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Among the volatile ebb and flow of the market, growth stocks have emerged as the shining stars, delivering stellar returns this year. The ever-vibrant tech-heavy S&P 500 index continues to break records, with investors nonchalantly brushing off inflation fears. Furthermore, looming interest rate cuts on the horizon signal a promising trajectory for growth stocks.
However, not all growth stocks are cut from the same cloth. With doubts swirling around an impending AI bubble, prudence dictates a cautious approach to investing. In such a climate, seeking insights from seasoned Wall Street analysts can provide a compass through the choppy waters. Analysts tend to gravitate towards growth stocks that boast solid track records of robust top-and-bottom-line growth. Subsequently, here are seven analyst-endorsed growth stocks that possess the potential to yield fruitful returns in the long run.
Meta Platforms (META)
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Meta Platforms (NASDAQ:META) weathered a forgettable year in 2022 but underwent a remarkable transformation in 2023. A strategic pivot under the “Year of Efficiency” banner and a renewed focus on artificial intelligence (AI) heralded a resurgence. This period witnessed enhanced operational efficiency, effective monetization of its user base, and significant investments in AI capabilities. The outcome? Four consecutive quarters of surpassing revenue and profit forecasts, elevating its free cash flow per share from $7 in 2022 to $17 last year. Noteworthy, META stock surged by an extraordinary 144% in the previous year, with a healthy 62% gain in the last six months alone.
Furthermore, Meta remains steadfast in its AI bet as the linchpin of its forthcoming victories, embedding this technology throughout its functions and product innovation. CEO Mark Zuckerberg divulged plans to allocate billions toward acquiring microchips from Nvidia (NASDAQ:NVDA) and introduced a dynamic new AI model to bolster its video recommendation engine across all its apps.
Mastercard (MA)
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If you’re in pursuit of excellence, look no further than Mastercard (NYSE:MA). This credit card titan boasts an A-grade profitability profile with double-digit growth across key metrics. For perspective, its five-year average net income and free cash flow margins stand at 44.33% and 42.70%, respectively. Over the years, it has richly rewarded its shareholders, consecutively increasing dividends for the past 12 quarters, resulting in a 0.55% yield. To kick off the year, it upped its dividend by 16%.
With exceptional recent financial results, Mastercard continues to dazzle across the board. Its fourth-quarter (Q4) performance showcased a remarkable 12.60% year-over-year (YOY) revenue surge to $6.55 billion, while its EPS hit an impressive $3.18, surpassing estimates by 10 cents. Mastercard consistently outperforms analyst predictions by significant margins on both revenue and earnings.
Nvidia (NVDA)
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Nvidia stands as an irreplaceable entity, steering the AI revolution with its dominant role. Its potent GPUs and processors have been pivotal in propelling nearly every major tech advancement of the last decade, establishing it as a true powerhouse in its niche. From the crypto surge to the AI wave, Nvidia’s business continues to captivate the tech landscape.
The past year has been underscored by a strong AI focus, as evidenced by its stellar quarterly results. Over the last three quarters, the company has consistently surpassed revenue estimates by nearly $2 billion on average. Consequently, operational cash flows skyrocketed by a staggering 398% in the last year alone.
In the latest Q4 earnings report, Nvidia experienced a meteoric sales rise with a 265% YOY increase to $22.1 billion. Its primary growth engine, the data center segment, soared by 409% YOY, reaching $18.40 billion. With these stellar outcomes and the increasing adoption of AI across diverse sectors, NVDA stock shows promise in delivering substantial long-term value to shareholders.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) requires little introduction as a prime player in the AI stocks niche. Surprising pundits with its investments in OpenAI, Microsoft has emerged as a trailblazer in the sector. It now leads the AI charge, integrating this transformative technology across its timeless software suite. Moreover, AI tailwinds continue to propel growth in its lucrative cloud computing domain, inscribing new chapters in its growth narrative.
