If you're somewhat new to investing, the term “growth stocks" may be confusing. After all, don't you want every stock you own to increase in price (and value)?
Of course you do. But the term growth stocks has a specific meaning for investors. These are stocks that generate earnings per share (EPS) that consistently outperform an index, like the S&P 500 index. That's because earnings growth is the best predictor of future stock price growth.
In the next five years, analysts project a median EPS growth rate of 8.5% for stocks in the S&P 500 index. Therefore, if you own an exchange-traded fund like the SPDR S&P 500 ETF Trust (NYSEARCA: SPY), you can expect to get a return of about 8.5% on your investment.
That will let you sleep well at night. But if you're a more aggressive investor, you'll want more growth. In this special presentation, we analyze seven stocks that analysts project may have EPS growth of higher than 8.5% over the next 10 years. As you'll notice, many of these stocks are blue-chip names that may already be components of the SPY. But owning them individually lets you concentrate your gains on these outperformers.
Quick Links
- NVIDIA
- Amazon
- Palantir Technologies
- Eli Lilly & Co.
- Netflix
- Uber Technologies
- Cameco Corp.
#1 - NVIDIA (NASDAQ:NVDA)
We’ll start this list with NVIDIA Corp. (NASDAQ: NVDA) and acknowledge that the stock has a high valuation. A price-to-earnings (P/E) ratio of over 78x may be significant for traders, but it shouldn’t matter much to investors who want to take a long position in NVDA stock.
NVIDIA makes graphic processing units (GPUs), chipsets, and related multimedia software. The company’s GPUs have been driving its outsized growth because of the essential role they play in artificial intelligence (AI) applications.
In fact, the demand for faster speed and performance outpaces NVIDIA’s ability to produce chips. But the good news for investors is that the same can be said of NVIDIA’s competition.
This space is likely to become very crowded over the next 10 years. However, demand is still in its early stages. That means you shouldn’t be concerned about NVIDIA’s ability to maintain and grow market share and profit margins. The company has a solid balance sheet and has started to buy back its shares, which should help boost shareholder value.
About NVIDIA
NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications.
Read More - Current Price
- $145.89
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 40 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $154.63 (6.0% Upside)
#2 - Amazon (NASDAQ:AMZN)
Amazon.com Inc. (NASDAQ: AMZN) is another stock that warrants consideration as a growth stock to own for the next 10 years. In addition to its signature e-commerce business, the comany has Amazon Web Services (AWS) cloud computing business.
For many investors, the overlap of these two business units, especially as it relates to the growth of generative AI, makes Amazon a great “sum of its parts” stock. And the 113% growth in the AMZN stock price over the last five years is compelling. Much of Amazon’s revenue growth has come from its AWS business, from which the company generates strong profit margins.
However, advertising, particularly through its e-commerce platform, is becoming a fast-growing part of the company’s business. And considering that e-commerce transactions account for just 16% of all retail sales, the company’s core business still has a long runway for growth.
Analysts are forecasting 20% EPS growth for Amazon in the next 12 months. They also have a consensus rating of Moderate Buy on AMZN with a $222.67 share price that is 20.6% higher than the share price on October 9, 2024.
About Amazon.com
Amazon.com, Inc engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content.
Read More - Current Price
- $202.88
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 41 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $235.77 (16.2% Upside)
#3 - Palantir Technologies (NYSE:PLTR)
Palantir Technologies Inc. (NYSE: PLTR) is one of the hottest stocks in the last 18 months. In 2024 alone, PLTR stock is up more than 140%. Yet, the stock is still primarily being supported by retail investors, which has some investors classifying it as a meme stock.
That might be a mistake, especially as Palantir has now earned inclusion in the S&P 500 index. AIP, the company’s software, ontology, and AI platform, helps position companies for the next phase of artificial intelligence by showing them how to get useful information from a large language model (LLM).
Palantir’s ability to deliver those insights is one reason why Palantir has many long-standing contracts with the U.S. Government, including the Department of Defense. And it’s a reason that the company is rapidly expanding its list of commercial clients.
Having said that, PLTR stock is objectively overvalued. But the company has overcome numerous objections since going public as a direct listing in 2020. And if Palantir can grow into its valuation, it will be one of the best growth stocks to own for the next 10 years and beyond.
About Palantir Technologies
Palantir Technologies Inc builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations in the United States, the United Kingdom, and internationally. The company provides Palantir Gotham, a software platform which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.
Read More - Current Price
- $62.11
- Consensus Rating
- Reduce
- Ratings Breakdown
- 2 Buy Ratings, 8 Hold Ratings, 6 Sell Ratings.
- Consensus Price Target
- $31.71 (48.9% Downside)
#4 - Eli Lilly & Co. (NYSE:LLY)
When you’re looking for growth stocks for the next 10 years, it would be easy to put together a list that includes all AI stocks. But, as the last couple of years have shown, there are other growth avenues for investors to pursue.
One of those comes from the GLP-1 revolution. What started out as a treatment for type-2 diabetes (T2D) has become an obesity treatment that is quickly becoming a mainstream weight-loss therapy. Eli Lilly & Co. (NYSE: LLY) is one of the leaders in this space with its drugs Mounjaro (T2D) and Zepbound (obesity).
