Recent market turbulence has prompted many investors to reconsider their strategies, especially when it comes to growth stocks. Although growth stocks are generally more expensive and don’t pay dividends like value stocks, they still offer significant opportunities for those who choose wisely.
In the current environment, it’s crucial to focus on quality within the growth sector. Look for companies that are not only growing rapidly but are also doing so with strong fundamentals. These include substantial free cash flow, low levels of debt, consistent earnings, a solid balance sheet, and a business model that can sustain over the next decade.
Valuation should be a key consideration in any investment decision. It’s important to understand the true value of a stock, avoiding investments based purely on fear of missing out or an appealing narrative without substance. Instead, prioritize stocks that demonstrate actual revenue and earnings growth.
Here are three stocks that I believe are positioned well and worth considering:
PayPal Holdings (PYPL)
Despite being down significantly from its peak in 2021, PayPal appears undervalued, especially within the fintech and digital wallets sector. The stock has dipped by about 3% over the last year, which might be an attractive entry point. The company has recently adjusted its profit expectations for 2024 from flat to a mid-to-high single-digit percentage growth, indicating a positive trajectory. Its investment in Venmo debit and credit cards plays a critical role in its overall growth strategy, helping to solidify its user base.
SS&C Technologies Holdings Inc:(SSNC)
As a major player in the software-as-a-service (SaaS) industry, SS&C Technologies benefits from having a significant market share in a somewhat duopolistic field. The company controls a vast amount of valuable data, which is essential both from an investment security and a user engagement perspective. Looking forward, its role as a major data provider is likely to be increasingly important. The stock has gained about 14% over the past year, and analysts are optimistic about its future, suggesting potential for further gains.
Moody’s Corp (MCO)
Known for its comprehensive data capabilities and increasing use of artificial intelligence to enhance data utilization, Moody’s has shown strong performance. The company recently exceeded Wall Street’s profit estimates, spurred by high demand for its offerings. Over the past year, the stock has increased by roughly 30%. Although the upside potential according to analysts is modest, the stability and steady growth make it an appealing choice for investors seeking reliable returns.
These stocks represent well-rounded choices for those looking to diversify their portfolio with growth stocks that not only promise but also deliver growth backed by robust fundamentals.
