After a dismal 2022, investors have returned to the top growth stocks to buy with great enthusiasm. We shouldn’t forget the lessons from 2022, however. Generally, it’s better to accumulate the top growth stocks to buy for long-term growth rather than companies that merely have short-term momentum. Of course, valuation also matters. At the wrong price, a company can still disappoint even if its growth rates remain stellar.
There are plenty of top growth stocks to buy now. In fact, here are seven that are worth buying on dips. Plus, all will continue to thrive for many years regardless of what happens with interest rates, the economy, or the tech sector in the immediate future.
Top Growth Stocks to Buy: Mastercard (MA)
Mastercard (NYSE:MA) is one of the two dominant global credit card companies. These firms are an effective oligopoly, with the top two players having a stunning 87% share of the overall credit card processing market.
After all, Mastercard takes no credit risk. The banks that issue the cards are responsible for that. Rather, Mastercard gets paid a small fee on every transaction that goes through its network. With billions of dollars in daily transactions, that money adds up.
A few years ago, there were worries that FinTech or cryptocurrency offerings could displace credit card companies. However, disruption proved difficult, with many of the purported rivals running large losses or even shutting down entirely. The truth is that Mastercard has a massive scale advantage and network effect due to its global scope and unmatched level of both consumer and merchant adoption.
Mastercard has grown revenues at 12 %/year compounded over the past decade and earnings per share at 16%. The pandemic temporarily impacted the business. But with the global travel resurgence, Mastercard is back to delivering record profits and growth should continue nicely from here.
Top Growth Stocks to Buy: Danaher (DHR)
Danaher (NYSE:DHR) is a conglomerate focused on the healthcare industry. Traditionally, Danaher has been involved in a great number of industries, with management being a constant M&A machine. This has had jaw-dropping results for shareholders. DHR stock has soared from a split-adjusted price of 9 cents per share in 1983 to more than $250 today.
The company has now prepared for the next stage of its incredible growth story. That’s because Danaher has divested or spun off nearly all its non-core businesses, leaving it to entirely focus on life sciences, specifically lab tools, and equipment. Danaher is now fully leveraged to profit from the rise of bioprocessing, that is to say, the advanced techniques needed to create the new waves of biotech drugs such as personalized medicine, RNA therapies, gene editing, and so on.
Analysts expect the overall bioprocessing market to grow more than 14% annually over the next decade. Danaher has, once again, shrewdly positioned itself to capture the lion’s share of this upcoming growth. DHR stock is still on sale today as investors panicked and dumped the stock when COVID-19-related revenues dried up. But the long-term story is as strong as ever and analysts expect the firm to return to growth next year.
Top Growth Stocks to Buy: Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) is the world’s dominant semiconductor foundry. For companies that don’t own their own fabs, they outsource their chip manufacturing to TSM or its rivals. Taiwan Semiconductor just disclosed a weak earnings outlook as the lingering slowdown in consumer electronics affects results. But the investment cycle into AI chips should overcome that near-term weakness over the next few quarters.
And, in the bigger picture, there’s no substitute for Taiwan Semi. As chips find their way into connected cars, home appliances, and many other new fields, overall demand will surge. TSM, with its massive market share, will capture a huge chunk of that expanded market opportunity.
Roper (ROP)
Roper Technologies (NASDAQ:ROP) is a software conglomerate. It operates software businesses spanning a vast number of verticals ranging from K-12 school management to power plants, insurance underwriting, graphic design, and many other things.
The company started as Roper Industries and was a manufacturing conglomerate. Over the years, it has transitioned from making things to making software that supports industrial and consumer applications. The latest stage in Roper’s evolution came earlier this month, as the company moved its stock listing from the New York Stock Exchange to the Nasdaq. This makes Roper eligible to be added to the Nasdaq 100 and attract a new wave of passive investing capital into the company.
Roper shares have risen subsantially since 1992. As the company continues to build and acquire more software operations while attracting a new wave of tech investor interest, shares should continue their inexorable climb.
Starbucks (SBUX)
Starbucks (NASDAQ:SBUX) had its share of setbacks amid the pandemic. Consumers have changed their behavior over the past few years, and some folks stopped using Starbucks locations as a place to sit and hang out. The firm’s heavy investments in China have also been slowed by that country’s lingering COVID-19 restrictions.
On the other hand, Starbucks’ commitment to drive-through lanes paid off in spades, as has the smart positioning of its mobile app and loyalty program. Furthermore, concerns about the brand’s coolness may be overblown.
To that point, a recent survey found Starbucks to be the second most popular restaurant among teenagers, trailing only Chick-Fil-A. People love coffee and sugar, and Starbucks is well-positioned to deliver those goods to folks in nearly all parts of the world. SBUX stock is a solid play on the rise of the global consumer class, especially as markets like China and Latin America continue to grow.
Texas Instruments (TXN)
Texas Instruments (NASDAQ:TXN) is the world’s largest analog semiconductor company. Analog chips are an attractive field, as they have a slower development cycle than chips that go into fast-moving consumer electronics fields. Lately, analog has been enjoying a major growth wave due to applications in promising fields such as automotive electronics, automation, and remote monitoring/security. As the dominant player in its area, Texas Instruments is grabbing a big piece of these new market opportunities.
Texas Instruments has made for a tremendous buy-and-hold investment because of management’s alignment with shareholders. Management is hyper-focused on generating more free cash flow per share and then distributing that to shareholders. In fact, the company has an owners’ manual which starts off by stating the company’s commitment to growing free cash flow and then using it to pay increasing dividends while repurchasing stock.
Since 2004, the company has grown free cash flow by 11% per year annualized. It has grown its dividend at a stunning 25%/year annualized since 2004. And it has retired an incredible 47% of its total outstanding stock over that timespan. Texas Instruments is a long-term wealth-generating machine, and investors should relish any opportunities to buy shares on the dip.
Grupo Aeroportuario del Pacifico (PAC)
Grupo Aeroportuario del Pacifico (NYSE:PAC) is a Mexican airport operator. It operates 12 airports primarily in the Pacific region of Mexico along with two Jamaican airports. Key holdings include the airports for Guadalajara, Tijuana, and the tourist destinations of Cabos and Puerto Vallarta, respectively.
The company IPOed in the United States in 2006 and has delivered a stunning 1,300% return, including dividends, since that point. Its success comes due to the attractive features of airports. Once built, they have low operating costs to maintain. Revenues grow naturally as passenger fees are linked to inflation. And, as traffic grows, revenues from non-aeronautical fields such as concessions, retail, car rentals, hotels, advertising, etc. grow naturally.
Mexico is a particular hotbed for airline traffic growth; it has been one of the world’s hottest tourist destinations in recent years due to more relaxed COVID-19 restrictions. Meanwhile, the surge in manufacturing in Mexico, tied to the reshoring movement, is creating lots of new jobs and prosperity in the cities that Pacifico serves. PAC stock has been a massive winner historically, and the tailwinds remain strong for the company heading into the next decade.
On the date of publication, Ian Bezek held a long position in TXN, PAC, ROP, and DHR stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
