Best Growth Stocks to Buy for Long-Term Gains

Investing in growth stocks can be a smart way to build wealth over time. These companies are known for increasing their earnings faster than others, making them attractive options for long-term investors. In this article, we will highlight some of the best growth stocks to consider for your portfolio, focusing on their potential for significant returns in the future.

Key Takeaways

• Growth stocks can offer higher returns than the overall market.
• Investing in diverse companies can help manage risks.
• Look for companies with strong earnings growth and market potential.
• Be cautious of the unique challenges that growth stocks face.
• Using tools like stock screeners can help identify promising growth stocks.

1. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing Company (TSMC) is a leading player in the semiconductor industry, holding a remarkable 60% market share. This company is known for its careful management of capital, which helps it avoid oversupply risks and invest in cutting-edge research. TSMC is well-positioned to benefit from the growth of technologies like artificial intelligence and the Internet of Things. Currently, TSMC’s stock is trading 27% below its fair value estimate of $213 per share.

Key Financial Metrics

Why Invest in TSMC?

• Market Leader: TSMC is the largest dedicated contract chip manufacturer.
• Strong Growth Potential: The company is set to benefit from long-term trends in technology.
• Solid Financials: TSMC maintains a strong balance sheet and capital allocation strategy.

Investing in TSMC means backing a company that is not only a leader in its field but also has a clear path for future growth. Its focus on innovation and market leadership makes it a strong candidate for long-term gains.

2. NXP Semiconductors

NXP Semiconductors is a major player in the semiconductor industry, particularly known for its role in the automotive market. The company has a strong position in various sectors, including industrial, mobile, and communications infrastructure. Here are some key points about NXP:

• Market Leader: NXP is one of the largest suppliers of semiconductors for the automotive industry.
• Competitive Advantages: The company benefits from high switching costs and valuable intangible assets, which help maintain its market position.
• Long-Term Growth: Despite selling into cyclical industries, NXP is expected to generate excess returns over the cost of capital for many years to come.

NXP Semiconductors is well-positioned to benefit from the ongoing growth in the automotive sector, making it a solid choice for long-term investment.

3. Rentokil Initial

Rentokil Initial is a leading player in the pest control and hygiene services market. The company has significant potential and runway for growth, especially after its recent acquisition of Terminix. This move has positioned Rentokil as a market leader in the US, despite facing some challenges.

Key Highlights:

• Price/Fair Value: 0.75
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Large Growth
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Specialty Business Services

Recent Developments:

• Over 200 acquisitions since 2015, focusing on pest control and hygiene.
• The acquisition of Terminix in late 2022 has strengthened its market position.
• Rentokil aims to enhance its geographic reach and customer density.

Challenges Ahead:

• Integration issues with Terminix have led to some underperformance.
• Weak growth in North America has prompted a profit warning.

Rentokil Initial’s strategy is focused on maintaining market share leadership, which has provided a durable cost advantage in the pest control sector.

Conclusion:

Despite recent setbacks, Rentokil Initial remains a strong contender for long-term growth, with a clear strategy and a solid market position.

4. Microsoft

Microsoft is a leading player in the software industry, particularly known for its cloud services. The company has a strong position in the market, offering a variety of solutions that cater to different needs. Here are some key points about Microsoft:

• Price/Fair Value: 0.82
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Large Growth
• Industry: Software—Infrastructure

Key Highlights

• Microsoft is one of the top public cloud providers, delivering a wide range of platform-as-a-service and infrastructure-as-a-service solutions.
• The company has made significant investments in artificial intelligence, particularly through its partnership with OpenAI.
• Azure, Microsoft’s cloud platform, is a major growth driver, with an impressive growth rate of 30% in fiscal 2024.

Financial Overview

Microsoft’s strong revenue growth and expanding margins make it a compelling choice for long-term investors.

In summary, Microsoft stands out as a robust growth stock, driven by its innovative solutions and strong market presence. Investors looking for long-term gains should consider adding Microsoft to their portfolios.

