Growth stocks continue to play a pivotal role in both the stock market and the portfolios of investors. Identifying game-changing growth stocks with long-term catalysts that drive their earnings and share prices upward is a challenging task, but their potential impact cannot be overlooked. When fortunate enough to acquire such stocks, it’s advisable to retain them and ride the wave of their success.
A prime example of this potential lies in Apple (NASDAQ:AAPL). Imagine having invested $1,000 in Apple back in 2007 when the iPhone was launched; that investment would now be valued at almost $55,000. This astonishing return of around 5,400% underscores the immense influence growth stocks can exert on smart and patient investors. It’s noteworthy that this year’s Nasdaq Index growth of 30% has been driven by fewer than 10 growth stocks. For those aspiring to financial prosperity, here are three promising growth stocks to consider.
Nvidia (NVDA)
Let’s begin with Nvidia (NASDAQ:NVDA), a notable player in microchip and semiconductor design. As the company approached its second-quarter earnings release, expectations were exceptionally high. Media outlets were quick to emphasize that this year’s stock market rally hinged on Nvidia surpassing Wall Street’s projections. The company delivered in impressive fashion, not only exceeding analyst expectations but also providing bullish guidance that outperformed even the most optimistic forecasts for its future sales and profits.
Nvidia reported an earnings per share (EPS) of $2.70, surpassing the anticipated $2.09. Q2 revenue reached $13.51 billion, doubling the $6.7 billion recorded the previous year and exceeding Wall Street’s estimate of $11.22 billion. The company’s margins also expanded to 71.2% during Q2. A key highlight was Nvidia’s upward revision of its third-quarter guidance, projecting revenue of $16 billion compared to the prior estimate of $12.61 billion.
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This heightened guidance suggests a remarkable 170% year-over-year growth in Q3 sales, primarily attributed to the soaring demand for the company’s artificial intelligence microchips. Describing Nvidia as a growth stock to watch would be an understatement. Year-to-date, NVDA stock has tripled in value, with further potential ahead.
Eli Lilly (LLY)
Following Nvidia’s lead is Eli Lilly (NYSE:LLY), a pharmaceutical company specializing in prescription drugs. The company’s stock has surged by 50% in 2023. This boost was driven by a noteworthy 85% increase in Q2 profits compared to the previous year. The surge was bolstered by robust sales of its diabetes drug Mounjaro, currently under review by the U.S. Food and Drug Administration as a potential weight loss treatment.
Eli Lilly’s positive Q2 results showcased revenue of $8.31 billion, a 28% rise from the same quarter in 2022. Sales of Mounjaro reached $979.7 million during Q2, a remarkable leap of over 6,000% from $16 million in the previous year. The company also raised its forward guidance, projecting full-year revenue between $33.4 billion and $33.9 billion.
The earnings guidance was similarly adjusted to a range of $9.70 to $9.90 per share for the entire year, surpassing the earlier projection of $8.65 to $8.85. Despite the substantial growth already achieved, analysts foresee further expansion for LLY stock. The median price target for the stock exceeds its current levels by nearly 10%.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) should not be underestimated. The company’s strategic moves, such as introducing a more affordable ad-supported streaming tier and tackling password sharing, have accelerated its growth trajectory, positively impacting earnings and subscriber figures. In Q2, Netflix reported an EPS of $3.29, outperforming the expected $2.86 per share. Although Q2 revenue of $8.19 billion was slightly below analysts’ predictions, the standout achievement was the addition of 5.9 million net new subscribers during the quarter, surpassing Wall Street’s expectation of 1.9 million.
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This surge in subscribers marked Netflix’s most successful second quarter since the challenges posed by the Covid-19 pandemic in 2020. The company’s global subscriber base now approaches 240 million, with its resilience against disruptions in Hollywood positioning it favorably compared to other entertainment entities.
While Netflix’s forward guidance didn’t entirely align with Wall Street’s preferences, it’s important to note that NFLX stock has surged by nearly 80% over the past year.
In conclusion, the potential of growth stocks to drive financial gains is undeniable. The examples of Nvidia, Eli Lilly, and Netflix demonstrate the substantial rewards that can be reaped by strategic investment in carefully chosen growth stocks. As always, it’s crucial to conduct thorough research and consider expert opinions before making investment decisions.
