Amid fears of persistent inflation and economic slowdown, many growth names, especially those that aren’t yet profitable, have fared poorly this year. However, growth stocks tend to outperform the broader market over the long term. So, I have compiled a list of the best growth stocks to buy for October.
Many investors remain cautious about allocating capital to growth stocks given the current macroeconomic backdrop. But there are numerous growth companies that are still on track to execute their longer-term vision despite near-term headwinds. Furthermore, the market sell-off is providing an opportunity to pick up shares at relatively low valuations.
Here are the seven best growth stocks to buy and hold in a long-term portfolio.
Best Growth Stocks: CrowdStrike (CRWD)
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52-week range: $130-$298.48
The first name on today’s list of the best growth stocks to buy is cybersecurity specialist CrowdStrike (NASDAQ:CRWD). The company offers its customers protection across endpoints, data and cloud workloads using a software-as-a-service (SaaS) subscription-based model. Within the endpoint protection segment, CrowdStrike’s market share is over 17%, second only to McAfee.
The company released results for its fiscal second quarter on Aug. 30. Revenue jumped 58% year over year to $535.2 million, and CrowdStrike added over 1,700 net new subscription customers. The company also saw impressive growth in annual recurring revenue, up 59% YOY to $2.14 billion, and free cash flow, up 84% YOY to $136 million. Based on these strong results, management raised its full-year revenue guidance to around $2.23 billion.
CRWD stock is down around 14% year to date. Shares are trading with a forward price-to-earnings ratio of 147.1 and a price-to-sales ratio of 22. Despite the lofty valuation, analysts’ 12-month median price forecast stands at $234.50, implying roughly 34% upside from the current level. Any further decline in CRWD stock could give investors an attractive entry point.
Diamondback Energy (FANG)
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52-week range: $78.14-$162.24
Next up on our list of best growth stocks to buy is Diamondback Energy (NASDAQ:FANG), an independent energy company focused on oil and natural gas reserves in the Permian Basin in West Texas. It’s a small player, to be sure, with market share of around 1%. By comparison, Exxon Mobil’s (NYSE:XOM) market share is over 38%. But that also implies a lot of room for growth.
On Aug. 1, Diamondback released second-quarter results showing a revenue increase of 65% YOY to $2.8 billion. Surging oil prices over the past year have contributed to a strong balance sheet, including free cash flow of $1.3 billion in Q2. Management raised its full-year total net production guidance and said that, going forward, it would be returning at least three-quarters of its FCF to shareholders, up from around half previously. Currently, FANG stock has a forward annual dividend yield of 9.1%.
Recently, Diamondback acquired Rattler Midstream (NASDAQ:RTLR), which owns oil, natural gas and water-related midstream assets in the Permian Basin. The transaction is expected to add to Diamondback’s top-line growth.
So far in 2022, FANG stock is up more than 25%. Shares are trading at 5.5 times forward earnings and 2.6 times sales. In other words, despite the significant increase in the share price, FANG stock still offers value. Finally, Wall Street’s 12-month median price target is $175, 36% above the current price.
Best Growth Stocks: Globalfoundries (GFS)
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52-week range: $36.81-$79.49
Globalfoundries (NASDAQ:GFS), a leading semiconductor manufacturing foundry, has benefitted from the increased use of chips in smartphones, the internet of things (IoT), computing, and the automotive and industrial sectors.
The chipmaker posted second-quarter results on Aug. 9. Revenue grew by 23% YOY to reach almost $2 billion. Adjusted earnings per share of 58 cents were up 38% on a sequential basis and compared to an adjusted loss of 6 cents per share a year ago.
In recent weeks, investors have been considering how the semiconductor industry may be affected if relations between Taiwan and China become more strained. Because Globalfoundries has its largest manufacturing site in New York state, the chip play is likely to be relatively immune from geopolitical worries.
In July, Globalfoundries and the Switzerland-based STMicroelectronics (NYSE:STM) announced plans to build a jointly operated semiconductor manufacturing facility in France. More recently, Globalfoundries and Qualcomm (NASDAQ:QCOM) announced they were more than doubling their current long-term manufacturing agreement following the passage of the CHIPS and Science Act, which is expected to greatly benefit the U.S. semiconductor industry.
According to McKinsey, the semiconductor industry’s “aggregate annual growth could average from 6 to 8 percent a year up to 2030.” This would make it a trillion-dollar industry in less than eight years. GFS shareholders are likely to benefit as the company continues to grow operations and revenue.
