The year is coming to a close and what a year it has been for the stock market. As of this writing S&P 500, NasdaqCompositeand DowJonesIndustrialAverage grew by 26%, 28% and 19%, respectively.
However, there are many growth stocks that are significantly outperforming their benchmarks and should be considered for the long term. Here are three investors to be aware of.
Start the morning smarter! Wake up with Breakfast news to your mailbox every market day. Register for free »
Image source: Getty Images.
The firstup streaming giant Spotify(NYSE: SPOT).
The company that runs the world’s most popular music streaming app continues to impress markets with its growth. In its most recent quarter (the three months ending September 30), Spotify reported 640 million monthly active users (MAUs), up 11% from 574 million MAUs a year ago.
In addition, the number of paid subscribers of the company jumped by 12% to 252 million. Arguably, paid subscribers are even more important a figure in Spotify, as subscription fees make up 88% of the company’s total income.
At the same time time as the company increased the conversion of total MAUs into paid subscribers, management also reduced costs. Accordingly, Spotify’s profitability has skyrocketed. The company reported operating profit 454 million euros compared to only 32 million euros a year earlier.
So Spotify is giving growth-oriented investors what they want to see. The company’s user base, revenue and profits are expanding as Spotify continues to expand into new markets and grow subscribers. This is a recipe for continued success, so investors should view this as a long-term buy and hold stock.
Next, there is Reddit(NYSE: RDDT).
Reddit only debuted through an initial public offering (IPO) less than a year ago. Still, the stock is up a remarkable 180% at the time of writing.
It’s all thanks to Reddit’s big three financial indicators:
Reliable revenue growth
Strong user growth
Skyrocketing gross profit
Starting with earnings, Reddit increased its quarterly revenue (for the three months ended September 30) to $348 million, a 68% year-over-year increase. Similarly, the company’s daily active unique users (DAUq) grew 47% to 97 million.
This is rapid growth, and best of all, the company is capitalizing on it growth by increasing its profitability. Gross profit margin increased to 90% in the last quarter – a better performance ever for the company, and more than 200 basis points higher than the same period a year ago.
Of course, Reddit remains a newcomer to the stock market, but its first year as a public company has been remarkable. Growth-minded investors may want to consider this high-performing candidate as a long-term buy-and-hold candidate given its strong growth and potential for high returns going forward.
The last one is Nvidia(NASDAQ: NVDA ).
obviously Nvidia scored well; it is already the second largest company in the world (as of this writing) with a market capitalization of $3.3 trillion.
However, there are reasons to believe that Nvidia stock could rise.
The firstconsider the company’s most recent earnings report (for the three months ending October 27). This was announced by Nvidia for realsurprisingly numbers; revenue grew 94% year-over-year to $35 billion. Keep in mindthat’s $35 billion quarterly income – but it is roughly equivalent to an annuity income for such iconic companies as Visa, Netflixand Starbucks.
Moreover, Nvidia’s sales have grown to these incredible heights in just a couple of years. for example in the same period two years ago, Nvidia reported less than $6 billion in revenue.
In other words, the growth in demand for artificial intelligence (AI) chips has been staggering. Moreover, this no is expected to will end soon.In addition to fantastic results reported by NvidiaThe company’s management also provided guidance that exceeded expectations. In short, management expects future sales of Blackwell AI chips to be even higher than previously forecast.
In the end, Nvidia’s important role in the AI ecosystem makes it a compelling choice for investors looking to buy and hold stocks in the AI sector.
Before you buy Nvidia stock, consider the following:
The Motley Fool Stock Advisor a group of analysts has just determined what they believe Top 10 promotions for investors to buy now … and Nvidia was not one of them. The 10 stocks that were shorted could yield huge returns in the coming years.
Consider when Nvidia compiled this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $859,528!*
Fund advisor provides investors with an easy-to-follow plan for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. TheFund advisorservice has more than four times return of the S&P 500 since 2002*.
*Stock Advisor provides returns as of December 2, 2024
Jake Lerch has positions in Nvidia, Reddit, Spotify Technology and Visa. The Motley Fool has positions in and recommends Netflix, Nvidia, Spotify Technology, Starbucks and Visa. The Spotted Fool has a disclosure policy.