5. Airbus

Airbus is a major player in the aerospace industry, primarily known for manufacturing commercial aircraft. The company is currently trading at a price that is 17% below its fair value estimate, making it an attractive option for long-term investors.

Key Highlights

• Duopoly Advantage: Airbus operates in a duopoly with Boeing, which means it has a strong position in the market for aircraft with 130 seats and above.
• Growing Demand: The demand for air travel is expected to rise, and Airbus is well-positioned to benefit from this trend.
• Fleet Modernisation: Many airlines are looking to replace their ageing aircraft, and Airbus’s offerings are likely to play a significant role in this transition.

Financial Overview

Airbus’s latest 20-year global market forecast for the 2024-2043 period offers a forward-looking view of air traffic and fleet evolutions.

In summary, Airbus stands out as a solid choice for investors looking for growth in the aerospace sector. With its strong market position and the increasing demand for air travel, it is likely to deliver long-term gains.

6. Amazon.com

Amazon is a giant in the e-commerce world, known for its vast selection and quick delivery options. The company is not just about online shopping; it has multiple growth engines. Here are some key points about Amazon’s strengths:

• E-commerce Leader: Amazon has set the standard for online shopping with features like free two-day shipping and Amazon Prime.
• Cloud Computing: Through Amazon Web Services (AWS), the company is a major player in cloud services, which is a rapidly growing market.
• Advertising Growth: Amazon’s advertising business is expanding, contributing significantly to its revenue.

Financial Overview

Future Prospects

Analysts predict that Amazon’s stock has a potential upside of about 15% from its current price, with an average target price of $220.58. This suggests that the stock is currently undervalued, making it an attractive option for long-term investors.

Amazon’s diverse business model positions it well for sustained growth in the coming years, especially in cloud computing and digital advertising.

In summary, Amazon remains a top choice for investors looking for growth stocks due to its strong market position and multiple avenues for revenue generation.

7. Autodesk

Autodesk is a leading name in the world of computer-aided design (CAD) software. The company has transformed its business model, moving from traditional software licences to a subscription-based system. This shift has allowed Autodesk to achieve a remarkable recurring revenue stream, with over 95% of its income now coming from subscriptions.

Key Financials

Why Invest in Autodesk?

• Strong Market Position: Autodesk is considered the industry standard for CAD software.
• Recurring Revenue Model: The transition to subscriptions has led to stable and predictable income.
• Innovation and Growth: Autodesk continues to innovate, ensuring it stays relevant in a rapidly changing market.

Autodesk’s ability to adapt to industry trends and maintain a loyal customer base positions it well for future growth.

In summary, Autodesk is a solid choice for long-term investors looking for growth stocks. With its strong financial performance and innovative approach, it is likely to continue thriving in the software industry.

8. BAE Systems

BAE Systems is a leading British company in the defence and aerospace sector, recognised as the largest defence contractor in Europe. With rising global security issues, especially due to the ongoing Ukraine conflict, the demand for defence solutions is expected to grow significantly. This growth is likely to continue for several years, as many countries, particularly in Europe, have not invested enough in their defence since the Cold War.

Key Highlights:

• Price/Fair Value: 0.88
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Large Growth
• Industry: Aerospace and Defence

Reasons to Consider BAE Systems:

1. Strategic Positioning: BAE is involved in numerous major international defence projects, making it well-placed to benefit from increased spending.
2. Market Demand: The ongoing global security concerns are driving a higher demand for defence products and services.
3. Valuation: Currently, BAE Systems stock is trading 12% below its fair value estimate of $74, indicating potential for growth.

Investing in BAE Systems could be a wise choice for those looking to benefit from the increasing focus on global security and defence spending.

In summary, BAE Systems stands out as a strong candidate for long-term growth, driven by its strategic involvement in the defence sector and the rising demand for security solutions.

9. Experian

Experian is one of the Big Three credit bureaus in the United States. The company has a strong position in the credit market, but it is also looking to grow in other areas. Here are some key points about Experian:

• Mature Core Business: Experian’s main credit bureau business in the US is well-established.
• Expansion Plans: The company is expanding into new products and markets, especially in emerging economies like Brazil.
• Growth Opportunities: The rise of the middle class in these markets and changes in regulations are expected to boost growth.

