While it’s too early to tell if the current bull run will last, investors with a long-term time horizon may want to consider the best growth stocks to buy for the next 5 years. For one thing, if you are the optimistic type, the latest news should bolster broader sentiments. For one, President Biden touted the U.S. economy’s 2.9% annual growth rate in the fourth quarter.
Two, even if 2023 ends up being a dud, at some point, the economy should gain its footing. For instance, one notable difference between current events and the factors leading up to the Great Recession is that nearly half of homes were equity rich last year. While this circumstance may change, people may have learned the harsh lessons of years past. Finally, societies always push forward, irrespective of ongoing challenges. Therefore, investors may want to pay close attention to the below best growth stocks to buy for the next half-decade.
Focused on producing the lithography machines that undergird the world’s most advanced chips, ASML (NASDAQ:ASML) represents one of the most important companies ever. That’s reason number one to rank it among the best growth stocks to buy. Another catalyst, though, stems from management’s upgraded sales guidance for 2023, anticipating a 25% jump. As things stand, ASML represents an overall solid enterprise for growth and earnings. Per data from Gurufocus.com, the company’s three-year revenue growth rate stands at 20.9%, beating out nearly 75% of the competition. As well, its free cash flow growth rate during the same period pings at 61.1%, outpacing over 85% of its peers.
On the bottom line, ASML features a net margin of 27.5%, along with a return on equity of a staggering 58.9%, reflecting an extremely high-quality business. To be fair, it’s not the cheapest name out there with a trailing multiple of over 46. Still, given the relevancy and otherwise strong financials, ASML is one of the best growth stocks to buy.
Alphabet (GOOG, GOOGL)
The events of 2022 – soaring inflation, geopolitical flashpoints, digital advertising erosion – didn’t bode well for Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and its Google ecosystem. Thus, it wasn’t terribly shocking to see the GOOG Class C shares tumble over 23% in the trailing year. Nevertheless, it could rank among the best growth stocks to buy because of its extraordinary relevance. Personally, I don’t think it’s a coincidence that GOOG gained almost 11% of equity value in the year so far. When people do anything on the Internet, they go to Google. That much is obvious when you consider its 92.58% global market share of the search engine industry. Unless you anticipate another competitor stealing Google’s fire, GOOG stock should be reasonably reliable.
As well, despite last year’s turmoil, Alphabet remains a growth machine. For example, its three-year revenue growth rate stands at 25%, above 75% of sector players. Also, its FCF growth rate during the same period pinged at 45%, outpacing 80% of the field. As a long-term idea, GOOG easily ranks among the best growth stocks to buy.
Although a consistently-relevant player in the broader technology sphere, Nvidia (NASDAQ:NVDA) recently absorbed more cyclical volatility. A leader in graphics processing units (GPUs), these components not only accelerate gaming protocols, they also undergird blockchain-mining enterprises. Therefore, when the cryptocurrency complex soared in 2021, it helped spark dramatic upside for NVDA. At the time, Nvidia unquestionably stood among the best growth stocks to buy. However, when circumstances soared on cryptos, the digital asset market sunk NVDA in its wake. In the trailing year, NVDA still slipped below nearly 10% below parity. However, circumstances look much better this year, with shares gaining over 38% of equity value.
Yes, cryptos regained their moxie (for now). However, Nvidia represents an ever-competitive innovator, driving its expansionary ambitions. In the past three years, the company’s sales growth rate pinged at 31.3%, outpacing over 89% of its peers. Also, Wall Street analysts rate shares a consensus strong buy.
Tax and accounting software provider Intuit (NASDAQ:INTU) might appear boring. To be completely fair, it is – painfully so. However, it’s also incredibly relevant, more than justifying its inclusion on this list of best growth stocks to buy. Fundamentally, as the workplace gradually pivots toward pre-pandemic norms, the gig economy may rise to prominence. If so, Intuit will provide a valuable service.
According to analysts from Industry Research, the gig economy may reach a valuation of $873 billion by 2027. That’s only four years away. While outside observers go nuts for the sector’s projected compound annual growth rate (CAGR) of 16.18% from 2022, it’s important to recognize the mundane details. Specifically, former employees that decide to go independent will fall under a different tax structure.
Essentially, the IRS treats gig workers (or independent contractors) as business enterprises, meaning they must file more complex tax forms, like profit and income statements. It can be daunting for first-time gig workers. Therefore, Intuit enjoys significant relevance, making it one of the best growth stocks to buy.
At first glance, AutoNation (NYSE:AN) doesn’t seem like one of the best growth stocks to buy. If anything, outside fundamentals such as soaring inflation and the resultant interest rate hikes makes car buying a difficult proposition. Therefore, auto dealerships such as AutoNation might suffer. However, that’s not what the data suggests. In the trailing year, AN gained over 12% of equity value. Since the Jan. opener, the stock’s closing in on 10%. At the most elemental level, personal vehicles represent necessities. True, some folks go overboard, buying more car than they can afford. Still, for the vast majority (particularly for west coast residents), a car is a critical asset.
Now, if you’re focused on the best growth stocks to buy over the next five years, AN offers an ideal profile. Basically, the cars on the road today already carry a record average age of 12.2 years. Over the next half-decade, you’ll see more breakdowns. Cynically, this will force consumers into used-car auto dealerships.
Enphase Energy (ENPH)
Admittedly, Enphase Energy (NASDAQ:ENPH) presents some difficulties regarding the best growth stocks to buy. While ENPH gained over 73% of equity value during the trailing year, that’s also the problem. It’s so hot, meaning that it’s possible ENPH is due for a cool down. Plus, other overlooked trades may have their year in 2023.
It’s a fair point. No one wants to hold the bag. However, Enphase’s solar energy solutions – particularly its battery storage system – will speak to residents who have suffered blackouts. Further, if we continue to encounter unusually warm summer seasons, the blackouts may worsen. Therefore, well-to-do households will almost surely seek energy resilience platforms, boding well for Enphase. Appropriately for the best growth stocks to buy, that’s exactly what undergirds ENPH. Per Gurufocus.com, Enphase’s three-year revenue growth rate stands at 45%, beating out nearly 95% of its peers. As well, it features solid profitability metrics, excellent ROE and a decent balance sheet.
Rover Group (ROVR)
As stated earlier, one of the biggest developments on the horizon centers on the gig economy. Organically, this circumstance augurs well for Rover Group (NASDAQ:ROVR). Connecting dog owners with individuals that provide dog-related services such as pet sitting, boarding and walking, Rover’s online marketplace should generate much interest. After all, Americans love their pets.
Now, during the lockdowns, pet owners had all the time in the world to take care of their four-legged friends. However, with major enterprises putting an end to remote work, it’s likely that over time, the workplace will fully normalize. Unfortunately, this puts recalled workers with pets in a bind. However, Rover can help, giving owners greater peace of mind.
For transparency’s sake, if you consider the broader financials for Rover, some viability concerns exist. However, ROVR features a consensus strong buy view from Wall Street analysts. Also, their average price target of $5.94 implies upside potential of over 58%. That makes ROVR one of the best growth stocks to buy over the next five years.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.