Investors who have favored growth stocks have certainly benefited over the past 15 years. Since the Great Recession, growth has essentially consistently outperformed value, as record-low interest rates spurred investment in higher-growth assets, which tend to come along with higher risk.
In 2024, many of the top growth stocks investors continue to focus on are trading near historically high multiples. Thus, finding growth stocks that truly fit within a value-conscious investor’s portfolio is easier said than done.
In some respects, the three companies I’m going to cover in this article may be viewed as part of this group. They’re expensive, but for good reason.
Let’s dive into three companies that I think still have 10X potential, particularly if interest rate cuts are on the table and this growth outperformance continues for some time to come.
Growth Stocks to Buy: ServiceNow (NOW)
ServiceNow’s (NYSE:NOW) latest platform release, Washington D.C., embraces generative AI, enhancing IT management solutions. It integrates AI into ITOM AIOps for alert analysis and Virtual Agent for improved case deflection. ServiceNow aims to streamline workflows, boost productivity, and foster innovation with end-to-end automation.
IDC group vice president Stephen Elliot highlights the significant integration of robust generative AI support with ServiceNow’s standardized data governance systems. This release addresses customer concerns about security, data governance, and regional regulations. Elliot emphasizes ServiceNow’s focus on improving core functionality alongside integrating generative AI capabilities across various workflows. Pricing data for the new feature set was not disclosed.
In addition, the stock surged 71% in the year, reaching $767, which is poised to mirror the success of other major AI stocks such as Nvidia (NASDAQ:NVDA). Offering workforce and customer experience solutions, it utilizes AI and workflow tools to streamline tasks. With an impressive EPS of $3.11 and revenue of $2.4 million in Q4, it surpassed expectations. Subscription revenue rose by 27%, closing 168 deals worth $1 million. ServiceNow’s premium valuation indicates continued growth potential, especially with promising first-quarter results anticipated.
Fortinet (FTNT)
Another growth stock to load up is Fortinet (NASDAQ:FTNT), which has been surging an excellent 307% surge in the past years. The stock has shown resilience, and it is truly a great pick for long-term investors who want substantial gains in the coming years. Its share price reached 15% in its previous quarter, which is backed up by the overall market’s 9.1% increase.
The company faces challenges but maintains strong profit margins and growth potential, appealing to patient investors. Analysts rate it as “hold” with an implied 12% upside, presenting value compared to peers. Despite recent slowdowns, its 5-year gain of 291% underscores its potential.
Recently, the cybersecurity giant partnered with Sunway University to offer industry-recognized cybersecurity training and certification courses, enhancing students’ employability. Sunway University joins Fortinet’s Training Institute’s Academic Partner Program, addressing the global cybersecurity skills shortage. The program includes self-paced and instructor-led sessions, ensuring graduates are well-prepared to safeguard networks and contribute to digital security infrastructure.
Growth Stocks to Buy: Equinix (EQIX)
Equinix (NASDAQ:EQIX), an $80 billion data center provider, recently faced criticism from Hindenburg Research, accusing management of hyping an “AI pipe dream” while manipulating metrics. Hindenburg took a short position, anticipating a drop in Equinix’s REIT shares, initially falling 7% in premarket trading.
The company stands out in tax season portfolios as a real estate investment trust (REIT) specializing in data centers. REITs, including Equinix, must abide by the 90% rule, ensuring that most assets and income derive from real estate, distributing 90% of taxable income as dividends to shareholders.
Focused on data centers, Equinix leverages a thriving market, achieving four consecutive earnings beats and a robust three-year free cash flow growth rate of 147%. Beyond dividends, investing in Equinix may offer tax advantages, appealing to long-term investors seeking potential cost-basis reductions.
On the date of publication, Chris MacDonald 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.
