Stocks have been on the rebound so far in 2023, and some believe we are already in the early stages of a new bull market. While it's impossible to know for certain whether bullish momentum will continue in the near term, history shows that long-term investors can score big wins by backing strong companies and holding to capitalize on sustained rallies.
If you're looking for great growth stocks with powerful performance catalysts on the horizon, read on to see why these two companies could be great portfolio additions.
1. ASML
ASML (ASML 2.04%) is a leading provider of semiconductor manufacturing equipment. The company's lithography and extreme-ultraviolet (EUV) lithography machines are used by leading foundries to produce high-performance chips that are at the heart of the artificial intelligence (AI) revolution. For example, Nvidia's 5 nm chips are central to powering ChatGPT and other AI services and are made possible by ASML's EUV tech.
With rising demand for chips in AI, data centers, automotives, wearables, and other emerging categories, the semiconductor industry is a great starting point for growth-focused investors. While it might not be a household name, ASML is on track to play a key role in this decade's most important technology trends.
At the low end of its forecasts, ASML expects the semiconductor industry will grow at a 9% compound annual growth rate from 2020 through 2030 -- increasing from $500 billion in sales at the start of the decade to $1 trillion in sales at the end of the projection period. Using other forecast models, the company thinks that total category revenue could be as high as $1.3 trillion by 2030.
As it stands, it looks like the company's competitive advantages will be very difficult to disrupt. For one, the company counts most leading chip fabs as key customers and has strong relationships with these clients. ASML isn't just delivering semiconductor manufacturing equipment to TSMC, it's also providing this tech to other foundry leaders including Intel and Samsung. The company's clear leadership in lithography tech positions it to win regardless of shifts in the chip fabrication market.
What's more, developing the kind of machines that ASML specializes in will be very capital-intensive for would-be competitors. The company has decades of experience in its particular corner of the semiconductor industry, and its patents give it an effective monopoly on EUV technologies used for the fabrication of highly advanced chips.
Still down 15% from its high even as AI and other demand catalysts are heating up, ASML looks like a smart long-term play for growth investors.
2. Take-Two Interactive
Take-Two Interactive (TTWO 0.72%) stands as one of the largest publishers in the video game space, and its stock looks like a smart play for those aiming to capitalize on the growth of interactive entertainment. While the company has a hand in a wide range of franchises and titles, there's no doubt that the gaming specialist is most famous for its Grand Theft Auto (GTA) franchise.
Nearly a decade after its initial release, Take-Two's incredibly successful Grand Theft Auto V is still one of the company's biggest performance drivers. But with sales having finally lost some steam, the publisher is gearing up to release the next entry in the series. To put the upcoming sequel's significance in perspective, it's worth recapping just how much of a blockbuster GTA V was.
As of the most recent tally, Grand Theft Auto V had shipped more than 180 million copies worldwide -- a performance good enough to make it one of the best-performing titles ever in terms of pure unit sales. But its performance is actually even more impressive if you factor in contributions from the game's hugely popular online mode. With sales from Grand Theft Auto Online included, GTA V is actually the most profitable entertainment release ever -- by a wide margin.
TTWO Revenue (TTM) data by YCharts
Grand Theft Auto VI is now on track to release sometime in 2024 or early in 2025, and the game is poised to supercharge a new growth phase for Take-Two Interactive. And while GTA VI is the key performance driver for investors, Take-Two is far from being a one-trick pony. Since its last major GTA release, the company has helped power big sales growth by continuing to build out other major franchises including NBA 2K and Red Dead Redemption and acquiring mobile gaming leader Zynga.
With the company looking stronger than ever and its stock still trading down roughly 30% from its high, Take-Two is a worthwhile portfolio addition right now.
