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Want a good growth stock but don't want to pay a fortune for it? It may seem like top growth stocks are trading at excessive prices and are bad buys, but there are plenty of good examples out there of growing businesses that you can still buy at reasonable, even downright cheap earnings multiples.
Three growth stocks trading at some incredibly appealing valuations right now are Carnival Corp. (NYSE: CCL), Baidu (NASDAQ: BIDU), and PayPal Holdings (NASDAQ: PYPL). Here's why these affordable titans could make for excellent long-term buys today.
Carnival
For the type of growth that cruise ship operator Carnival has been delivering recently, it should be trading at a much higher price than it is. Based on analyst expectations, its forward price-to-earnings multiple (P/E) is less than 14.
The company has been generating record-breaking numbers and has a lot of visibility into its demand since bookings are often done well in advance. And this year, management is projecting 20% earnings growth.
The company outperformed its initial guidance for 2024 and is still doing tremendously well, expecting to add even more to its bottom line for 2025.
Cruises can be unique and relatively affordable travel options for families. A seven-day cruise can cost less than a few thousand dollars per person, depending on the cabin type and destination, which is why it may not be surprising that Carnival's business is doing so well at a time when travelers may be seeking more-affordable options in a challenging economy.
Carnival's business still looks to be in great shape, which is why investors may want to consider buying the stock even though it's up around 50% in the past 12 months. There may still be much more upside for those who buy it today.
Baidu
Investors can buy the Chinese tech stock Baidu at an even cheaper price: a forward P/E of less than 9. This can make for a fairly cheap artificial intelligence (AI) stock since it has been experiencing strong growth in that area of its business.
During the last three months of 2024, the company reported 26% revenue growth in its AI cloud business. Although the overall business experienced a decline of 2% during the quarter, AI could be what lifts Baidu's numbers in the future.
Its AI chatbot, Ernie, handled around 1.65 billion API calls in December, management says. And there are reports that it will unveil a next-generation AI model later this year.
Tech investors have been closely watching Chinese companies since DeepSeek released a low-cost AI model earlier in the year that is said to be on par with ChatGPT and other chatbots. If Baidu can follow suit, that could not only generate a lot of bullishness around the stock but also help boost its AI business even further.