Financial Overview

Experian faces challenges in some regions, including currency fluctuations and economic issues, but its focus on growth in emerging markets could lead to significant long-term gains.

Overall, Experian is well-positioned to benefit from the changing landscape in credit and data services, making it a stock to consider for long-term investment.

10. Dassault Systèmes

Dassault Systèmes is a leading software application company that has a strong grip on the computer-aided design (CAD) market, especially in sectors like automotive, aerospace, and manufacturing. With 90% of all aircraft and 80% of all cars globally designed using its software, the company is well-positioned for future growth.

Key Highlights:

• Price/Fair Value: 0.90
• Morningstar Uncertainty Rating: Medium
• Industry: Software—Application

Growth Potential

Despite some recent challenges, including a projected growth rate of 8-10% for 2024, Dassault Systèmes remains a solid investment. The management has noted complexities in the market, but the company’s strong position in CAD software, particularly with SolidWorks, provides a significant competitive advantage.

Why Invest in Dassault Systèmes?

1. Strong Market Position: The company dominates the CAD market, making it hard for competitors to gain ground.
2. Adaptability: It has successfully adapted to trends like electric vehicle design, ensuring its relevance.
3. Long-Term Growth: Analysts believe the company can maintain its economic moat and achieve excess returns on invested capital.

Investing in Dassault Systèmes offers a chance to tap into a company that is not only a leader in its field but also has the potential for long-term gains despite current market challenges.

11. Tesla

Tesla is a leading player in the electric vehicle market, known for its innovative technology and strong brand loyalty. The company is at the forefront of the shift towards sustainable transport. With a focus on electric cars, battery storage, and solar energy, Tesla is not just a car manufacturer; it’s a technology company that aims to revolutionise the way we think about energy and transportation.

Key Highlights:

• Market Leader: Tesla holds a significant share of the electric vehicle market, making it a key player in the automotive industry.
• Innovative Technology: The company is heavily invested in autonomous vehicles, which are expected to transform the future of transport.
• Sustainability Focus: Tesla’s commitment to sustainability is evident in its production processes and product offerings.

Financial Overview:

Tesla’s growth potential is immense, especially as the world moves towards greener energy solutions. The company’s ability to innovate and adapt will be crucial in maintaining its competitive edge.

In summary, Tesla is not just about electric cars; it’s about leading the charge towards a sustainable future. With its strong market position and innovative spirit, it remains one of the best growth stocks to consider for long-term gains.

12. Shopify

Shopify is a leading player in the e-commerce sector, providing businesses with the tools they need to sell online. As more consumers turn to online shopping, Shopify is well-positioned to benefit from this trend. In its recent financial report, Shopify announced fourth-quarter and full-year 2023 financial results, showcasing its strong performance.

Key Highlights:

• Sales Growth: Shopify has experienced a 24% increase in sales over the past three years, reflecting its robust growth in the e-commerce market.
• Market Position: The company is a top choice for small to medium-sized businesses looking to establish an online presence.
• User-Friendly Platform: Shopify’s platform is known for its ease of use, making it accessible for entrepreneurs without technical expertise.

Financial Overview:

Shopify’s ability to adapt to changing market conditions and its commitment to innovation make it a strong candidate for long-term investment.

In summary, Shopify stands out as a growth stock due to its strategic positioning in the expanding e-commerce landscape. Investors looking for long-term gains should consider adding Shopify to their portfolios.

13. Block

Block, formerly known as Square, is a financial services and mobile payment company that has made significant strides in the tech industry. Its innovative approach to payment solutions has attracted a large customer base.

Key Features of Block:

• User-Friendly Interface: Block’s platform is designed to be easy to navigate, making it accessible for all users.
• Diverse Payment Options: The company offers various payment methods, including contactless payments, which are increasingly popular.
• Strong Growth Potential: With the rise of digital payments, Block is well-positioned for future growth.

