Many investors are experiencing the impact of high inflation and high interest rates for the first time. It’s a time when following the daily market news can drive you crazy. First, good news is bad news, then good news is good news. That’s not just true of the meme stocks; it’s true of many long-term growth stocks.
Being a buy-and-hold investor is easy with some dividend stocks, but it’s not always the case with growth stocks. You need money in long-term growth stocks if you have a long-term outlook. But which ones?
Some time-honored advice is that when in doubt, take a wider view. Sometimes, that means looking at the chart; sometimes, taking a wider perspective is remembering why you bought the stock. Or, if you don’t own the stock, why are you considering it? Has anything changed that makes you doubt the case for its long-term growth?
The end of the year is a good time to take a critical look at your portfolio. If you want to take a long position in a new name or two, here are three long-term growth stocks for your consideration.
Nvidia (NVDA)
If artificial intelligence (AI) is the story of the year, then Nvidia (NASDAQ:NVDA) is the signature stock of that story. Everybody knew Nvidia was one of the leading names in the chip sector. However, knowing how valuable that leadership would be regarding AI applications was nearly impossible.
NVDA stock is up over 239% in 2023, fueled mainly by its unquestioned leadership in delivering the essential chips for generative AI applications. But even that fantastic performance has come with some sharp pullbacks.
However, in terms of long-term growth stocks, it doesn’t look much better than NVDA. Forty-four analysts have issued a one-year price forecast for Nvidia, and every single one has a price target higher than the $495.56 closing price on November 14, 2023. That’s rare.
Analysts and many investors are convinced Nvidia can continue generating revenue and earnings to justify its premium valuation (currently 51x forward earnings). However, even with that growth, the company may consider increasing its dividend, which only costs about $400 million annually. That compares favorably to the $10.3 billion in trailing twelve-month free cash flow.
In the past, the company has prioritized share buybacks. That may continue, but long-term investors may benefit from a juicier dividend down the road.
Block (SQ)
Block (NYSE:SQ), formerly Square, is next on this list of long-term growth stocks. The case for making Block a long-term buy is its evolution. The company has expanded beyond being a point-of-sale (POS) and e-commerce payment processor. That’s why the company changed its name.
Today, Block includes a Bitcoin and blockchain business and the company has recently entered the buy-now-pay-later (BNPL) space.
It’s too early to call Block a sum-of-its-parts stock. But there’s clearly a roadmap for customers who become familiar with the company through Cash App to get more immersed in the other areas of its business.
At least, that’s the plan. Forty analysts have offered a one-year price target on SQ stock. The consensus price target is $71.68, a 30% increase in the share price. The company recently authorized up to $1 billion in share buybacks to help offset some dilution that long-term investors have experienced.
Editas Medicine (EDIT)
Gene editing is one of the most compelling growth sectors from now through 2030. Editas Medicine (NASDAQ:EDIT) is in a race to commercialize a first-of-its-kind treatment for sickle cell disease and beta-thalassemia.
EDIT-301 is in late-stage clinical trials. In October 2023, the U.S. Food and Drug Administration (FDA) granted Editas a Regenerative Medicine Advanced Therapy (RMAT) designation to EDIT-301 for treating sickle cell disease. This will give the company the benefits of FDA Fast Track and Breakthrough Therapy designation programs, such as intensive FDA guidance, possible rolling review and priority review of the Biologics License Application (BLA).
The company competes with CRSPR Therapeutics (NASDAQ:CRSP) for approval. However, analysts seem to be encouraged. The consensus price target for EDIT stock shows the potential for a 66.7% gain.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
