Investors have always looked at growth stocks to make relatively safe and steady returns. This is because these companies, while well-established, seem to be undervalued, providing a great entry price for investors. Over time, as the overall valuation grows, so does the value of the initial investment. Growth stocks like NVIDIA (NASDAQ:NVDA), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) have given many of their initial investors more than a thousand times their initial investment.
While I can’t promise this for any of the companies on this list, I will say that these companies have a great outlook. This, combined with analysts agreeing that they’re going to grow heavily in the upcoming months, makes these safe bets that investors can trust. Strong fundamentals, when combined with the financials these companies have, set them apart and will make them cornerstones of your portfolio if you play your cards right.
Duolingo (DUOL)
Duolingo (NASDAQ:DUOL) is an internationally available language learning platform. It is one of the leading providers in this sector, with competitors such as Babble showing up fairly recently. The majority of well-known competitors are privately held. Duolingo’s stock has fallen around 13% in the last month, but analysts predict a possible upside of over 46%.
DUOL has some pretty impressive financials and growth. While profit remains a concern, with a margin of just 7.82%, year-over-year quarterly revenue growth was 44.9%, smashing analyst predictions. It also has a debt-to-equity ratio of around 7.97%, which is great for a company with such low profit margins, as DUOL can cover all its debt with its current cash.
Analysts regularly revise DUOL’s EPS estimates higher, which is incredibly bullish for a company that operates at the scale Duolingo does. The platform also only had a monthly active user base of ~90 million as of Q1 2024, which represents great growth potential going forward. The company is also expanding into the music business, with guitar lessons, among other things. This development allows it to expand through another vertical, which is once again a bullish sign.
Mastercard (MA)
Mastercard (NYSE:MA) and Visa (V) are among the world’s leading transaction processing companies. It has a widespread international network that facilitates purchases for both consumers and corporations. According to multiple analysts, the company is trading at $441.30 right now, with an implied upside of 17% over the next year.
As a payment processing company, MA’s cash flow is amazing — operating cash flow was $11.73 billion in the most recent quarter. Revenue growth is solid, at 10.4%, with earnings rising over 27% in the same period, all with a profit margin of a whopping 46.09%. Additionally, over 85% of outstanding shares are held by insiders and institutions, with a short ratio of only 0.47%, which represents an incredibly bullish stance.
MA is starting to expand its digital services footprint. As per an Accesswire article, it is establishing strong digital partnerships to build financial resilience. This shows forward thinking by management, especially as inflationary pressures, while ceasing, are still causing consumers to be more mindful of their spending in the US, which has the potential to hamper MA’s earnings.
Salesforce (CRM)
Salesforce (NYSE:CRM) is a company that provides businesses around the world with Customer Relationship management services. These include data management and client acquisition, among other things. As of the market close on 7/29, CRM was trading at $258.59, with an implied upside of over 14%, according to multiple Yahoo Finance! analysts.
Analysts have repeatedly raised EPS predictions for the next quarter, which only increases my confidence in this company. It has seen solid revenue growth of 10.7% and impressive earnings growth of 670.4%. This indicates that management has pushed the company towards increasing profitability, which is almost always a great sign for investors.
Additionally, recently, Workday (WDAY) collaborated with CRM to bring out a new product that uses AI to make workspace tasks more efficient and provides even stronger data analytics tools. This enhances the use case for both of these companies, thereby providing value to both. This, along with many other reasons, is why CRM is a great growth stock to invest in.
On the date of publication, Matthew Rodrigues held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
