Stocks to buy

I believe that 2023 is the time to consider some of the best growth stocks for long-term investors. The reason is that last year was the worst year for Wall Street since the financial crisis of 2008. Inflation, aggressive rate hike, geopolitical concerns, and earnings adjusted after the pandemic dominated headlines.

In times of panic-driven correction, reactions on the downside tend to be extreme. The markets entered 2023 with several stocks trading at massively undervalued levels. Amidst this gloom, it’s important to note that equity markets have always been through bull and bear cycles.

The best time to accumulate stocks is when valuations are depressed. Once market sentiments reverse, quality growth stocks can deliver multibagger returns. In this column, my focus is on growth stocks to buy and hold forever. These stocks represent companies that have a sound business model that’s backed by positive industry tailwinds.

Let’s discuss the reasons to consider these top growth stocks to buy and hold forever.

Li Auto (LI)

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Li Auto (NASDAQ:LI) stock has remained defiant in the last 12 months even as EV stocks witness significant selling pressure. During this period, LI stock has trended higher by 31%. The resilience amidst challenging market conditions is an indication that LI stock is a long-term winner.

Of course, the stock upside has been backed by strong fundamental developments. For April, Li Auto delivered 25,681 vehicles. On a year-on-year basis, deliveries surged by 516.3%. I expect strong delivery growth to sustain through 2023.

The reason for being bullish on delivery growth is the launch of multiple models in the recent past. Currently, the company’s portfolio includes Li L7, Li L8, Li L9, and Li ONE. It’s also worth noting that the company’s vehicle margin is superior as compared to Nio (NYSE:NIO) and XPeng (NYSE:XPEV).

Another point to note is that Nio and XPeng have entered Europe. However, Li Auto remains focused on China. Global expansion might be on the cards in a few years. That’s another potential trigger for delivery growth.

Albemarle Corporation (ALB)

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Albemarle Corporation (NYSE:ALB) is another massively undervalued growth stock to buy and hold forever. Estimates indicate that the lithium supply gap will be acute by 2035, with supply likely to be 24% lower than the demand. While lithium has corrected in the recent past, the outlook for the coming years is positive.

Albemarle Corporation is among the best bet, with the company having ambitious expansion plans. To put things into perspective, Albemarle reported a lithium conversion capacity of 85ktpa in 2019. Last year, capacity more than doubled from those levels to 200ktpa. The company is targeting capacity expansion to 550ktpa by 2027. This will ensure steady revenue, cash flow, and dividend growth.

Another point to note is that the company is targeting leverage in the range of 0.3x and 0.5x by the end of the year. With ample financial flexibility, the company is positioned to accelerate capital investments in a scenario of lithium prices surging higher.

Coinbase (COIN)

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For investors who believe that the cryptocurrency space will continue to grow, Coinbase (NASDAQ:COIN) stock is a buy-and-hold. The stock of the second largest cryptocurrency exchange in the world has trended higher by 80% for year-to-date 2023.

Standard Chartered believes that Bitcoin (BTC-USD) can touch $100,000 by the end of 2024. Assuming this scenario to be true, COIN stock is poised for multibagger returns.

It’s worth noting that Coinbase has navigated challenging times with a robust liquidity buffer. The company ended Q1 2023 with cash and equivalents of $5.3 billion. This is important with the company pursuing aggressive global expansion. Coinbase intends to launch products globally that are a gateway to Web 3.0 and crypto. With this global expansion, the company is positioned to accelerate revenue growth in the next bull market.

I also like the fact that Coinbase has seen steady growth in subscription and service revenue. Most of this segment’s revenue has come from blockchain rewards and interest income. As the user base swells in the next bull market, this segment will continue to contribute positively toward cash flow upside. Thus, I think COIN is among the best growth stocks for long-term investors.

On the date of publication, Faisal Humayun 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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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