It's a smart move, if you're a long-term stock investor, to maintain a list of stocks you're interested in or are eager to own. So I keep my own list as an online portfolio. When I add a company to it, I pretend that I've bought one share, at its price as of the day I add it. Then, whenever I look at the list, I can see how much each stock has risen or fallen since I added it to the list -- and that can help me spot potential bargains.
A watch list, whether you maintain it online or in a paper notebook, can be very handy during market downturns, as it will remind you about stocks you'd like to own, some of which may be priced attractively.
Here are three growth stocks on my own buy list -- see if they should be on yours, too.
1. Adobe
There's a lot more to Adobe (ADBE -0.91%) than many people realize. It's perhaps best known for its digital media applications, which include Photoshop for image editing, Premiere Pro for video editing, Illustrator for vector graphics, and its widely used Acrobat application, facilitating the creation, editing, and sharing of digital documents.
The company's Experience Cloud offers a suite of tools and services, such as analytics and marketing, related to content and commerce. Adobe Analytics, for example, offers insights to customers based on an analysis of more than a trillion visits to retailer websites. Its Document Cloud includes Adobe Scan (the leading scanning app) and Adobe Acrobat Sign, a digital signature service rivaling that of DocuSign. And Adobe keeps expanding its offerings, with new services such as Substance for 3D design and Aero for augmented reality.
Adobe is an impressive growth stock, with its second-quarter revenue up 14% over year-ago levels and cash flow from operations coming in at more than $2 billion. The company's profit margins are fat, too -- its net profit margin was recently a hefty 27%.
It's a stock I'd love to own, and its price is appealing, too. It's recently down 46% from its 52-week high and with a recent price-to-earnings (P/E) ratio of 37, well below the five-year average of 52.6.
2. Nvidia
Nvidia (NVDA -2.55%) is a semiconductor designer, specializing in graphics processing units (GPUs) used by entities such as gaming systems, cloud computing operations, and data centers. It's also much more than just a semiconductor company, as it's heavily involved in artificial intelligence and in the acceleration of various applications. The company itself explains:
NVIDIA accelerates more than 700 applications today, including the top 15 in scientific computing. By addressing the entire computing stack, we can drive continuous speed improvements on these applications even without releasing new GPUs. We've accelerated core High-Performance Computing applications -- used to discover new drugs, explore the cosmos, and predict the weather -- by 13X in just five years.
Meanwhile, Nvidia is growing briskly, with its first-quarter revenue popping 46% over year-ago levels, and certain divisions growing even faster. For example, "First-quarter [data center] revenue was a record $3.75 billion, up 83% from a year ago and up 15% from the previous quarter." The company is expanding in multiple directions and is a leader in many, so its growth potential is quite promising.
I've long wanted to be a Nvidia shareholder, but the stock has always seemed too expensive. The shares were recently down some 53% from their 52-week high, which makes them far more attractively priced -- but according to many measures, it's still not a screaming bargain.
3. Texas Instruments
Texas Instruments (TXN 0.18%) is the oldest company in this group, founded in 1930. It's another chipmaker, churning out tens of billions of them annually, and it specializes in analog chips, which are needed for certain applications, such as sensors.
Texas Instruments is old, it's big -- with a recent market value topping $140 billion -- and it's still growing. Its first quarter featured revenue up 14% year over year, while free cash flow came in at $6.5 billion -- fully 34% of revenue. It's a company I'd like to own because it's a longtime major cash producer in an industry that's only going to grow for the foreseeable future. (Its longevity suggests that its management has experience dealing with all kinds of markets and can adapt to change -- those are big plusses.)
On top of all that, while Adobe pays no dividend and Nvidia pays a currently tiny one, Texas Instruments offers a meaningful payout -- recently yielding 2.9%. Its stock was recently down more than 20% from its 52-week high, too.
These are just three of many very appealing companies out there. Remember that while a down market like today's can be unsettling, it can also present great investing opportunities.