GFS stock has lost around 12% since the beginning of the year. Shares are changing hands at 22.6 times forward earnings and 4.2 times sales. Analysts’ 12-month median price forecast is $70, 22% above the current price. For interested readers, the $55 level may be a better entry point if shares continue to sell off.
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52-week range: $194.67-$285.61
Life sciences technology company IQVIA (NYSE:IQV) provides advanced analytics, technology solutions and clinical research services to the global healthcare industry. Its market share in the healthcare analytics segment is over 62%.
The company released Q2 metrics on July 21. Revenue of $3.5 billion was up 3% YOY and 7.1% when accounting for currency fluctuations. Management updated its full-year revenue guidance to a range of $14.4 billion to $14.6 billion, representing growth of 7.4% to 8.5% at constant currency.
In August, IQVIA and GSK (NYSE:GSK) launched Vaccine Track, a platform to track vaccination data across the U.S. This step is an important example of how IQVIA is helping biopharma companies integrate technology into the industry.
With an extensive portfolio of healthcare data from more than 1.2 billion non-identified patient records, IQVIA is also well-positioned to benefit from the growth in the global clinical research services market, which is expected to exceed $82 billion by 2027.
IQV stock is down 29% YTD. Forward P/E and P/S ratios stand at 17.6x and 2.8x, respectively. Finally, Wall Street’s 12-month median price forecast is $269, 35% above the current price. Picking up shares below $200 would be opportune.
Best Growth Stocks: Meta Platforms (META)
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52-week range: $144.29-$373.56
Meta Platforms (NASDAQ:META), formerly Facebook, is the world’s most-accessed online social network, with around 3 billion monthly active users (MAUs). Nearly 70% of U.S. adults use the Facebook platform. Therefore, advertisers rely on Meta’s platforms, which also include Instagram and WhatsApp, to reach potential consumers worldwide.
The tech giant delivered its Q2 results on July 27. A 32% year-over-year decline in net income certainly raised some eyebrows. Revenue also declined slightly and management gave a cautious outlook, lowering its guidance for the year.
Wall Street is debating how Meta will rise up to the macroeconomic challenges ahead, but its days as a growth stock are likely not over. Many argue that new services like Reels and disruptive technologies like the metaverse can be the next catalysts for revenue growth.
META stock has plummeted almost 57% this year and is trading at prices not seen since its pandemic lows. Shares are swapping hands at 12.2 times forward earnings and 3.4 times sales. The 12-month median price forecast for META stock stands at $215, implying upside potential of around 47%. Watch for a decline toward $140, which would make shares a better buy.
Spotify Technology (SPOT)
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52-week range: $89.03 – $305.60
The next name on our list of growth stocks to buy is Spotify Technology (NYSE:SPOT). The digital music and podcast services provider offers over 80 million tracks, including 4 million podcasts, worldwide.
On July 27, Spotify posted mixed Q2 financial results. Although revenue increased 23% from a year ago, the company reported a net loss. Yet, driven by successful marketing campaigns, monthly average users and premium subscribers increased by 19% and 14% year over year, respectively.
Management has been accelerating expansion into audiobooks with its Findaway acquisition. It has also acquired the artificial intelligence voice platform Sonantic.
SPOT stock has dropped 58% YTD. The P/S ratio stands at 1.8x. Analysts’ 12-month median price target is $143.52, around 48% above the current price. Interested readers should consider buying SPOT on dips.
Best Growth Stocks: Visa (V)
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52-week range: $185.91-$236.96
Visa reported fiscal third-quarter results on July 26. Net revenue increased more than 21% on a constant-dollar basis to $7.3 billion, benefiting from the post-pandemic recovery.
New technologies are likely to provide tailwinds for further growth for Visa. For instance, the global payment giant is focusing on payment digitization opportunities, such as the Visa Token Service. This technology “replaces sensitive account information, such as the 16-digit primary account number, with a unique digital identifier called a token. The token allows payments to be processed without exposing actual account details.”
As of Aug. 24, the company had issued more than 4 billion network tokens, surpassing the number of physical Visa cards in circulation worldwide.
V stock is down more than 11% for the year. Shares are trading at 22.8 times forward earnings and 14.8 times sales. Wall Street’s 12-month median price forecast is $261, 37% above the current share price. The $190 level looks like an attractive entry point.
On the date of publication, Tezcan Gecgil, Ph.D., 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.