Finding elite growth stocks to buy to outperform the market is a worthy endeavor. These companies can be characterized by their consistent expansion of revenue, earnings and market capitalization.
Elite growth stocks go hand in hand with innovative industries like artificial intelligence. Investors who are seeking to build portfolios with a focus on long-term capital appreciation gravitate towards these stocks, recognizing their potential to outperform their competitors. If you’re patient with a long-term mindset, rest assured that you’ll be sitting comfortably with these three elite companies.
Now, let’s discuss the three best elite growth stocks to buy right now!
Amazon (AMZN)
Amazon (NASDAQ:AMZN) hit a key inflection point in 2023 making it primed for more upside. It continues to lead from the front in the artificial intelligence (AI) revolution and is set to become the world’s largest company by revenue.
Generative AI will continue to be one of the leading investment ideas for the foreseeable future. Bloomberg Intelligence estimates the generative AI market to become a $1.3 trillion industry by 2032, growing at a mindblowing 42% compounded annual growth rate (CAGR). Amazon stands to get a big piece of the pie, through their comprehensive suite of generative AI products. This includes Amazon Bedrock, Amazon Q, Code Whisperer and AWS Tranium.
In FY23, Amazon’s revenue increased 12% year-over-year (YOY) to $574.8 billion. Operating income skyrocketed to $36.9 billion, compared with $12.2 billion in 2022. However, what got Wall Street excited is Amazon’s record free cash flow (FCF) of $36.8 billion. Andy Jassy has been spearheading growth and cost-cutting measures in 2023 have increased shareholder confidence. With operating income, EPS and FCF trending in the right direction, Amazon is one of the best elite growth stocks to buy in 2024.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) dominates global streaming and they are well positioned to gain market share over the next decade. Management’s restructuring efforts have been working, and their new ad plan membership continues to gain traction.
Netflix’s management issued optimistic guidance for FY24 after implementing broad cost-cutting measures in 2023. This resulted in the company seeing a recovery in revenue and EPS while delivering record FCF from operations. In the 2023 fiscal year, Netflix’s FCF ballooned to $6.9 billion, and its operating margin expanded by 280 basis points. Their new ad plan membership has created a new revenue growth opportunity, and they continue to crack down on password sharing.
They are clearly doing something right, and there is enough evidence to believe that growth will continue. Netflix currently boasts more than 260 million global subscribers and their new ad plan membership will likely boost advertising revenue growth. The company forecasts revenue of $9.24 billion in Q1 FY24, implying approximately 13% YOY growth. Furthermore, they expect operating margins to expand by 520 basis points (bps). This makes Netflix one of the top elite growth stocks to buy right now.
Spotify (SPOT)
Spotify (NYSE:SPOT) is a global music streaming giant that is set to deliver outsized returns over the next decade. They may be inches closer to achieving GAAP profitability for a full fiscal year, which could propel them to new heights.
Spotify delivered a strong operational year in 2023 despite the company remaining unprofitable. Revenue increased 13% YOY to $13.24 billion, with FCF hitting a record 674 million. However, what got investors excited was the company delivering a surprise profit of $0.33 per share in Q3 2023. They continue to see diversified growth with Latin American and the rest of the world growing at a more than 15% CAGR.
In FY23, Spotify’s monthly active users (MAU) hit 602 million and the company is on pace to surpass 1 billion MAU’s in the next few years. Gross margin expansions have been key to drive profitable growth and premium subscriptions are growing by double digits across all regions. Additionally, the company’s liquidity remains strong with approximately $4.3 billion in cash and marketable securities. As operating losses continue to shrink over the next several quarters, Spotify remains one of the premier elite growth stocks to buy in March.
On the date of publication, Terel Miles 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.
