As investors navigate the ever-changing financial landscape, growth stocks to buy have emerged as attractive options for those looking to pounce on market shifts. Recently, growth stocks have taken a hit following concerns about declining revenue growth rates and tech industry layoffs. However, the focus has shifted to the banking sector because of multiple major banking failures in March sending throughout the financial world.
The turn of events could be a silver lining for growth stocks, as analysts predict a more dovish stance from the Federal Reserve. Moreover, many growth stocks offer comparable value to defensive stocks. Some companies are trading at just a few times earnings due to margin compression and lackluster year-over-year results compared to 2021. But as the business climate eventually pivots towards a conducive environment, and companies no longer have to compete against tough comparable metrics, there’s potential for significant upside.
Keeping this in mind, let’s dive into seven growth stocks poised to boom, offering savvy investors a chance to seize long-term opportunities.
Sociedad Química y Minera de Chile
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Visa (NYSE:V) is a dominant credit card player with a leadership position in financial transactions. It boasts a rock-solid business, marked by over 50% net income margins in the past five years on average.
The firm saw a healthy transaction bump during the pandemic, with people opting for touch-free payment and eCommerce solutions. However, the one door closing, the other opened for Visa in the form of resurgent travel and tourism. The robust profit margins on cross-border payments helped the firm to post incredible top and bottom-line growth in the past few quarters.
Though growth rates are expected to normalize, forward estimates are at an eye-catching 14.2%, more than 30% higher than its 5-year averages. Moreover, according to analysts at Tipranks, V stock is trading at an 18% discount to its intrinsic value.
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Adobe (NASDAQ:ADBE) has established itself as a juggernaut in the graphics space with industry-leading software tools, including Premiere Pro and PhotoShop. Its software stack is virtually irreplaceable in fields like graphic design, video editing, marketing, and others. In recent years, the firm has widened its moat by buying other pieces of software to build its content cloud for creative professionals. Last year, creative cloud subscribers grew by nearly 30 million, a run rate of one million subscriptions per quarter.
Additionally, Adobe is looking to cash in on the artificial intelligence (AI) trend, having released a Beta version of its art generator called Firefly. The editing software allows content creators to effectively improve their photos and videos using the help of AI. With the proliferation of AI, the tool could prove to be another money-spinner down the line.
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Datadog (NASDAQ:DDOG) offers cloud monitoring and security features via a software-as-a-service model. In contrast to other solutions, Datadog’s clients can effectively monitor and secure their digital infrastructure from a single location. Having these functions in place significantly reduces blind spots and vulnerabilities.
The firm has been one of the most talked-about success stories in its niche, growing its revenues from $101 million in 2017 to a whopping $1.7 billion in 2022. Moreover, analysts expect the firm to continue growing by over 30% for the foreseeable future. Though it continues to invest heavily in its business each year, the scale at which its growing points to a break-even scenario in the not-so-distant future.
The stock market rout last year saw DDOG stock losing over 50% of its value. It trades at around 13 times trailing-twelve-month sales, roughly 64% lower than its 5-year average.
Sociedad Quimica y Minera de Chile (SQM)
Sociedad Quimica y Minera de Chile (NYSE:SQM) is a specialty chemical giant establishing itself as the world’s leading lithium producer. That’s reflected in its recent results, which show triple-digit growth in lithium sales.
Across virtually every metric, SQM offers robust value. Its A-graded profitability profile is a sight to behold, more so in the past year, with double-digit growth over historical metrics. Its earnings per share grew by a whopping 585% last year, with a 730% bump in free cash flows. Based on higher sales volumes and average prices, expect SQM stock to continue performing remarkably well over the long run.
Having said that, SQM stock trades at just 2.3 times forward sales estimates, a 50% discount to its 5-year average. Therefore, investing in this growth stock seems like a no-brainer.
Fiverr International (FVRR)
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Fiverr International (NYSE:FVRR) is a popular online freelancer marketplace that has taken off in line with the burgeoning gig economy. Its top-line growth has averaged more than 50% over the past five years, an incredible feat, to say the least. However, it’s only scratching the surface with its $337 million revenue base, considering how the worldwide freelancer marketplace is expected to reach $18.3 billion by 2031.
Fiverr boasts a highly sticky user base that continues to deliver double-digit revenue growth for the business in the current economic climate. During the fourth quarter, spending-per-buyer reached $262, compared to $242 last year. As we advance, it remains in an excellent position to continue tapping into powerful workplace trends. Its stock dipped over 50% last year, and investing at current levels is mighty attractive.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) is a bellwether in the semiconductor space, generating multi-bagger returns for its investors over the past decade. Bloomberg Intelligence data shows that TSM has over 57% market share in the semiconductor market, head, and shoulders above its competition.
TSM saw record growth in its top line due to a robust chip pricing environment last year. Revenue growth is over 42.6% on a year-over-year basis, almost 170% higher than its five-year average. However, it expects revenues to slow down in the first half of the year due to the softness in the market. It should pick up the pace again in the second half of 2023, though, because of a strong recovery in the semiconductor market. Analysts expect the firm to generate 20%+ growth in 2024, following a relatively anemic 2023.
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Tech powerhouse Nvidia (NASDAQ:NVDA) is arguably the pick of the growth stocks to buy. The California-based GPU giant never ceases to amaze in having its finger on the pulse of virtually every popular tech trend over the past several years. Be it autonomous driving to crypto mining, its GPUs are optimizing more than 700 applications across various sectors.
Most recently, it has set its sights on the AI space, helping to bring the technology to the masses. Its impressive hardware and software stack is tailor-made for the AI sphere, which includes powerful GPUs such as the H100, the world’s fastest AI GPU. Moreover, it boasts a suite of software tools, including the TensorRT, CUDA, and the DGX cloud service, which provide users with spectacular capabilities to develop and optimize AI applications efficiently. Even without AI, it can continue to generate impressive double-digit growth rates each quarter.
On the date of publication, Muslim Farooque 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.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.