Financial Performance Overview

Block is not just a payment processor; it is a comprehensive financial ecosystem that supports businesses of all sizes.

Investors should consider Block for its potential in the evolving digital payment landscape. With its commitment to innovation and customer satisfaction, it remains a strong contender in the growth stock arena.

14. Etsy

Etsy is a unique platform that connects buyers with independent sellers, primarily focusing on handmade and vintage items. This marketplace has seen steady growth, making it a strong contender for long-term investment.

Key Growth Factors

• E-commerce Expansion: As online shopping continues to rise, Etsy is well-positioned to benefit from this trend.
• Niche Market: Etsy caters to a specific audience looking for unique, handcrafted products, which sets it apart from larger retailers.
• Community Engagement: The platform fosters a strong community of sellers and buyers, enhancing customer loyalty.

Financial Performance

Investing in companies that capitalise on long-term trends can lead to significant wealth generation for shareholders.

Etsy’s focus on creativity and community makes it a compelling choice for investors looking for growth in the e-commerce sector. As more consumers seek unique products, Etsy’s potential for long-term gains remains strong.

15. Nvidia

Nvidia has become a powerhouse in the tech industry, especially with its focus on artificial intelligence and gaming. The company designs graphics processing units (GPUs) that are essential for high-performance computing and AI applications. Here are some key points about Nvidia:

• Market Leader: Nvidia holds a significant share in the GPU market, making it a top choice for gamers and professionals alike.
• AI Growth: The demand for AI technology is skyrocketing, and Nvidia is at the forefront, providing the necessary hardware for AI development.
• Strong Financials: Nvidia has shown impressive revenue growth, with a 2,500% increase in stock value over the past five years.

Investing in Nvidia is not just about its current success; it’s about its potential to lead in future technologies.

Overall, Nvidia is a compelling option for investors looking for long-term growth, especially as the world increasingly relies on AI and advanced computing solutions. The company’s innovative edge and market position make it a strong candidate for your portfolio.

16. Netflix

Overview

Netflix has become a household name in the world of streaming entertainment. With millions of subscribers globally, it has transformed how we consume media. The shift from traditional cable to streaming has been significant, and Netflix is at the forefront of this change.

Competitive Landscape

While Netflix leads the market, it faces increasing competition from other platforms. Here are some key competitors:

• Amazon Prime Video
• Disney+
• Hulu

Financial Performance

Netflix’s financial growth has been impressive. Below is a summary of its recent performance:

Future Prospects

Netflix is not just resting on its laurels. The company is exploring new avenues to enhance its offerings, including:

1. Expanding into gaming
2. Introducing ad-supported plans
3. Investing in original content

Netflix’s ability to adapt to changing market conditions will be crucial for its long-term success. The company must continue to innovate to maintain its competitive edge.

In conclusion, Netflix remains a strong contender in the growth stock arena, especially as it navigates the evolving landscape of digital entertainment. Investors should keep an eye on its strategic moves to stay ahead of the competition.

17. Meta Platforms

Meta Platforms, formerly known as Facebook, has made significant strides in recent years. The company has seen impressive profit growth, with net income increasing by 73% year-over-year in the last quarter. This growth is largely due to its vast user base, which includes over 3.27 billion daily active users across its platforms like Facebook, Instagram, and WhatsApp.

Key Highlights:

• Strong Revenue Growth: Revenue jumped by 22% year-over-year.
• Diverse User Engagement: The company retains users effectively across its apps.
• Future Ventures: Meta is exploring augmented reality and artificial intelligence, which could lead to new revenue streams.

Financial Overview:

Meta Platforms is well-positioned to benefit from the ongoing shift towards digital advertising, making it a strong contender for long-term growth.

In summary, Meta Platforms is not just a social media giant; it is evolving into a multifaceted tech company. Investors should keep an eye on its developments in new technologies and advertising strategies, as these could significantly impact its future performance.

18. Salesforce.com

Salesforce.com is a leading player in the cloud computing sector, providing essential tools for businesses to manage customer relationships effectively. The company has shown remarkable growth, making it a top choice for long-term investors.

