Growth stocks have the potential to outperform stock market indices like the S&P 500 and Nasdaq 100. These types of stocks can return your initial investment several times over.
However, growth stocks can also become quite risky. Any dent in the growth narrative can send shares tumbling as a lofty valuation gets thrust into the spotlight. Growth investing isn’t for everyone, especially if you don’t like volatility. However, investors who can weather the storms of short-term uncertainty may want to consider these enticing growth stocks.
Cava Group (CAVA)
Cava (NYSE:CAVA) is an up-and-coming fast food restaurant that offers healthy Mediterranean meals. It has received comparisons to Chipotle (NYSE:CMG). The stock’s market cap is approaching $6 billion and has a lofty valuation of a 204 forward P/E ratio.
Revenue and net income growth are both encouraging. In the third quarter of 2023, Cava posted 49.5% year-over-year revenue growth. Net income reached $6.8 million compared to a net loss of $11.9 million in the same period last year.
Cava primarily positions its restaurants on the east and west coasts, with restaurants located in 24 states. Cava opened 11 new restaurants in the third quarter, bringing the total number of restaurants to 290. It represents a 35.5% year-over-year increase in Cava restaurants.
The restaurant is gaining momentum among Gen Z consumers and may be worth a small portion of your portfolio. The Mediterranean diet is gaining traction and was recently ranked as the best diet for the 7th year in a row.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) continues to generate healthy profit margins with its advertising business while tapping into other areas. The company’s most successful venture outside of its advertising network is Google Cloud, which recently became profitable and brings in roughly 10% of Alphabet’s total revenue.
Alphabet offers an enticing 21-forward P/E ratio while delivering exceptional growth. The firm reported 13% year-over-year revenue growth and 51.8% year-over-year net income growth in Q4 2023. You can get higher returns from smaller tech companies, but Alphabet offers a rare blend of growth and stability.
The corporation’s valuation won’t scare away most value investors. Despite this detail, the stock has outperformed the market. Shares are up by 61% over the past year and have gained 153% over the past five years.
The advertising industry should experience renewed demand in 2024 as people watch the Olympic Games and politicians run ad campaigns. Alphabet is a logical choice for many advertisers due to its vast network, ad targeting and various features.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is a reliable tech giant that continues to gain market share in e-commerce, cloud computing, advertising and other industries. The corporation reported 14% year-over-year net sales growth in Q4 2023, with Amazon Web Services growing by 13% year-over-year.
Domestic and international sales both had double-digit year-over-year growth rates, but international sales came in with a slightly higher growth rate. Amazon’s continued growth in international markets can help the company achieve additional revenue and earnings growth.
The tech firm announced upbeat guidance that projects 8% to 13% year-over-year revenue growth. Amazon has a pristine balance sheet, and grew its cash position by 42.4% year-over-year.
Amazon is making several investments in its logistics segment to offer faster delivery times for Prime members. These enhancements can increase retention and encourage more members to sign up. Prime Air is one of the company’s projects, intended to speed up deliveries. The company will experiment with drone deliveries in Italy, the United Kingdom and one unnamed state in the United States.
On this date of publication, Marc Guberti held long positions in CAVA and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
