In the stock market, investors are always looking for growth. After all, a growing company means a growing share price. However, managing risk is equally as important. Many companies offer explosive growth but with no real certainty for investors on the long-term prospects of the company. This led us to create this list of trailblazing stocks to watch.
If the market were to take a dive, these companies that may be highly leveraged to offer such growth may fail to ever make it back to a profitable point and default on their loans. Additionally, companies that fail to innovate may be initially successful but may not be able to keep up with their competitors and the overall competitive market.
As such, we need to look out for companies that have growth, resilience to market conditions, and an ability to innovate. In this article, we aim to present three companies that have explosive growth potential, are resilient to poor market conditions, and are consistent innovators worth a long-term addition to any portfolio.
Microsoft logo close up. Microsoft (MSFT) Flagship Store Fifth Avenue, Manhattan, NYC.
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Microsoft Co. (NASDAQ:MSFT) is a company that enables people to transform the way they work, play, and communicate through technology. Yahoo finance analysts suggest that his stock will trade within a one-year range of $261.03 to $412.15, with an average of $369.39. Microsoft has also surpassed its expected earnings for every quarter this year.
Microsoft is currently attempting to expand its technological dominance by acquiring Activision Blizzard. Activision Blizzard is the creator of the Call of Duty series, World of Warcraft, and Overwatch. The Call of Duty series alone is ranked in fourth place for being one of the most played PC games and has made $3 billion of Activision’s revenue of $8.7 billion, a massive increase of 15.65% from last year. This alone massively increases Microsoft’s power by allowing it to expand its territory in the gaming industry. Microsoft’ has had its earnings grow by 172.16% throughout the past five years, and this is only going to continue.
Taiwan Semiconductor Manufacturing Company Limited (TSM)
image of TSM semiconductor office building
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Established in 1987, Taiwan Semiconductor Manufacturing Company Limited, a.k.a. TSMC (NYSE:TSM) stands as a semiconductor industry powerhouse, specializing in cutting-edge semiconductor manufacturing processes. TSMC’s semiconductor chips play a vital role across diverse applications, from advanced electronics to 5G technology. Positioned as a growth stock, Yahoo Finance analysts project a one-year price target of $100–$130, with an average of $112.
TSMC differentiates itself through its leadership in advanced semiconductor manufacturing, crucial for the ever-evolving tech landscape. The company’s market share of 56.4% means that it has an overwhelmingly large presence in the global semiconductor foundry market. Also, the company’s strategic collaborations and partnerships (such as its partnership with Apple as its only chip manufacturer) enhance its market presence and global impact, with plans for its first factory in the United States in Arizona.
With a current P/E ratio of around 18.9 times, TSMC aligns with industry standards. Over the last five years, the company exhibited robust EPS growth, boasting a CAGR of approximately 22.4%, surpassing its historical mean. TSMC’s resilient gross margins and impressive 18.3% year-over-year revenue growth underscore its financial stability. Pioneering advancements in semiconductor fabrication technology and maintaining a strong free cash flow position TSMC for sustained growth.
MercadoLibre Inc. (MELI)
MercadoLibre (MELI) homepage on a smartphone
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Established in 1999, MercadoLibre Inc. (NASDAQ:MELI) is a trailblazer in Latin America’s e-commerce and technology sector, providing a comprehensive online marketplace and digital payment solutions. Yahoo Finance analysts project a one-year price target of $1,350 to $2,120, averaging $1,677, underscoring the company’s growth potential.
Through Mercado Pago, MercadoLibre provides a seamless and secure digital payment experience for users across the region. This success significantly contributes to MercadoLibre’s leading position in Latin America’s e-commerce market. MercadoLibre’s investments like Mercado Envíos, a logistical service operation providing free shipping, that, while common in the U.S., is less prevalent in Latin America, enhance the overall e-commerce experience for buyers.
With a current P/E ratio of approximately 74 times, MercadoLibre reflects the high-growth expectations tied to its innovative approach compared to other competitors. The company has showcased remarkable EPS growth, achieving a CAGR of around 180%, surpassing its historical mean. MercadoLibre’s impressive gross merchandise volume and remarkable 79.6% year-over-year revenue growth underscore its financial strength.
On the date of publication, Ian Hartana and Vayun Chugh 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.
Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.