Key Features of Salesforce.com

• Strong Market Position: Salesforce is a dominant force in the customer relationship management (CRM) market.
• Innovative Solutions: The company continually updates its platform with new features, ensuring it meets the evolving needs of its users.
• Recurring Revenue Model: A significant portion of Salesforce’s income comes from subscriptions, providing stability and predictability in earnings.

Financial Overview

Salesforce.com is well-positioned to benefit from the ongoing shift towards digital transformation in businesses. Its focus on innovation and customer satisfaction is likely to drive future growth.

In summary, Salesforce.com stands out as a solid investment for those looking to benefit from the growth in cloud-based solutions and CRM systems. Its strong market presence and innovative approach make it a compelling choice for long-term gains.

19. Alphabet

Alphabet Inc., the parent company of Google, is a major player in the tech industry. With a strong focus on innovation, Alphabet continues to expand its services and products, making it a top choice for long-term investors.

Key Highlights:

• Earnings Growth: Analysts predict that Alphabet’s earnings will increase by 31.8% and 13.7% over the next two years.
• Valuation: Currently valued at 22 times its earnings, Alphabet remains an attractive option for growth.
• Diverse Portfolio: The company has a wide range of services, including search, advertising, cloud computing, and hardware.

Investment Considerations:

1. Strong Market Position: Alphabet dominates the online advertising market.
2. Innovative Projects: The company invests heavily in AI and other emerging technologies.
3. Financial Stability: Alphabet has a robust balance sheet, allowing for continued investment in growth.

Investing in Alphabet is not just about its current performance; it’s about its potential to shape the future of technology and communication.

20. Adobe

Adobe is a leading software company known for its creative and digital marketing solutions. The company has faced challenges recently, but it remains a strong player in the market. Here are some key points about Adobe’s growth potential:

• Diverse Product Range: Adobe offers a variety of products, including Photoshop, Illustrator, and Adobe Experience Cloud, catering to both individual and business needs.
• Recurring Revenue Model: The shift to subscription-based services has resulted in a steady stream of income, making it more resilient to market fluctuations.
• Strong Market Position: Adobe holds a significant share in the creative software market, which continues to grow as more businesses invest in digital content.

Adobe’s commitment to innovation and customer satisfaction positions it well for future growth, despite recent market volatility.

However, it is important to note that Adobe has underperformed the market so far in 2024. The stock could remain volatile as its investments in growth will take time to pay off. Investors should keep an eye on its performance as the company navigates these challenges.

21. ServiceNow

ServiceNow is a leading player in the cloud computing space, focusing on digital workflows. The company has shown impressive growth, making it a strong candidate for long-term investment. Here are some key points about ServiceNow:

• Market Position: ServiceNow is known for its innovative solutions that help businesses automate their processes, enhancing efficiency.
• Revenue Growth: The company has consistently reported strong revenue growth, driven by increasing demand for its services.
• Customer Base: ServiceNow serves a diverse range of industries, which helps mitigate risks associated with economic downturns.

Financial Overview

ServiceNow’s focus on digital transformation makes it a vital partner for businesses looking to improve their operations.

In summary, ServiceNow stands out as a growth stock due to its robust business model and commitment to innovation. Investors looking for long-term gains should consider adding it to their portfolios.

22. CrowdStrike

CrowdStrike (CRWD) is a leading player in the cybersecurity sector, known for its innovative solutions that protect businesses from cyber threats. Despite facing challenges, the company has shown impressive growth. In the second quarter of FY25, CrowdStrike reported a remarkable 32% increase in revenue compared to the previous year, showcasing its ability to expand even in tough times.

Key Highlights:

• Strong Revenue Growth: The company is nearing $4 billion in annual recurring revenue.
• Market Position: CrowdStrike has consistently outperformed major indices like the S&P 500 and Nasdaq Composite.
• Customer Relationships: Management remains optimistic about maintaining strong ties with clients despite recent setbacks.

