In this piece, we will take a look at the 12 best growth stocks to buy and hold in 2024. If you want to skip our overview of growth stocks and how they relate to the current stock market environment, then you can take a look at the 5 Best Growth Stocks to Buy and Hold in 2024.
As the first quarter of 2024 is behind us, the stock market is also presenting a changed environment. The first quarter saw an extension of the themes that were in play during Q4 2023. It saw artificial intelligence and technology stocks continue to post gains, as investors were not only convinced that AI held great potential when it came to consumer and business use cases, but also that the Federal Reserve would cut interest rates multiple times this year.
However, with Q2 now officially underway, investor expectations for a robust economic environment to pile vast sums of money into the stock market have now shifted. Part of this is due to fresh economic data that shows that despite the fact that it is significantly down from the highs of 2022, inflation is still higher than what the Federal Reserve would like to observe. Consequently, major stock indexes such as the S&P 500 and NASDAQ Composite have dialed down some of their gains as Wall Street starts to enter a 'wait and watch' phase.
For instance, while the S&P 500 made news in 2024 for crossing the 5,000 point mark for the first time in its history, it ended up losing more than 4% of these gains during the second and third week of April 2024 after the inflation data for March 2024 was released. Similarly, the tech heavy NASDAQ Comp fell by 7% during the same time period and recovered some of these gains later on.
How does this relate to growth stocks? Well, the macroeconomic factors that have contributed to the illustrious stock indexes shedding their gains are also ones that do not bode well for growth stocks. One of the most commonly accepted definitions of a growth stock is a firm whose price bakes in a significant premium over the earnings per share. This premium is measured through the price to earnings ratio, which is also evaluated along with the industry average to see whether the high multiple is an industry trend or an exception.
Growth stocks are also some of the most highly sought ones on Wall Street since investing for most people is all about making money by watching share prices grow. Some of the best known growth stocks of our times have transformed industries and made history in their respective industries. Two such examples are the semiconductor designer Advanced Micro Devices, Inc. (NASDAQ:AMD) and the electric vehicle manufacturer Tesla, Inc. (NASDAQ:TSLA). AMD's shares are up by a whopping 445% over the past five years, showing that those investors with the correct insights about the semiconductor industry who had the foresight to buy the shares in 2019 would be significantly better off now. So why have AMD's shares soared? The answer to this question lies in the nature of the semiconductor industry and the prowess of the firm's CEO Dr. Lisa Su. The nature of the chip sector means that not every company can sell x86 microprocessors. In fact, most such processors are made by the chip behemoth Intel Corporation (NASDAQ:INTC), and AMD's success has been due to its ability to capture market share from the larger rival.
Tesla, on the other hand, has soared because it became the first company in the world to make and ship electric vehicles on scale. Its share price percentage gain over the past five years is double of AMD's and currently sits at 823%. But is Tesla still a growth stock? Here's what Aristotle Atlantic Partners, LLC had to say about the firm as part of its Q4 2023 investor letter for the Large Cap Growth Strategy fund:
Tesla contributed to portfolio performance in the fourth quarter due to our underweight position relative to the growth index. Tesla reported disappointing third quarter earnings in mid-October in part, due to downtime at some factories that were being upgraded. The CEO expressed concern that higher interest rates were impacting demand for automobiles and would not comment on growth expectations for 2024. However, the expected scale production of the Cybertruck is 12 to 18 months in the future which we believe will negatively impact short-term growth.
So, which growth stocks might be great picks for 2024? Some top picks are Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) and read below for more:
12 Best Growth Stocks to Buy and Hold in 2024
A close-up of an investor pointing to a chart featured on a projector, conveying a message of growth.
Our Methodology
To make our list of the top growth stocks, we ranked the holdings of the Vanguard Growth ETF by the number of hedge funds that had bought the shares in Q4 2023. Out of these, the top growth stocks were chosen.
For these best growth stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 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.
Adobe Inc. (NASDAQ:ADBE) is a software company that provides productivity products used by designers, engineers, and other professionals. It's been quite active on the AI scene lately and has brought AI support to its smartphone products and the lucrative Photoshop platform as well.
During Q4 2023, 105 out of the 933 hedge funds surveyed by Insider Monkey were Adobe Inc. (NASDAQ:ADBE)'s shareholders. Ken Fisher's Fisher Asset Management owned the biggest stake which was worth $2.7 billion.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT), Adobe Inc. (NASDAQ:ADBE) is a top growth stock that hedge funds have bought.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor designer headquartered in Santa Clara, California. While its stock has been one of the market's top performers over the past five years, the shares tanked in April 2024 as Wall Street reconsidered the current AI valuation landscape.
Insider Monkey's December quarter of 2023 poll covering 933 hedge funds revealed that 120 had held a stake in the firm. Advanced Micro Devices, Inc. (NASDAQ:AMD)'s largest hedge fund shareholder is Ken Fisher's Fisher Asset Managemen through its $4.1 billion stake.
Uber Technologies, Inc. (NYSE:UBER) is an urban mobility and delivery software services provider. The firm is back in the news for its platform's safety problems in April 2024 after a 70 year old drive shared how he was beaten while working.
By the end of last year's fourth quarter, 129 out of the 933 hedge funds profiled by Insider Monkey had bought and owned Uber Technologies, Inc. (NYSE:UBER)'s shares. D. E. Shaw's D E Shaw was the biggest shareholder as it owned $886 million worth of shares.
Salesforce, Inc. (NYSE:CRM) is an American firm whose software products allow businesses to interact with their customers and analyze performance. The shares are rated Buy on average, and the average analyst share price target is $311.54.
As of Q4 2023 end, 131 out of the 933 hedge funds part of Insider Monkey's database had piled into the firm's shares. Salesforce, Inc. (NYSE:CRM)'s largest investor among these is Ken Fisher's Fisher Asset Management due to its $ 3.9 billion investment.
Apple Inc. (NASDAQ:AAPL) is one of the biggest consumer technology companies in the world. Heading into the second half of 2024, multiple unconfirmed reports are now claiming that Apple Inc. (NASDAQ:AAPL)'s answer to the AI question will be to bring on device AI to its gadgets.
For last year's December quarter, 131 out of the 933 hedge funds covered by Insider Monkey's research had bought a stake in Apple Inc. (NASDAQ:AAPL). Warren Buffett's Berkshire Hathaway owned the biggest stake that was worth $174 billion
Mastercard Incorporated (NYSE:MA) is a financial technology company whose products enable people to make purchases through cards linked to their accounts. The firm has been doing well on the financial front as of late since it has beaten analyst EPS estimates in all four of its latest quarters.
Insider Monkey took a look at 933 hedge fund portfolios for their fourth quarter of 2023 shareholdings to find that 141 had invested in the firm. Charles Akre's Akre Capital Management is Mastercard Incorporated (NYSE:MA)'s largest investor since it owns $2.1 billion worth of shares.
Visa Inc. (NYSE:V) is another payment platform provider. Heading into its first quarter of 2024 earnings, analysts are expecting the firm to earn $4.9 billion in profit which translates into an EPS of $2.44.
162 out of the 933 hedge funds covered by Insider Monkey's Q4 2023 database had bought and owned Visa Inc. (NYSE:V)'s shares. Chris Hohn's TCI Fund Management owned the biggest stake which was worth $4.3 billion.
Visa Inc. (NYSE:V), Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) are some top hedge fund growth stock picks.
