There continues to be a lot of chatter about the mega-cap tech stocks that are collectively known as the “Magnificent 7.”
While these stocks have helped to lift the stock market into a new bull run in 2023, it is a bit of a misnomer to say that it is only the largest of the technology players that have rallied over the past year and pulled U.S. indices out of the clutches of a bear market. Cybersecurity companies, cruise line operators, restaurants, and a good number of retailers have all seen their stocks rise significantly in 2023. Not to mention pharmaceutical companies tied to weight loss drugs and many of the technology and meme stocks that crashed the hardest during the 2022 downturn.
The point is that there are lots of opportunities for investors to find growth stocks if they know where to look. Here are three great growth opportunities beyond the Magnificent 7 stocks.
Broadcom (AVGO)
When it comes to microchip and semiconductor companies, it’s been all about Nvidia (NASDAQ:NVDA) over the last year. But what about Broadcom (NASDAQ:AVGO)? While the chipmaker hasn’t grown at quite as torrid a clip as Nvidia, its shares have still outperformed. Year-to-date, AVGO stock is up 70%, bringing its five year gain to 270%. Unlike Nvidia, Broadcom also pays a quarterly dividend of $4.60 per share, giving it s yield of nearly 2%.
Broadcom recently issued strong financial results that beat Wall Street forecasts, sending its stock up 2% immediately after the print. The company reported earnings per share (EPS) of $11.06, topping the consensus expectation of $10.96. Revenue in the period came in at $9.3 billion, which matched analyst expectations. Looking ahead, Broadcom said that for its fiscal 2024 year, it expects to generate revenue of $50 billion, including its recent acquisition of VMware that was finalized in November. Analysts had forecast full-year revenue of $39.2 billion.
Following the latest results, several analysts raised their price targets on AVGO stock, including at Mizuho Financial Group (NYSE:MFG), which raised its price target on the stock to $1,000 a share and reiterated its “buy” rating, citing the company’s industry-leading margins and free cash flow.
Lululemon (LULU)
Not all growth stocks are in technology. Case in point is retailer Lululemon Athletica (NASDAQ:LULU). The company’s stock has been a long-term outperformer and matched the growth seen in many tech stocks. In 2023, LULU stock has gained 51% and its share price is up 311% over the past five years. Like Broadcom, Lululemon just delivered strong financial results that beat what analysts had been expecting, and its stock caught several upgrades on Wall Street as a result.
Lululemon reported third-quarter earnings per share (EPS) of $2.53, which was better than $2.28 that had been forecast. Q3 revenue of $2.20 billion was up 19% year-over-year and was also above the $2.19 billion that analysts had estimated. The increased revenue came from new and existing clients, with Lululemon taking 1.5 points of market share during Q3. Lululemon’s same-store sales rose by 13%. The forward guidance was conservative due to what management called “macroeconomic headwinds.”
The guidance didn’t take away from what was a strong print by Lululemon. The company also authorized a new $1 billion share repurchase program. LULU stock received a bunch of upgrades after its Q3 print, including from Barclays (NYSE:BCS), which slapped a “buy” rating and $530 price target on the shares.
DocuSign (DOCU)
It’s been tough sledding at e-signature company DocuSign (NASDAQ:DOCU) since the Covid-19 pandemic ended and demand for its electronic documents and online contracts slowed. However, DocuSign’s aggressive turnaround plan is starting to show results and things are looking up at the company, which also just posted better-than-expected financial results that have analysts on Wall Street looking at the company in a new light.
For its fiscal third quarter, DocuSign announced EPS of 79 cents, which was well ahead of the 63 cents forecast on Wall Street. Revenue came in at $700 million, up 9% from a year earlier and ahead of Wall Street consensus estimates of $690 million. The company said that its billings rose 5% from a year ago and its subscription revenue increased 9% year-over-year in fiscal Q3. DocuSign also provided guidance that was ahead of Wall Street projections and indicates growth of 9% in fiscal 2024.
DOCU stock rose 5% in a single trading session on news of its latest results and guidance. While the share price is down 12% on the year, it looks to have bottomed at the end of October and has gained 30% since then, making it a great growth opportunity for investors.
On the date of publication, Joel Baglole 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.