Financial Overview:

CrowdStrike’s combination of a high valuation and slowing growth makes it a stock to watch closely. Investors should consider the potential risks before making decisions.

23. Palantir Technologies

Palantir Technologies is a company that focuses on data analytics and software solutions. Their tools help organisations make sense of large amounts of data. This is especially important for businesses and governments that need to make informed decisions based on complex information.

Key Highlights

• Revenue Growth: In 2022, Palantir’s revenue growth slowed to 24% from 40% in 2021 and 47% in 2020. However, in 2023, revenue grew 17% year-over-year to $2.23 billion.
• Market Position: Palantir is known for its strong presence in sectors like defence, healthcare, and finance, where data-driven decisions are crucial.
• Future Potential: The company is well-positioned to benefit from the increasing demand for data analytics as more businesses recognise the value of data.

Financial Overview

Palantir Technologies is a prime example of how companies that leverage data can drive significant growth and innovation in their industries.

In summary, Palantir Technologies remains a strong contender in the growth stock arena, especially as the world becomes more data-centric. Investors should keep an eye on its performance as it continues to evolve in a rapidly changing market.

24. Datadog

Datadog (DDOG) is a leading player in the cloud monitoring and analytics space. The company has shown impressive growth, making it a strong candidate for long-term investment. On a historic basis, Datadog has generated cash flow growth of 130.2%, and is expected to report cash flow expansion of 310.4% this year.

Key Highlights:

• Strong Revenue Growth: Datadog has consistently increased its revenue, showcasing its ability to capture market share.
• Innovative Solutions: The company offers a wide range of monitoring tools that cater to various industries, enhancing its appeal.
• Robust Customer Base: With thousands of customers, including major enterprises, Datadog is well-positioned for sustained growth.

Financial Overview:

Datadog’s commitment to innovation and customer satisfaction positions it as a top growth stock for the future.

In summary, Datadog’s strong financial performance and innovative solutions make it a compelling choice for investors looking for long-term gains.

25. Snowflake and more

Snowflake Inc.

Snowflake Inc. (NYSE: SNOW) is a leading player in the cloud data warehousing space. Its innovative platform allows businesses to store and analyse data efficiently, making it a strong contender for long-term growth. The company has shown impressive revenue growth, with a year-over-year increase of 50% in the last quarter.

Key Highlights

• Strong Revenue Growth: Snowflake’s revenue has consistently increased, showcasing its market demand.
• Expanding Customer Base: The company has attracted numerous high-profile clients, enhancing its credibility.
• Innovative Technology: Snowflake’s unique architecture allows for seamless data sharing and collaboration.

Financial Overview

Snowflake’s growth potential is significant, especially as more companies shift to cloud-based solutions.

Conclusion

In summary, Snowflake and similar companies represent promising opportunities for investors looking for long-term gains. Their innovative approaches and strong market positions make them worthy of consideration in any growth-focused portfolio.

Frequently Asked Questions

What are growth stocks?

Growth stocks are shares from companies that are expected to grow their earnings faster than most others. They usually have higher prices compared to their earnings.

Which growth stock is likely to do well in 2024?

The stocks that are predicted to rise in 2024 are those that exceed market expectations. If a company does better than expected, its stock price is likely to go up.

Can you give an example of a growth stock?

Amazon is a well-known growth stock. Although its shares can seem pricey, the company keeps investing in new areas, which could lead to high profits in the future.

What are the best growth stocks to consider?

Some of the top growth stocks include companies like Microsoft, Tesla, and Nvidia, known for their strong performance and potential for future growth.

How can I find good growth stocks?

To find good growth stocks, look for companies that are in growing industries, have strong competitive advantages, and are expected to keep growing.

What risks are involved with growth stocks?

Growth stocks can be risky because their prices may drop quickly during market downturns. Investors often pay high prices for these stocks.

Why do people invest in growth stocks?

Investors choose growth stocks because they can provide high returns over time, especially if the company continues to grow.

How long should I hold growth stocks?

It’s generally best to hold growth stocks for at least three to five years to see their full potential return.