Investors who are looking to beat the market may now be in a position to once again explore the world of growth stocks, many of which are taking off at a much faster rate than their value counterparts in recent weeks. A reversion rally higher in many beaten-up names (with these moves largely tied to tariffs and other macro factors) is welcome by many investors who didn’t reposition their portfolios at any point this year.
Key Points
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All investors can benefit from having some percentage of their portfolio dedicated toward higher-growth companies.
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However, not all are created equal – here are three top-tier growth stocks I think investors can buy and hold long-term before July 1.
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Notably, most major growth indices are now above the flat line for the year, with some growth funds actually seeing reasonable upside once again.
Will we end the year higher for growth stocks as a whole in 2025? That’s the key question many investors are looking to answer right now.
But for those looking to add some exposure (so as not to miss this rally), the good news is there are a few great options still trading at reasonable prices in the growth space. Here are my three top picks I think are worth buying before we cross the mid point of the year.
Alphabet
As far as growth stocks with a clear value tilt are concerned, Alphabet (NASDAQ:GOOG) continues to remain one of my top ideas in the world of large-cap tech stocks. Alphabet’s growth profile has remained robust for years, driven by strong online advertising growth tied to the company’s core Google and YouTube businesses. The leading global search provider, Alphabet has benefited from consistent global growth trends on this front.
In part due to being widely considered to be a “mature” growth stock, Alphabet’s valuation has continuously dropped over the years. That’s a good sign – it means the company continues to outperform the market’s expectations of where growth will come in. So, when the company reports 12% year-over-year revenue growth to more than $90 billion this past quarter, those are the kinds of numbers one would think would take this company’s multiple higher.
Currently trading at a forward price-earnings multiple of just 17.9-times (much more reasonable than that of the overall market), I think Alphabet is more than fairly priced given the company’s recent AI investments and its potential to emerge from the AI revolution as a key winner (rather than as a loser in the search area, as many have suggested).
Meta Platforms
Meta Platforms (NASDAQ:META) doesn’t have the same rock-bottom valuation I’d argue Alphabet is trading at right now. However, the company has been an absolute operating efficiency machine. The company dubbed 2023 the year of efficiency, but Meta Platforms’ management team appears to have done everything possible to continue this trend forward. Over the past three years, the company has really delivered impressive outsized growth, and its balance sheet is one of the best in the mega-cap tech space in my view.
This past quarter, Meta saw revenue growth of 16%, which is certainly notable. However, the company’s net income figure surged 35% to $16.6 billion, a truly incredible move. Investors cheered Meta’s push for efficiency, with operating margins improving from 38% to 41%, and it’s becoming increasingly clear that Meta’s continued launch of various AI products (as well as its partnerships with leading AI firms) is paying off.
I think Meta will continue to be one of the most shareholder-friendly companies out there, with the company seeking to return a tremendous amount of capital to shareholders in the form of buybacks over time. I actually wouldn’t be surprised to see Meta institute a dividend at some point (similar to Alphabet). We’ll see. But for now, in terms of pure growth in the Mag 7 grouping, Meta would be my top pick to consider right now.
Shopify
Now for a pick that’s not on the list of “Magnificent 7” stocks I think can provide outsized returns over the next year or two. Canada-based e-commerce platform provider Shopify (NASDAQ:SHOP) is a company I’ve been bullish on for a long time, and it looked like my long-term thesis around this stock was turning the corner much faster than anticipated when we got the pandemic.
The pandemic was a terrible situation in which millions were hospitalized or died, and it’s a period of time many of us would like to forget. However, coming out of the pandemic we did see certain trends accelerate. The push for companies of all sizes to improve their online presence is real, and Shopify is a clear beneficiary of this trend. Additionally, the amount of interest around efficiency-generating technologies like blockchain and artificial intelligence have spurred many investors to look for companies that are most levered to the outsized growth these new technological developments can provide.
Consumers may not necessarily be solely shopping online anymore, and bricks-and-mortar retail shopping activity is certainly back in fashion. But over the long-term, I think the need for most retailers to have a solid online positioning should bode well for Shopify, who happens to be the leader in this sector. And given the fact that the company operates in more than 100 countries around the world, it’s a property diversified option I think could have much further to run from here.
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