In this article, we will be taking a look at the 10 best growth stocks to invest in now. To skip our detailed analysis of current stock market news, you can go directly to see the 5 Best Growth Stocks To Invest In Now.
Growth Outperforms in 2023 and Beyond
Investing in growth stocks is a good way to bolster your portfolio with high-profit names. Traditionally, growth stocks are companies that quickly grow their sales and earnings relative to the market, making them highly attractive to investors. But on the flipside, these stocks typically have incredibly high valuations and P/E ratios, which may discourage some investors looking for less expensive stocks. However, if you're an investor who is willing to commit to a higher valuation in exchange for quick profits and gains, growth stocks may be the best for you.
Last year, growth stocks outperformed the S&P 500 by a large margin. According to a Bloomberg article published this January, the S&P 500 Growth Index actually saw gains of 30% for 2023 compared to the broader benchmark index's 22% gain for the year. This performance came as a shock to many investors, considering the fact that the Federal Reserve was on a rate-hiking journey for most of the year, and traditionally, growth is expected to underperform in periods of rising interest rates. This stellar performance has resulted in growth stocks acquiring somewhat of a reliable appearance, leading to many investors in 2024 continuing to stick with their growth picks over their value counterparts.
For example, UBP's Head of Equity Research for Asia, Kieran Calder, joined Bloomberg on January 3 and stated that US growth stocks are at present a "better bet" for investors, with Calder himself preferring growth over value stocks in 2024. One of the major growth sectors in the market today is the technology sector with its exponential growth in light of the rise of artificial intelligence. According to Calder, for investors today, the following are the places to be in high-growth tech:
"One is the Magnificent Seven, and we think these should probably be core holdings in a portfolio, but we also expect kind of a broadening out into, let's say, software names within tech, which have underperformed over the court of last year. But we'll be able to use and get improved earnings on the back of implementation of AI, for example, and more cloud adoption. So we think that the second tier of cloud and AI names is a good place to start to look for more ideas within US tech."
In keeping with the above, our list of the best growth stocks to buy today also has several major tech names in it, such as Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). For growth investors looking to identify key investment areas within tech, it would be necessary to first identify the main themes within the tech sector in terms of what will drive the sector's growth the most in 2024 and beyond. According to BlackRock Active Equity Group's Ben Bei, there are three major themes in this sector: AI, cloud computing, and electric and autonomous vehicles. These areas offer the most interesting investment opportunities for investors today and are thus worth taking a look at.
Small-Cap Growth Stocks On The Rise
When most investors think about growth stocks, especially in the tech sector, what comes to mind is usually large or mega-cap stocks with enormous valuations and market capitalizations. However, the trend in growth stock performance this year is showing that even small-cap growth stocks are on the rise and are performing spectacularly. On February 29, Fairlead Strategies' Founder and Managing Partner, Katie Stockton, joined CNBC's "Last Call" to offer some insights on this development. Here's what she said:
"We've seen very concentrated outperformance in the small-cap arena from growth stocks, so more than just Supermicro and Viking Therapeutics. We have broad participation from growth more broadly and that includes a lot of biotechnology stocks, a lot of technology stocks, and I actually see that as a risk on move. A risk on indication shows an appetite for these names that previously were out of favor. You could say that about even the Russell 2000 Index, that the small-cap benchmark had been out of favor for some time. And now it's showing some signs of life and relative strength, when you compare it to the S&P 500."
This improvement in the performance of small-cap growth stocks alongside the usual suspects is proving to be encouraging for investors. As such, many investors are looking for some of the best growth stocks to buy, which is why we have compiled our list below. Our list of the best growth stocks includes some of the best stocks for long-term growth and some of the fastest growing technology companies in the US today.
10 Best Growth Stocks To Invest In Now
A close-up of a portfolio of stocks, emphasizing the broad equity portfolio of the company.
Our Methodology
For our list of the best growth stocks to invest in now, we consulted the holdings of the Vanguard Growth ETF. We shortlisted the stocks for our list by using Insider Monkey's hedge fund data for the fourth quarter. We also mentioned the share price gains of these stocks year-to-date as of March 28. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by over 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company based in Indianapolis, Indiana. The company offers clinical depression drugs, weight loss drugs, and other human pharmaceuticals, among more.
A Buy rating and $850 price target were maintained on Eli Lilly and Company (NYSE:LLY) on March 22 by Truist Securities analysts.
In the fourth quarter, 102 hedge funds were long Eli Lilly and Company (NYSE:LLY), with a total stake value of $11.2 billion.
Holding 4.5 million shares in the company, Fisher Asset Management was the largest shareholder in Eli Lilly and Company (NYSE:LLY) at the end of the fourth quarter.
On March 11, Cantor Fitzgerald analysts maintained an Overweight rating and $190 price target on Advanced Micro Devices, Inc. (NASDAQ:AMD).
Based in Santa Clara, California, Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company on our list of the best growth stocks. It operates through its Data Center, Client Gaming, and Embedded segments.
Advanced Micro Devices, Inc. (NASDAQ:AMD) was seen in the 13F holdings of 120 hedge funds in the fourth quarter, with a total stake value of $15.2 billion.
Fisher Asset Management was the most prominent shareholder in Advanced Micro Devices, Inc. (NASDAQ:AMD) at the end of the fourth quarter, holding 28.3 million shares in the company.
In total, 131 hedge funds were long salesforce.com, inc. (NYSE:CRM) in the fourth quarter, with a total stake value of $14.9 billion.
Based in San Francisco, California, salesforce.com, inc. (NYSE:CRM) is an application software company. It offers Customer Relationship Management technology and marketing services, enabling companies to plan, personalize, automate, and optimize customer marketing journeys among more.
As of March 7, Canaccord Genuity analysts hold a Buy rating and $350 price target on salesforce.com, inc. (NYSE:CRM).
Like Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), salesforce.com, inc. (NYSE:CRM) is one of the best growth stocks to buy this year.
Akre Capital Management was the largest shareholder in Mastercard Incorporated (NYSE:MA) at the end of the fourth quarter, holding 5.1 million shares in the company.
Mastercard Incorporated (NYSE:MA) is a transaction and payment processing services company. Based in Purchase, New York, the company offers integrated products and value-added services for account holders, merchants, financial institutions, digital partners, businesses, and others.
Mizuho analysts maintained a Buy rating and $480 price target on Mastercard Incorporated (NYSE:MA) on March 27.
Mastercard Incorporated (NYSE:MA) had 141 hedge funds long its stock in the fourth quarter, with a total stake value of $16.9 billion.
For the fourth quarter, 162 hedge funds were long Visa Inc. (NYSE:V), with a total stake value of $26.5 billion.
Visa Inc. (NYSE:V) is another transaction and payment processing services company on our list of the best growth stocks. It offers a transaction processing network that enables the authorization, clearing, and settlement of payment transactions.
An Outperform rating and a $265 price target were maintained on Visa Inc. (NYSE:V) on March 27 by Mizuho analysts.
Like Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Visa Inc. (NYSE:V) is among the best growth stocks to buy today.
