We all want to invest in stocks that will soar, right? Of course. It's hard to know which stocks will be tomorrow's big winners, though. Given that challenge, it makes perfect sense to just invest in a low-fee, broad-market index fund, such as one that tracks the S&P 500 index of 500 of America's biggest companies.
If you want to deploy some of your long-term dollars into some super-promising individual stocks, though, here are five growth stocks to consider -- two of which are among the "Magnificent Seven" stocks.
1. Amazon
It's not hard to imagine how Amazon (NASDAQ: AMZN) might soar in the years and decades to come, in part because it's involved in so many different businesses, from A to Z -- like Amazon Web Services and Zappos the shoe retailer. Amazon Web Services (AWS), a leading cloud computing platform, is often underappreciated. As of last year, it held a commanding market share and was growing customers by 31% year over year.
As big as Amazon is, it's still growing at a good clip, with revenue recently up 10% year over year in its last quarter and operating cash flow up 75%. Amazon has been investing heavily in artificial intelligence (AI), too, which is likely to provide major tailwinds for further growth. With its recent forward-looking price-to-earnings (P/E) ratio of 32 well below its five-year average of 54, the stock seems appealingly valued.
2. Microsoft
Microsoft(NASDAQ: MSFT) arguably has an even more impressive array of businesses under its roof, including the prevalent Office productivity software, the Azure cloud computing platform, the Xbox gaming platform, and the Windows operating system, among others. The company is also poised to ride the AI growth wave, having invested billions in ChatGPT creator OpenAI and incorporating AI into many of its offerings.
With its recent forward-looking price-to-earnings (P/E) ratio of 33 not far from its five-year average of 30, Microsoft stock seems reasonably valued.
3. PayPal
PayPal(NASDAQ: PYPL) is a major player in the fintech arena -- another realm, along with AI and cloud computing, with high expectations for growth. It recently boasted 426 million active customer and merchant accounts and 25 billion annual transactions. In its second quarter, revenue grew 8% year over year, with payment volume up 11%.
The company had slowed in recent years, but its prospects are looking better recently, with a new management team, a strong balance sheet, and leaner operations. It's been rolling out new features, too, such as its FastLane and Cash Pass rewards program. With its recent forward-looking price-to-earnings (P/E) ratio of 16, well below its five-year average of 21, the stock seems undervalued.
4. Veeva Systems
Veeva Systems(NYSE: VEEV) is not a household name, like the companies mentioned, but it's grown into a recent market value of $35 billion by offering vital cloud-based services primarily to the life sciences industry. For example, it helps pharmaceutical companies manage clinical trials -- and its customers include lots of big names, such as Moderna and EliLilly.
Veeva's second quarter featured revenue up 15% year over year and subscription services revenue up 19%. That last tidbit is very promising, because subscriptions offer relatively reliable recurring revenue. If a customer has a subscription, you don't have to keep selling to them -- you just have to keep them satisfied.
With its recent forward-looking price-to-earnings (P/E) ratio of 34 well below its five-year average of 50, the stock seems attractively valued. Better, it has billions in cash and no debt, giving it a lot of flexibility to pounce on opportunities.
5. iShares Semiconductor ETF
The iShares Semiconductor ETF (NASDAQ: SOXX) isn't technically a stock. It's an exchange-traded fund (ETF) -- a lot like a mutual fund, but trading like a stock. I have high hopes for this one because it gives you part ownership in 30 stocks of semiconductor specialists, and our modern world is now very dependent on semiconductors -- for everything from cloud computing, AI, data centers, smartphones, and more.
The ETF's top holdings recently included Nvidia, Broadcom, Advanced Micro Devices, Applied Materials, and Qualcomm.
Five stocks to watch
These are five investments that seem to have terrific growth potential over the coming years and decades. They may or may not soar this year, but I suspect that anyone buying them now will be happy they did so five or 10 years from now.
After learning more about any that interest you, if you're not sure, you needn't invest in them. There are other great stocks out there -- and great index funds, too, which can also help you amass wealth -- with less risk.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Selena Maranjian has positions in Advanced Micro Devices, Amazon, Broadcom, Microsoft, Moderna, Nvidia, PayPal, Qualcomm, Veeva Systems, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Applied Materials, Microsoft, Nvidia, PayPal, Qualcomm, Veeva Systems, and iShares Trust - iShares Semiconductor ETF. The Motley Fool recommends Broadcom and Moderna and recommends the following options: long January 2026 $395 calls on Microsoft, short December 2024 $70 calls on PayPal, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