Its latest quarterly results sparkled, exceeding revenue and earnings projections by remarkable margins. Revenues vaulted 17.70% to $62.02 billion, surpassing estimates by $890 million. Concurrently, its EPS of $2.93 eclipsed market forecasts by 16 cents in Q2, marking the fourth consecutive quarter of earnings beats. Notably, a 20% YOY surge in intelligent cloud sales to $25.9 billion was the standout indicator of robust demand for its cloud services.
Spotify Technology (SPOT)
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Spotify Technology (NYSE:SPOT) reigns supreme in the realm of streaming, lauded for its stellar user growth and engagement metrics. This is evidenced by its superb 5-year average revenue growth of 21.90%. Furthermore, its monthly active users (MAUs) exhibit a consistent upward trajectory, escalating by a notable 23% YOY to 602 million, surpassing estimates by 1 million. An eye-catching 28 million net MAU additions in the quarter further underscore its dominance.
Q4 witnessed a resilient 16% YOY total sales growth, driven by robust performance in ad-supported and premium revenue streams. Premium revenue soared by 17% YOY, accompanied by a 12% YOY uptick in ad-supported revenues. Bolstered by these robust outcomes, Spotify stands on the cusp of a transformative leap, potentially charting its inaugural GAAP profit this year. Analysts are eyeing a substantial leap in fiscal year 2024, projecting an EPS of $3.72, a significant leap from its negative $2.96 EPS in the bygone year.
Walmart (WMT)
Strong Performers Defying Odds in a Turbulent Market
Walmart: Powering Through Challenges with Unrivalled Staying Power
A juggernaut in the retail arena, Walmart (NYSE:WMT) has been a beacon of consistency for over six decades. Weathering storms and market fluctuations, this retail titan has time and again shown its prowess by generously rewarding its investors. In fact, with an impressive track record of consecutively increasing dividend payouts for half a century, Walmart proudly bears the coveted moniker of a Dividend King.
Defying concerns of inflation, Walmart recently unveiled its robust quarterly report, sending shockwaves through the industry. The fourth-quarter results painted a picture of resilience with a remarkable 5.70% year-over-year surge in sales, catapulting to an impressive $173.4 billion and surpassing estimates by a staggering $2.55 billion. Moreover, beating forecasts by five cents, its earnings per share stood at a solid 60 cents. The company’s stellar performance was underpinned by the exponential growth of its eCommerce division, which witnessed a remarkable 23% year-over-year upswing in Q4, catapulting its annualized sales past the monumental $100 billion mark. Furthermore, advertising revenues soared by a staggering 28% year-over-year, a trajectory poised for further ascension following Walmart’s strategic acquisition of Vizio Holdings (NYSE:VZIO).
Eli Lilly: A Medical Marvel in a League of Its Own
Standing at the pinnacle of the pharmaceutical realm, Eli Lilly (NYSE:LLY) boasts the crown of commanding the most valuable pharmaceutical entity globally, with a market capitalization soaring above $700 billion. Its diverse product portfolio caters to a spectrum of medical conditions, encompassing diabetes, depression, anti-obesity solutions, and a myriad of other ailments. Noteworthy is the awe-inspiring ascent of LLY stock, surging over 30% year-to-date and delivering a jaw-dropping 129% increase over the past year, largely fueled by the buzz surrounding its revolutionary anti-obesity medications.
A close examination of Eli Lilly’s exceptional fourth-quarter unveiling elucidates the profound influence of its anti-obesity medicines on the company’s top-line performance. The Q4 sales figures stood tall at $9.35 billion, marking a phenomenal 28% year-over-year surge. The anti-obesity marvel, Mounjaro, contributed a monumental $2.2 billion to the quarterly sales tally, constituting roughly a quarter of the total revenues. Additionally, the debut quarter of Zepbound, its latest weight-loss injectable, amassed $175.8 million, painting a promising growth trajectory. Eli Lilly’s Q4 GAAP earnings per share of $2.42 reflected a commendable 13% uptick year-over-year.
As the market continues its turbulent dance, these stalwarts rise above the chaos, shining bright with their unwavering resilience and innovative strategies. Investors and market enthusiasts alike stand in awe of such steadfast performance in the face of uncertainty, underscoring the enduring power of strategic foresight and operational excellence.
