Investors should define their goals before entering the market. For low-risk inflation-beating investments, focus on undervalued blue chips. For regular cash flows, high-dividend stocks are ideal. To build significant wealth, invest in high-growth stocks. The companies I’m going to highlight below are among the groups I’d qualify as millionaire-maker growth stocks, for those looking to generate outsized gains from the higher-risk portion of their portfolios.
The thing is, these stocks aren’t as risky as many think, with valuation multiples that have come down and cash flow generation profiles that are world-class. Without further ado, let’s dive in and discuss these three names.
Broadcom (AVGO)
One of the most underrated semiconductor companies in the market (in my view) is Broadcom (NASDAQ:AVGO). The company’s VMWare acquisition boosted its software capabilities and stock performance, driving strong financial results.
In fiscal 2024, Broadcom’s AI-related revenues are expected to constitute over a third of Broadcom’s total revenues, highlighting its market influence in the world of AI. Collaborations with industry giants like ByteDance and upgrades to VMWare Cloud Foundation for AI workloads underscore Broadcom’s commitment to cutting-edge technology.
The AI surge has certainly benefited Broadcom in a significant way. JPMorgan (NYSE:JPM) analyst Harlan Sur noted Broadcom holds the second-largest AI chip market share after Nvidia (NASDAQ:NVDA) and leads in ASIC chip designs. Sur estimated the ASIC chip market at $20 to $30 billion, with Broadcom controlling 55% to 60% of it. Broadcom secured AI ASIC chip deals with major tech companies, further solidifying its market position.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) reported earnings after the bell on Tuesday, which were a mixed bag. The company brought in 14% year-over-year revenue growth, driven by its search and cloud segments, which beat expectations. However, YouTube advertising revenue did miss the mark, leading to some choppy price action in the after-market session.
At the time of writing, GOOG stock is down roughly 2% after reporting its earnings. That makes sense, given that Alphabet didn’t necessarily outperform in a meaningful way. However, the company did report relatively strong earnings from its cloud division, which is central to the long-term thesis behind this stock.
In my view, so long as Alphabet continues to meet expectations moving forward, it’s a stock that can hold its current valuation. That’s partly because, at 25 times earnings, it’s relatively cheap compared to other mega-cap tech names.
Over the long term, I think Alphabet’s dominant position in search and online advertising positions the company well for cash flow growth, leading to fundamental-led stock price appreciation that may be more stable than other Magnificent 7 names.
Meta Platforms (META)
Leading social media, AI and metaverse sectors, Meta Platforms (NASDAQ:META) is truly exceeding expectations through its virtual and augmented reality headsets. The Quest headset, starting at $499.99, became the market leader, praised by critics and consumers, especially kids. It boasted a longer battery life and more applications than competitors like Apple’s (NASDAQ:AAPL) Vision Pro. Rebranded to emphasize its metaverse focus, Meta continued advancing virtual technology.
META stock has risen more than 65% over the past year, largely due to the success of its core social media business, but with some investors increasingly focused on the company’s AI and metaverse ambitions.
Meta’s share gains were driven by a 27% revenue rise to $36.5 billion and free cash flow doubling to $12.5 billion. Cost cuts and strong advertising revenue boosted net income by 117% and EPS by 114%. Meta’s dominance in digital ads positions it well for future growth. Upcoming earnings are expected to show similar growth rates, but we’ll have to see how the numbers come in.
Meta Platforms, with over 3.24 billion users, had a strong advantage in product launches. The company also initiated a dividend recently, which I think is likely to grow at a double-digit rate for years. Meta’s rising revenue and net income solidify its position as a leading choice for those looking to bet on the continued growth in online advertising.
On the date of publication, Chris MacDonald did not hold (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.
On the date of publication, the responsible editor held a long position in GOOG.
