Top Growth Stocks to Buy Amid Market Sell-Off
The recent market downturn has created enticing opportunities for investors interested in growth stocks. Here, we examine four companies that could be excellent long-term investments.
Amazon
Currently down over 20% from its recent peaks, Amazon (NASDAQ: AMZN) is trading at one of its lowest valuations in history, with a trailing price-to-earnings (P/E) ratio around 34. This comes despite solid growth, as the company reported a 10% increase in revenue last year and an impressive 91% rise in adjusted earnings per share (EPS).
Amazon’s cloud computing segment, Amazon Web Services (AWS), remains a primary growth driver. It assists customers in creating and deploying artificial intelligence (AI) models through its Bedrock and SageMaker services. Furthermore, the company has developed custom AI chips to enhance performance and reduce operational costs.
AI integration is evident across Amazon’s business, boosting efficiency and lowering costs in logistics and warehousing. The company is also experiencing robust growth from its high-margin sponsored advertising sector. Given its substantial investments in AI, Amazon positions itself as a potential long-term beneficiary in this evolving sector.
Alphabet
With shares down roughly 25% from their highs, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) faces increasing bearish sentiment. Concerns arise over AI chatbots like ChatGPT potentially disrupting Google’s search dominance. While there is some validity to these fears, Google Search continues to excel in tasks such as gathering real-time data, sourcing materials, and discovering new content.
Notably, Google Search currently displays ads on only about 20% of its queries, highlighting significant future monetization opportunities in both traditional search and AI inquiries. The highest revenue-generating searches tend to consist of straightforward terms rather than complex questions typically posed to chatbots.
The prevailing AI chatbot model, which includes no advertisements and some premium monthly services, appears unsustainable in the long run. As the largest digital advertiser globally, Alphabet possesses advantages due to its extensive two-way network and effective ad targeting capabilities. Beyond search, the company owns Prime Video, a leading streaming service, operates the third-largest cloud platform, and leads the U.S. robotaxi market through Waymo. Additionally, Alphabet is advancing in quantum computing with its Willow chip.
Trading at a forward P/E of 17, shares of Alphabet seem undervalued given the breadth of its business interests and future opportunities.
Image source: Getty Images
Cava Group
With share prices nearly 50% off their highs, Cava Group (NYSE: CAVA) presents an attractive growth opportunity in the fast-casual dining market. The Mediterranean chain exhibits one of the hottest concepts in the quick-service sector and boasts significant expansion potential.
Cava’s appeal is underscored by impressive same-store sales growth of 21.2% last quarter, fueled by a 15.6% increase in guest traffic. This marks the third consecutive quarter of double-digit growth, driven by menu innovations such as the introduction of grilled steak. Management is committed to continuing menu innovation alongside enhanced digital marketing and loyalty initiatives.
The most significant opportunity lies in store expansion. Cava operated 367 locations across 28 states by the end of the last quarter, akin to just a tenth the size of Chipotle Mexican Grill in the U.S. The company plans to launch 62 to 66 new locations in 2025, equating to a 17% to 18% increase in units.
With extensive growth avenues ahead, Cava appears to be a strong candidate for long-term investment.
Dutch Bros
Like Cava, Dutch Bros (NYSE: BROS) is a restaurant stock with substantial growth potential. Currently, the coffeehouse chain operates 982 locations—670 of which are company-owned—across merely 12 states, compared to Starbucks’ more than 17,000 U.S. locations.
The company aims to open at least 160 new locations this year, translating to a 16% increase overall, indicating significant potential for further growth.
Dutch Bros locations feature a compact format, primarily drive-thru or walk-up only, yet each generates approximately $2 million in sales. Additionally, the company has recently introduced mobile ordering, which is expected to enhance sales in the future.
More importantly, Dutch Bros is testing new food offerings, which could increase average order sizes and drive more traffic. Currently, only around 2% of Dutch Bros’ sales derive from food—compared to 19% for Starbucks—indicating substantial growth potential in this area.
With the stock down more than 30% from its highs, Dutch Bros stands out as a long-term investment opportunity driven by a combination of growth and expansion.
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Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market (an Amazon subsidiary), also sits on this board. Geoffrey Seiler holds positions in Alphabet. The Motley Fool has investments in and recommends Alphabet, Amazon, Chipotle Mexican Grill, and Starbucks. Additionally, The Motley Fool recommends Cava Group and Dutch Bros while suggesting short March 2025 $58 calls on Chipotle Mexican Grill. The Motley Fool adheres to a detailed disclosure policy.
The views expressed here belong to the author and do not necessarily represent those of Nasdaq, Inc.
