These 3 Stocks Hold the Key to Uncharted Growth in the Market
The best stocks to buy for growth aren’t always the ones plastered all over media outlets. Magnificent Seven stocks have captured many headlines for long-term gains and market dominance.
Those stocks have delivered exceptional growth over the years. It should surprise many investors to see these companies continue to reward long-term investors.
However, investors can realize higher returns by looking into the horizon and discovering stocks that receive less coverage. A few stocks can generate meaningful growth. You may want to monitor these growth stocks.
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Datadog (DDOG)
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Datadog (NASDAQ:DDOG) is a cloud infrastructure company that helps companies stay on top of their cloud apps, monitor analytics, and keep hackers at bay. The high-growth stock has almost doubled over the past year and is up 256% over the past five years.
Datadog once again delivered high revenue growth, a 25% year-over-year increase in the third quarter of 2023. The company’s strong growth of large customers making over $100,000 in annual recurring payments to the firm spurred growth. Customers with that spending went from 2,600 to 3,130 in one year, representing a 20.45 year-over-year growth rate.
Most businesses stick with Datadog for a long time due to the company’s quality solutions and the high switching costs. A company would have to move its data to another cloud infrastructure platform and retrain its workers to use something other than Datadog.
Datadog’s profit margins should substantially improve in upcoming quarters. The stock is more than 30% down from its all-time high and can reclaim that level in 2024 or 2025.
Palo Alto Networks (PANW)
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Palo Alto Networks (NASDAQ:PANW) is a leader in cybersecurity that serves thousands of customers across various sectors. The firm has been an exceptional investment with its 139% gain over the past year and a 381% increase over the past five years.
The corporation started the first quarter of fiscal 2024 with 20% year-over-year revenue growth. Remaining performance obligations grew by a higher 26% year-over-year, which suggests high revenue growth will continue.
Palo Alto Networks also delivered an exceptional net income growth of 871% year-over-year. The company is expanding its net profit margin, making the valuation more attractive in the upcoming months.
Nikesh Arora, CEO of Palo Alto Networks, mentioned some catalysts that can drive more growth. He cited an “unprecedented level of [cyber] attacks” that will result in more businesses using Palo Alto Networks. He also mentioned that the company has been strengthening its platform in a bid to attract more customers, maintain high retention rates, and increase the average value of each customer.
First Solar (FSLR)
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First Solar (NASDAQ:FSLR) had a bumpy 2023 and is down by 14% over the past year. The drop is noteworthy, considering the stock has gained 186% over the past five years. Solar energy firms have been outpacing the market for a while, and bargain price level points can lead to higher returns in the future.
First Solar only trades at an 11-forward P/E ratio. While other solar energy companies lost market share last year, FSLR continued to expand. The firm reported net sales of $801 million in the third quarter of 2023, representing a 27.4% year-over-year growth rate.
Net income surged by 645.9% year-over-year to reach $268 million. Diluted EPS came in at $2.50 per share. Demand for First Solar’s products has remained strong. It has been punished alongside other solar energy stocks despite posting good financials. FSLR looks like it is due for a rally in 2024 after a disappointing 2023.
On the date of publication, Marc Guberti 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.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
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