Growth stocks have always captured investors’ attention due to their potential for explosive returns. As we look ahead to 2028, several growth stocks will potentially double in value.
These companies typically operate in high growth sectors, such as technology, healthcare and renewable energy. Investors recognize this robust potential, showcased through their strong market positioning, revenue, earnings and free cash flow growth. These companies often reinvest their profits to spur further innovation and expansion. This provides ample opportunities to buy these companies on the dip if you have a long-term investment horizon.
Now, let’s unpack the top 3 growth stocks on track to double by 2028.
Spotify (SPOT)
Spotify (NYSE:SPOT) is undoubtedly one of the top growth stocks to double by 2028. While its growing user base and profitability are good signs, its incredible pricing power capabilities are taking the spotlight.
Spotify has been off to an incredible start so far in 2024. The stock is up 64% YTD, as Wall Street is starting to recognize its long-term potential. While the company lost money in the 2023 fiscal year, its revenue increased 13% from the year prior. Additionally, its annual subscribers grew 20% year over year to a staggering 220 million. Spotify’s monthly active users (MAUs) are growing sequentially, driven by an expanding base in emerging markets.
Furthermore, Spotify’s operating margins increased by 243 basis points to 27.6% in its latest quarterly results. This was accompanied by strong double-digit growth in MAUs and premium subscribers. The company’s recent announcement to raise prices on multiple premium subscription plans further showcases its pricing power capabilities. As the tide turns in 2024, Spotify’s increasing profitability makes it one of the top growth stocks to double by 2028.
Palantir (PLTR)
Palantir (NYSE:PLTR) has emerged as one of the best growth stocks to buy and hold for the next decade. As a pioneer in artificial intelligence and machine learning, Palantir’s expertise is just beginning to get a taste of the commercial market in 2024.
During Palantir’s early IPO days, it often had the reputation as a one trick pony. This is largely due to its reliance on government contracts that has spurred the company’s growth since its founding in the early 2000’s. However, the narrative is beginning to shift as a result of their growing commercial platform. After achieving its first year of GAAP profitability in 2023, CEO Alex Karp forecasts this trend to continue. Moreover, their AIP Platform is showing a lot of promise thus far, with commercial revenues outpacing government revenues in the first quarter of 2024.
In Q1 FY24, commercial revenue increased 27% year over year, compared to government revenue increasing 16% year over year. The company has also achieved its 6th consecutive quarter of GAAP profitability. With management forecasting free cash flow in the $800 million to $1 billion range in FY24, the sky is truly the limit.
Meta Platforms (META)
Meta Platforms (NASDAQ:META), formally known as Facebook, is a social media and advertising powerhouse. The company’s cost-cutting efforts in 2023 have paid off tremendously. Additionally, its strategic investments in the metaverse and artificial intelligence provide ample room for growth through 2028.
Meta Platforms family of Apps, including Facebook, Instagram, WhatsApp and Messenger, continues its growth streak. Their user growth metrics remained strong in the first quarter of 2024, with daily active people up 7% year over year to 3.24 billion. The company is also benefiting from increased spending in the advertising market after its slump in the back half of 2022.
Businesses have been more aggressive in their advertising spend as the prospects of lower interest rates and a strong economy fuel confidence. Its CFO Susan Li, reiterated that it will commit between $35 – $40 billion in infrastructure costs in 2024. This will go toward developing its AI roadmap and enhancing its AI-powered features across the family of apps. With Meta issuing its first ever dividend of $0.50 per share earlier this year, its next stage of growth looks extremely promising.
On the date of publication, Terel Miles 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.
