Got a few extra bucks you know you won't be needing anytime soon? Put it to work! That is to say, scoop up a growth stock or two while they're still trading at a discounted valuation. Stocks may or may not have hit their ultimate bear market bottom yet, but we're likely closer to that low than not.
And if you don't know where to start, here's a rundown of three great growth stocks to consider adding to your portfolio, even if you can't take on a huge position in any of them. Something is better than nothing.
1. Palo Alto Networks
The statistics are staggering. Despite more awareness and tighter cybersecurity as the impact of the COVID-19 pandemic eases, Check Point Software reports cyberattack attempts actually grew another 38% in 2022.
The total cost of each successful data breach? IBM reckons the average for each breach is above $4 million worldwide and more than $9 million in the United States alone, where hacked data is worth more to cybercriminals. At its current growth pace, cybercrime could cost the world more than $10 trillion per year by 2025, according to numbers from Cybersecurity Ventures.
The sheer cost of hacks and data breaches means institutions are defending themselves against cyberattacks, of course, and increasingly so. Information technology market research outfit Gartner estimates that by 2026, the world will be spending $260 billion on direct cyber defense solutions like cloud and app security. When adding options like email protection, credential management, and digital defense of the Internet of Things, McKinsey believes the total cybersecurity market could be worth as much as $2 trillion.
Enter Palo Alto Networks (PANW -0.23%).
Palo Alto is one of the market's top cybersecurity companies, but not simply because it's one of the biggest. Its size enables it to provide one of the market's most complete arrays of offerings to organizations looking to beef up their digital defense. Threat detection, cloud security, firewalls, ransomware, and more are all in its wheelhouse.
Perhaps Palo Alto's top competitive advantage, however, is that its menu includes options like so-called zero trust access, which is a way to secure remote employees' connections to an organization's network. Both Gartner's and McKinsey's market size estimates specifically point to zero trust access as the growing replacement for virtual private networks, or VPNs. App security is another particularly high-growth opportunity McKinsey and Gartner agree on and that Palo Alto can deliver on for years to come.
To this end, this year's analyst-projected revenue growth of 25% is likely to be the long-term norm for Palo Alto Networks.
2. Pinterest
Since its public launch all the way back in 2012, Pinterest (PINS 0.10%) has been a bit of an internet curiosity. It's typically categorized as a social media site but looks distinctly different from Twitter or Meta Platforms' Facebook. Pinterest is essentially a collection of individuals' digital bulletin boards. The platform allows users to "pin" things they've found of "interest" on the internet and share those grouped pins with like-minded Pinterest users.
It's not always been entirely clear how Pinterest makes money (for the record, it inserts ads within a user's search of other people's pins), though it is now turning a modest operating profit. The next few years, however, are likely to be much more fruitful now that all the important groundwork has been laid.
One of these key profit growth drivers is the evolution of the company's business model itself. It's no longer a mere platform to show users the occasional banner ad while they're browsing other people's pins. Pinterest is now a shopping-minded platform in and of itself.
Leveraging the power of artificial intelligence (AI), relatively new CEO Bill Ready recently explained, "More than half the users are there [on Pinterest] to shop, so what we're doing now is making it so that not only is it solving digital window shopping, we're opening all the stores, making it so you can easily take action on the things you find at Pinterest."
Investors and analysts are starting to believe in Ready's vision as well. Regarding their upgrade of Pinterest, UBS analysts recently noted, "We think Bill Ready taking over as CEO has driven a philosophical shift in the company's go-to-market (strategy) that will unlock faster top line growth." To this end, the analyst community as a whole is calling for accelerated sales growth of nearly 19% next year, driving a 36% increase in per-share earnings.
3. Nvidia
Last but not least, add Nvidia (NVDA -1.95%) to your list of growth stocks to buy, even if you've only got $500 to work with. That'll still get you, roughly, a couple of shares of the powerhouse company.
You likely know it as a maker of graphics cards, or GPUs (graphics processing units), that video gamers and digital artists typically need to get the most out of their personal computers. The company also makes graphics tech that powers computer screens without a stand-alone GPU.
However, Nvidia is so much more than a graphics card company these days. As it turns out, the same hardware and architecture found in GPUs are also well suited for data-intensive AI applications. The company's A100 chip, in fact, is purpose-built from the ground up to serve customers working on AI projects and is one of many reasons New Street Research estimates Nvidia's tech is the hardware foundation for 95% of the world's machine-learning systems.
AI is also now Nvidia's single biggest business, accounting for the bulk of the $15 billion worth of data center business done last year versus last fiscal year's top line of $26.9 billion.
And this lead is only apt to widen going forward. Precedence Research believes the AI hardware market is set to grow by an average of 27% per year through 2030, led by the processors Nvidia has perfected.
Nvidia shares aren't cheap, mind you, priced at more than 60 times this year's expected earnings. The stock is also already trading very near the consensus price target of $275.84. If you're a true long-term investor, though, you don't mind paying for quality opportunities.
