Investors should take any and all big growth forecasts with a grain of salt, as many of market’s so-called growth stocks never end up reaching the proverbial promised land.
On the other hand, some story stocks truly are destined to make it big, so traders need not write off all big-time growth stocks as disappointments.
The distinguishing factors? Quality and plausibility.
To that end, here’s a closer look at five of the market’s best growth stocks to buy. They’re names that give investors legitimate reasons to expect significantly larger numbers in the foreseeable future, based on history, a competitive edge, or both.
Growth Stocks to Buy — Crown Castle International (CCI)
Investors not familiar with Crown Castle International Corp (NYSE:CCI) may be surprised to find it lumped in with a list of growth stocks to buy, as it’s a real estate investment trust — or a REIT — and REITs just don’t grow rapidly.
CCI isn’t your ordinary real estate investment trust, however. The company is actually a telecommunications infrastructure company organized as a REIT as a means to maximize value for shareholders. The company’s “business” is leasing access to cell phone towers to wireless service providers, and the REIT serves as a tax-friendly means to dish out a big part of that income to investors.
The growth aspect of Crown Castle International lies in the fact that demands on wireless networks are still outpacing capacity growth. For just a little money, CCI can build a new tower and generate a lot of perpetual revenue. The projected top-line growth isn’t red hot, but bottom-line growth is expected to remain at double-digit levels, as the business is one that’s more and more profitable with scale.
Growth Stocks to Buy — Mobileye (MBLY)
If you think Google has the corner an driverless-car technologies, think again. A company called Mobileye NV (NYSE:MBLY) has actually developed a virtual “eye” for an automobile, and it’s gradually becoming a standard feature in some new cars.
GM, Volvo, BMW, Nissan, and about a dozen other auto makers offer vehicles with Mobileye technology on board, with the most impressive feature being the equipment’s ability to stop the car automatically if it sees a large object ahead of it.
In any case, 2015 is expected to be a breakthrough year for MBLY, with sales projected to grow 52% from last year’s $141 million to $218 million, and similar growth rates projected through 2018.
Growth Stocks to Buy — Twitter (TWTR)
To be clear, Twitter Inc (NYSE:TWTR) still has a valuation problem that ultimately stems from a profit-margins problem.
However, the company seems to have finally found the right formula of advertising, pricing, and user growth. Last quarter, the company nearly doubled its year-over-year revenue from $243 million to $479 million, and pumped up profits from two cents per share of TWTR to twelve cents per share.
But does Twitter really deserve to be placed on a list of the market’s top growth stocks now that it’s apparently neared maturity? That’s the thing, though — twitter hasn’t reached maturity yet. Even if it manages to grow the top line by the expected 69% this year, that’s still only $2.37 billion in revenue. For perspective, Facebook Inc. (NASDAQ:FB) drove $12.5 billion in revenue last year, while Google Inc. (NASDAQ:GOOGL) generated $66 billion in sales.
In other words, there’s still miles to go before the saturation ceiling is hit.
Growth Stocks to Buy — Weibo (WB)
Alibaba Group Holding Ltd (NYSE:BABA) may be the 800-pound gorilla in the room when it comes to Chinese internet stocks. But bigger isn’t always better.
Weibo Corp (NASDAQ:WB) may well be one of the burgeoning Chinese market’s stronger growth stocks.
What’s Weibo? The simplest explanation is, Weibo is like Twitter (mostly). And like Twitter, the current coming-of-age of for the site that coincides with a similar coming-of-age for China’s internet accessibility (mobile in particular) is setting up a lot of growth.
Per-share income for WB is expected to grow from basically nil last year to 26 cents this year on the heels of 43% growth in the top line, from $334 million to $479 million in 2015. Similar progress is projected for 2016 and 2017, and based on what we’ve seen thus far, those numbers aren’t far-fetched.
Growth Stocks to Buy — Palo Alto Networks (PANW)
Not that security breaches and other forms of “hacking” haven’t always been a problem, but if it seems like they’re becoming more and more of a problem every day, you’re not crazy — they are.
And, with the advent of more wireless and cloud-based connections, the problem is going to get worse before it gets better.
Enter Palo Alto Networks Inc. (NYSE:PANW), which offers enterprise-level security to defend against a growing wave of cyberattacks.
Just for the record, PANW isn’t going to win any value awards anytime soon; the forward-looking P/E is a frothy 95. But, valuation isn’t part of the equation when looking for growth stocks. Palo Alto Networks belongs on a list of longer-term growth stocks to buy because the only solution to the cybercrime problem is spending on products and services like the ones PANW provides.
With the nation’s — and the world’s — corporations and governments just now figuring this out, Palo Alto is expected to see sales grow 47% this fiscal year and grow another 33% next year, with each year bringing it closer to GAAP profitability.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.