Unbeatable Growth Stocks to Buy: With higher borrowing costs and rising inflation, the current macroeconomic climate has taken its toll on growth stocks lately. Many companies now find it harder to scale and develop their businesses, resulting in depressed share prices and slowing sales.
But not all companies are feeling the squeeze right now. In fact, some high-growth enterprises are starting to buck the trend, thriving in the face of adversity and returning some serious capital to shareholders along the way.
So, with that in mind, here are 3 top growth stocks that could outperform their industry rivals in the coming years.
Nvidia
High-end chip designer Nvidia has seen its profits explode the past two years, with demand for its graphics processing units (GPUs) skyrocketing amid ongoing global semiconductor shortages. But as is the case with most other tech stocks recently, Nvidia’s share value declined almost 50% from its all-time high of November 2021.
Yet despite its latest price re-rating, NVDA’s fundamental business outlook remains decidedly positive. The company enjoys a huge gross margin of 65%, while its revenues have grown more than 222% over the previous five years.
Indeed, Nvidia reported a record quarterly revenue for the Fourth Quarter 2022 of $7.64 billion, an increase of 53% from the same period in fiscal 2021. GAAP earnings also showed significant improvement, coming in 103% higher at another record of $1.18.
And it’s not just its financial performance that makes Nvidia an excellent prospect either. There are other secular tailwinds working in Nvidia’s favor at the moment too.
For instance, the rapidly accelerating digital transformation of practically every industry on the planet is a massive growth driver for the company. Its GPUs are crucial to the proper functioning of the increasingly ubiquitous data centers that underpin many cloud-based applications, and its AI and deep learning solutions are currently the best-in-class.
Furthermore, Nvidia is also at the forefront of the self-driving car revolution – and the company is already ahead of its competitors when it comes to actual products available in the space.
For example, the firm markets its NVIDIA DRIVE as an end-to-end platform featuring a range of software and hardware offerings, including options for deep neural network training, physics-based simulation, and a sensor data processor to name but a few.
Despite the wider worries surrounding monetary policy and the eroding of high-growth stock valuations, NVDA’s solid fundamental performance and expertise should carry it through the rough times ahead, making it a good pick for investors looking for long-term price appreciation.
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Tesla
It was late last year when Tesla’s market cap breached the $1 trillion mark, making Elon Musk’s electric vehicle brand worth more than the combined valuations of the world’s other nine biggest car-manufacturers put together.
Given the enormity of that fact, it might make some investors question whether the company can sustain such a premium. Indeed, the business isn’t exactly cheap right now: the firm trades for a GAAP PE multiple of over 100x, while its gross profit fraction underwhelms at an anemic 27%.
However, the company is growing at a rate that appears to justify that price tag. At $18.8 billion, the firm’s total revenues expanded 81% year-on-year in the First Quarter 2022, with its adjusted EBITDA of $5.02 billion also increasing by 173%.
Not only that, but Tesla has positioned itself as arguably the preeminent EV manufacturer in the automotive industry.
And this is important; electric vehicles are the future of both personal and commercial transport, with the US government aiming to make EVs account for half of all new vehicle sales by 2030.
This fits in with the policy of most other administrations around the globe, as plans to tackle climate change will intensify as time goes on.
At the moment, Tesla (NASDAQ:TSLA) only claims around a 2.5% share of the light-duty vehicle market in the United States – while it has even less in Europe at just 1.8%.
However, this isn’t such a bad thing; if anything, it demonstrates how much territory there is for the company to conquer in the coming years. And the business is primed to do just that – TSLA has now begun production and deliveries from its two new “Giga” plants in Texas and Berlin, and its superior charging station infrastructure coverage makes it a virtually guaranteed growth play for the remainder of the decade.
AMD
Like Nvidia, Advanced Micro Devices is another “fabless” chip designer that outsources its production of GPUs to manufacturers in Taiwan and elsewhere. However, unlike its industry competitor, AMD’s target market is generally considered to be the less expensive, mid-range GPUs as opposed to NVDA’s more upscale units.
But that might be about to change.
AMD has recently solidified its relationship with a number of important computing firms, signing-off on deals that suggest the company is gaining traction on Nvidia’s hitherto monopoly on high-tech capability.
For example, Google and AMD (NASDAQ:AMD) have been collaborating at a deep level on a sophisticated cloud security project, one which signaled a “rare level of trust” between the two companies.
That Google actually chose AMD is highly indicative of just what the IT giant thinks of the semiconductor firm, especially in regard to its industrial and technical know-how.
Additionally, AMD also teamed-up with Hewlett Packard Enterprises to work on the creation of “one of Europe’s most powerful supercomputers”. Again, this is just another validation of AMD’s importance to the future of high performance computing.
Where AMD really shines, however, is with its present valuation metrics. The firm’s forward price-to-sales ratio of 6.30 easily outclasses Nvidia’s hefty 13.1, and, while NVDA’s future EDITDA growth is definitely pleasing at 50.5%, AMD’s 72.1% is simply exceptional.
This certainly gives the impression that, with profits accelerating at such a rate, AMD has some pretty bright prospects ahead.
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