Analyzing growth stocks and using stock screeners can help you detect captivating opportunities before the rest of the market notices. These stocks are riskier, but investments that pan out can become multi-baggers.
Not everyone wants to do the research associated with finding the biggest winners. Some investors want to get started with growth stocks with histories of winning and generating reliable returns for long-term investors. Those looking for growth stocks for new investors might want to start here.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a great starter growth stock due to its long-term growth and numerous business segments. Microsoft Cloud and artificial intelligence were two key growth drivers that led to 18% year-over-year revenue growth in Q2 FY24. While some high-growth corporations struggle with profits, Microsoft has high margins that improved with the firm’s 33% year-over-year increase in net income.
If you buy an index fund that tracks the S&P 500 or the Nasdaq 100, you already have exposure to Microsoft stock. Each of these funds is heavily concentrated within the Magnificent Seven stocks. Most of the stocks in that group are great for beginners, and you will see other Magnificent Seven stocks on this list.
Microsoft shares are up by 65% over the past year and have gained 261% over the past five years. The firm has a 0.74% dividend yield and has been aggressively raising it over the years.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is the leader in the online advertising industry. Billions of people use Google and YouTube each month to find educational and entertaining content.
The platform’s targeting capabilities have made it a top pick for many advertisers seeking to get in front of larger audiences. Alphabet’s competitive positioning and high-margin business model have allowed the stock to outperform market indices. Shares are up by 56% over the past year and have gained 144% over the past five years. The stock currently trades at a 21-forward P/E ratio, which is more affordable than many growth stocks.
Alphabet’s 51.8% year-over-year net income growth in Q4 2023 further supports the current valuation. The firm also grew revenue by 13% year-over-year, as advertising growth has been on the rebound. Continued cost-cutting measures and investments into artificial intelligence and other initiatives could result in rising value for long-term shareholders.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is another great choice for investors looking to get started. The tech conglomerate is the leader in the artificial intelligence industry. Its GPU chips power many AI tools, and Nvidia has most of the market share in this high-growth industry.
Despite a 237% gain over the past year, Nvidia still has a reasonable valuation. Net income growth in Q4 FY24 comfortably exceeded its stock gains and came in at 769% year-over-year. Nvidia also grew its revenue by 265% year-over-year.
Data Center revenue has been the company’s driving force. This segment is still growing strong and exhibited 409% year-over-year revenue growth.
Nvidia has additional business segments that are growing at fast rates. The company’s Gaming segment grew by 56% year-over-year, while its Professional Visualization segment increased by 105% year-over-year. Nvidia has been the best performer among the Magnificent Seven stocks and will likely extend its rally. There is a realistic chance of Nvidia’s valuation eclipsing Microsoft in the next 1 to 2 years.
On this date of publication, Marc Guberti held long positions in MSFT, GOOG and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
