxes (EBIT) margin is at 34.31%. This is 313.43% above the 8.28% sector median, highlighting Meta’s continued profitability and consistent growth.
Meta’s AI-driven ad targeting software has received a recent performance boost and is excelling in comprehending user preferences and behaviors. This precision has empowered advertisers to reach their target audiences more effectively, significantly boosting revenues. Regardless of the market turbulence experienced in 2022, Meta’s stock made an outstanding 87% year-to-date (YTD) recovery, showcasing an unstoppable growth pattern. Innovations like generative AI tools and enhanced monetization strategies, including Reels, solidified Meta’s market position.
Zoom Video Communications (ZM)
Zoom Video Communications (NASDAQ:ZM) has remained a steadfast leader in online video communications. Bolstered by a robust balance sheet with approximately $6 billion in cash, the company has the funds and the management team to carry out strategic acquisitions, further strengthening its leading position in its core sector.
Valued at just under $19 billion (despite a 12% YTD decline), Zoom holds strong industry presence with a 57% market share. Notably, the company’s Q2 2023 financials were robust, featuring $1.14 billion in revenue (3.57% YOY increase), $181.97 million in net income (297.76% YOY increase) and 59 cents diluted EPS (293.33% YOY increase). Zoom exceeded consensus earnings estimates by 26.52% for earnings and 2.18% for revenue.
The communication technology sector, valued at $11.5 billion in 2022, shows significant growth potential with a projected 31.1% compound annual growth rate (CAGR), reaching $100.9 billion by 2030. Even with the pandemic creating volatility for video-based meetings platforms, Zoom has continued investing in innovation. The company has introduced AI tools like the Zoom AI Companion and Zoom Docs to boost customer engagement and productivity. Its enduring market presence in video conferencing secures ZM stock a spot on tech investors’ watchlists.
On the date of publication, Chris MacDonald held a LONG position in META stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
