Investing in growth stocks is compelling, especially if one can handle the volatility associated with such assets compared to more conservative options. With recent data indicating a softening in inflation, the Federal Reserve is gearing up for a rate cut in the latter half of this year. This potential shift is the right time to closely monitor the growth stocks to watch, as a broader market surge would favor such dynamic investments.
Wall Street analysts have identified three stocks that should experience impressive growth. These three stocks are among the best investment opportunities for any savvy investor as they are ideal for delivering high returns because of their strength in their respective industries. This excellence also enhances their prospects of outperforming the market competition.
Given that the financial structure is in a transitional phase, these are the three growth stocks to watch for explosive growth. This makes it an ideal time to capture the uptrend.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is greatly advancing in futuristic fields like cloud computing and artificial intelligence, making it a stable choice among other growth stocks. AI is completely integrated into all its services and has revamped its functioning significantly, especially in its Azure cloud business.
This division reported a solid 31% revenue growth in the third quarter of 2024, drawing more sizable enterprises to its platform. Notably, over 65% of the Fortune 500 companies now utilize Azure’s AI models. Thus, I believe Microsoft will continue outperforming its cloud industry competitors.
Moreover, Microsoft reported a 17.1% increase in revenue and a 20% upswing in net income year-over-year. Additionally, with an astounding 35.5% net profit margin, Microsoft demonstrates a perfect harmony of growth and operational efficiency.
Wall Street analysts further bolster Microsoft’s robust position, with a consensus “strong buy” rating and an expected 10% price boost. This sentiment highlights confidence in Microsoft’s ongoing momentum and market leadership.
Shopify (SHOP)
Shopify (NYSE:SHOP) is enhancing its e-commerce platform to offer more robust services to businesses of all sizes. The company’s multifaceted revenue streams, including subscriptions, payment processing and shipping labels have fueled rapid growth.
Shopify surpassed revenue expectations in Q1 with a stellar $1.9 billion, a 23% bump YOY. This includes $1.4 billion from Merchant solutions and the rest from subscription services, which is quite balanced as Shopify targets mainly e-commerce merchants.
It also marked a significant change in the company’s financial status, where the operating income went up from negative $193 million to $86 million annually. Although the 4.5% margin is modest, it represents a crucial step towards making a profit.
Wall Street analysts are upbeat about Shopify’s prospects, offering a “buy” rating and projecting a remarkable 15.6% upside potential. Considering the stock’s double-digit dip in the past six months, now presents a golden opportunity for investors to acquire shares at a lower price.
Block (SQ)
Block (NYSE:SQ) is changing the face of consumer finance and payment systems. Having evolved remarkably from a simple fintech firm, the company has achieved great milestones in the blockchain space, thus attracting Wall Street’s attention.
Despite its post-pandemic performance challenges, analysts are optimistic and predict a mind-boggling 40% surge from its current value.
The company showed superb performance and flexibility in Q1 2024. As for the peer-to-peer payment application Cash App, gross profit increased by 25% YOY and clocked in at $1.26 billion. Also, Square’s merchant solutions were up 19% to $820 million, which shows steady growth in user adoption and usage of the products.
Furthermore, Block’s financial position has improved drastically, with net income escalating more than fourfold to $472 million in the previous year and adjusted EBITDA almost doubling to $705 million. This impressive turnaround positions Block as a top contender among growth stocks.
On the date of publication, Nabeel Bukhari 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 did not have (either directly or indirectly) any positions in the securities mentioned in this article.