The approval of these drugs resulted in 19% year-over-year (YoY) revenue growth in 2023. That didn’t make its way to earnings in 2023, but that’s changing in 2024. Analysts expect 45.3% earnings growth in the next 12 months. And with the possibility of Medicare agreeing to cover GLP-1 drugs, those estimates may be too low.
Of the stocks listed here, Lilly is the only one that pays a consistent dividend (although NVIDIA has recently started paying dividends). That’s one reason that LLY stock has generated a total return of over 1,600% for investors in the last 10 years.
About Eli Lilly and Company
Eli Lilly and Company discovers, develops, and markets human pharmaceuticals worldwide. The company offers Basaglar, Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, insulin lispro mix 75/25, Humulin, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500 for diabetes; Jardiance, Mounjaro, and Trulicity for type 2 diabetes; and Zepbound for obesity.
Read More - Current Price
- $753.41
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 17 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1,007.94 (33.8% Upside)
#5 - Netflix (NASDAQ:NFLX)
As the streaming business begins to look more and more like a bundled cable TV service, Netflix Inc. (NASDAQ: NFLX) still manages to stand out. The company has successfully instituted two moves that have boosted the company’s top and bottom lines. The first was the launch of a low-price, ad-supported tier. The second was a crackdown on the practice of password sharing.
The NFLX stock chart correlates with the strong YoY revenue and earnings growth in the last 18 months, and NFLX stock has recently reached an all-time high. This has led to a valuation that is drawing mixed analyst reviews about the stock’s short-term prospects, particularly as the company has announced it will discontinue providing subscriber data in its quarterly earnings reports. But this list is for investors who are looking for stocks to own over the long haul.
And Netflix is continuing to adapt to the new streaming landscape and making smart business decisions. For example, it has exclusive rights to two National Football League games on Christmas Day, which is the company’s first major foray into live sports.
About Netflix
Netflix, Inc provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices.
Read More - Current Price
- $883.85
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $758.76 (14.2% Downside)
#6 - Uber Technologies (NYSE:UBER)
Uber Technologies Inc. (NYSE: UBER) is one of the hottest stocks in the last 12 months, posting a price increase of over 70%. However, even if you had the foresight to envision what the company would be today when it went public in 2019, the gain in the last 12 months would be nearly identical the stock’s total return in that time.
What started out as a ride-sharing platform has blossomed into a company that also offers delivery services. And the company is generating advertising revenue - a key reason that analysts are forecasting EPS growth of over 119% in the next 12 months.
Uber’s business model is unquestionably tied to a demographic that is increasingly comfortable with both the ride sharing and delivery models. A key test of the company’s long-term growth prospects will come if, and when, it becomes a key market for autonomous vehicles. This could be huge for a business model that is under pressure by recent laws providing more protection for gig workers.
About Uber Technologies
Uber Technologies, Inc develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia excluding China and Southeast Asia. It operates through three segments: Mobility, Delivery, and Freight. The Mobility segment connects consumers with a range of transportation modalities, such as ridesharing, carsharing, micromobility, rentals, public transit, taxis, and other modalities; and offers riders in a variety of vehicle types, as well as financial partnerships products and advertising services.
Read More - Current Price
- $69.62
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 33 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $90.32 (29.7% Upside)
#7 - Cameco Corp. (NYSE:CCJ)
One way to look for stocks likely to grow is to follow trends. And an emerging trend is the increased demand for nuclear power, which will provide a tailwind for uranium stocks. Cameco Corp. (NYSE: CCJ) is the world’s largest publicly traded uranium company and one of the best pure-play options for investors to consider.
As of this writing, CCJ stock is up 35.9% in the last 30 days and 16.8% in 2024. In an interview with Bloomberg, Cameco CEO Tim Gitzel called the current outlook the “best fundamentals” he’s ever seen for nuclear power. In response to the expected demand, Cameco plans to expand capacity.
One more thing to keep in mind is that the growth in nuclear power will be a multi-year cycle. This means that Cameco will have a long runway for future growth, much like NVIDIA in the chip sector. Commodity stocks can be notoriously cyclical, but CCJ looks like a solid choice for investors banking on a clean energy future.
About Cameco
Cameco Corporation provides uranium for the generation of electricity. It operates through Uranium, Fuel Services, Westinghouse segments. The Uranium segment is involved in the exploration for, mining, and milling, purchase, and sale of uranium concentrate. The Fuel Services segment engages in the refining, conversion, and fabrication of uranium concentrate, as well as the purchase and sale of conversion services.
Read More - Current Price
- $57.61
- Consensus Rating
- Buy
- Ratings Breakdown
- 7 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $66.56 (15.5% Upside)
If you think back to 2014, investors couldn't have predicted a global pandemic and the repercussions it would have on the stock market over the last five years. One of those repercussions was the meme stock movement when investors could throw money at a stock blindfolded and get a market-beating return.
But what came next should serve as a reminder to investors. Picking market winners isn't an exact science, but historical patterns matter.
By looking at stocks that have a proven track record of beating the S&P 500, you've got a better chance of getting market-beating returns no matter what surprises hit the economy.
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