As we end the year and look ahead to 2024, it’s instructive to consider which growth stocks are likely to outperform moving forward. Third-quarter earnings season provided some clues as several technology companies issued impressive results and gave bullish outlooks for the coming year. Many of these tech names are not the usual suspects.
While the mega-cap tech stocks continue to lead the market higher, many smaller technology concerns are also posting impressive gains and should continue to outperform as we enter a New Year. Investors will want to take positions in these securities now so as not to miss any further gains.
Here are seven steady growth stocks to buy before 2024.
Arm Holdings (ARM)
The initial public offering this September wasn’t great. And its stock is down 5% since its market debut. But long-term investors should consider the growth potential of British chipmaker Arm Holdings (NASDAQ:ARM). After all, this is a company whose microchips and semiconductors can be found in nearly every smartphone on the planet, as well as in a host of other electronic devices. And Arm’s first publicly released financial results were encouraging.
Arm Holdings just issued its first earnings report as a publicly traded company, and the results exceeded expectations. For the third quarter that ended Sept. 30, Arm reported earnings per share of 36 cents, which matched analyst forecasts. Revenue amounted to $806 million versus $744.3 million that was expected. The company’s revenue grew 28% from a year earlier. Impressively, Arm reported it sold more than 7.1 billion microchips in the three months between July and September.
It’s still early, however Arm Holdings has potential and should be a long-term growth story for many years to come.
Zoom Video Communications (ZM)
Zoom Video Communications (NASDAQ:ZM) is another growth stock that deserves some consideration. Granted, the stock is a long way from its pandemic peak when the move to online work and school propelled it up nearly 400%. Essentially, Zoom Video’s stock has done a round trip; today it trades near the $62 price it closed at on its first day of trading back in 2019. However, the company has weathered the post-Covid-19 reopening and its financials show steady improvement.
Zoom Video just reported Q3 EPS of $1.29, which was ahead of consensus forecasts for $1.08. Revenue in the quarter came in at $1.137 billion, up 3.2% from a year ago and better than analyst expectations of $1.119 billion. Zoom said that its customers contributing more than $100,000 in revenue on a trailing 12-month basis was up 13.5% from a year earlier. Looking forward, Zoom forecasts revenue of $1.125 billion to $1.13 billion, and profits of $1.13 to $1.15 a share. The outlook was ahead of consensus views.
The company finished the quarter with $6.5 billion of cash on hand. ZM stock is down 2% on the year.
Datadog (DDOG)
Datadog (NASDAQ:DDOG) is a rip-roaring growth stock. The software company’s stock rose nearly 30% in a single trading session after its Q3 print, bringing its year-to-date gain to 54%. Since the company went public in 2019, its share price has gained 207%. It helps that Datadog’s software is used in the red hot area of cloud-computing. Specifically, Datadog’s cloud monitoring and security products integrate with Amazon Web Services (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), among others.
Strong demand for its cloud security software led Datadog to report Q3 EPS of 45 cents, beating expectations for 34 cents. Revenue during Q3 came in at $547.5 million, up 25% from a year earlier and beating Wall Street forecasts that called for revenue of $524.1 million. The company also lifted its full-year guidance, saying it now expects Q4 revenue of $564 million to $568 million, and full-year revenue of $2.1 billion. Both figures exceeded Wall Street’s consensus forecasts.
Palantir (PLTR)
It hasn’t gotten a lot of attention, but shares of data analytics firm Palantir (NYSE:PLTR) are more than 200% this year, making it one of the best-performing tech stocks. The company’s share price is now 116% higher than its 2020 market debut. The company and its stock endured a difficult downturn during the 2022 bear market and subsequent “tech wreck.” But they have bounced back this year thanks to strong quarterly results and less of a reliance on government contracts than in the past.
Recently, PLTR stock jumped 16% higher after the company reported Q3 earnings that beat Wall Street forecasts and raised its full-year revenue guidance. Palantir reported EPS of 7 cents compared to 6 cents that was expected by analysts. Revenue came in at $558 million versus $556 million anticipated. The company’s sales rose 17% from a year earlier. Equally impressive was news that Palantir’s commercial (non-government) revenue grew 33% year-over-year.
The company raised its full-year revenue guidance to between $2.216 billion and $2.22 billion, up from previous guidance of $2.212 billion for all of this year.
Netflix (NFLX)
Winners and losers are starting to emerge in the streaming industry, and Netflix (NASDAQ:NFLX) is clearly in the winners camp. The company is one of only two streaming services that is currently making a profit. The other being Warner Bros. Discovery (NASDAQ:WBD). Netflix is achieving sustained success not only from a strong line-up of content, but also by adapting to market realities that led it to crackdown on password sharing and place advertisements on its platform for the first time.
The steps taken to adapt its business model are paying off judging by the company’s latest financial results. For Q3, Netflix reported EPS of $3.73, which was better than the $3.49 expected. Revenue totaled $8.54 billion, matching forecasts. Of course the most important number was paid subscriptions, which rose by 8.8 million net new additions in Q3 compared to Wall Street estimates of 6.1 million. Netflix said the positive quarter was due to increased subscription fees and improving profitability.
Netflix said it now expects a profit margin of 20% for this year, and 22% to 23% in 2024. The company also continues to raise its prices without losing subscribers. NFLX stock is up 61% this year.
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI) is another growth stock that is still recovering from the 2022 downturn. So far this year, SOFI stock has increased 46%, including a 5% uptick after the financial technology company reported better-than-expected Q3 numbers and raised its guidance. SoFi had also suffered from the federal government’s moratorium on student loan repayments during the Covid-19 pandemic. However, that area of its business is now on the mend too.
Owing to growth in its student loan segment, SoFi reported a Q3 loss of 3 cents a share, which was less than the loss of 8 cents expected on Wall Street. Revenue in Q3 totaled $530.72 million, which was ahead of the $511 million that was forecast by analysts. Student loan originations amounted to $919.3 million, which was well above a forecast of $651.5 million. Personal and home loans made by SoFi also beat expectations, and the company raised its forward guidance for all of this year, impressing investors.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is firing on all cylinders, and this fact is reflected in its share price, which has risen 172%. The company has bounced back big time from a steep decline in 2022 and questions about its strategy that focused on building the theoretical world known as the “metaverse.” Now focused on AI, Meta has released a slate of new products and strong earnings that have analysts and investors feeling bullish about the company and its stock once again.
In September, Meta unveiled the Quest 3 virtual reality headset, which will retail for $499. The company also unveiled generative AI chatbots and announced a new version of its Ray-Ban mixed reality smart glasses that can capture photographs and videos with a voice command. The new products impressed consumers and Wall Street traders, as did the company’s Q3 numbers. The company reported a 23% increase in its Q3 revenue, the fastest growth rate in two years, as the market for online ads rebounds.
On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
