There are always great opportunities to be found in the stock market if you look hard enough. In addition to the easing of pandemic restrictions and the reopening of numerous economies around the world, consumer demand has also been strongly boosted as people engage in "revenge spending." At the same time, new trends are emerging that can act as sustainable tailwinds for the foreseeable future.
If you have some cash to spare, whether from a nice bonus or regular savings, you can consider allocating some to solid growth stocks. The Nasdaq Composite index has chalked up its best performance since 1983, jumping 32% in the first half of this year. However, some stocks have performed significantly better than the index as they rode a wave of optimism. This crop of stocks has handily beaten the index and could continue to outperform as they benefit from strong earnings and sustainable catalysts.
Here are three names that you may consider adding to your growth stock portfolio.
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Nvidia
Nvidia (NVDA 6.18%) is the inventor of the graphics processing unit (GPU) that heralded a new era in the personal computer gaming industry. The company is riding high on the generative artificial intelligence (AI) wave brought about by the release of ChatGPT by OpenAI. Nvidia's share price has tripled year to date and its market capitalization has surpassed the trillion-dollar mark as investors bet that the company can continue to win market share and larger deals with its cutting-edge technology.
Nvidia is on the cusp of releasing its fiscal 2024 second-quarter earnings report, but its first-quarter report has already provided a hint of what investors can expect. The computing company guided for revenue of $11 billion, far ahead of its $7.2 billion first-quarter revenue and 64.2% higher than the prior year's $6.7 billion. Morgan Stanley has reiterated that Nvidia is in a great position to benefit from AI advancements as more companies shift spending toward AI in the coming years and after the current microchip oversupply situation resolves. CEO Jensen Huang claims that Nvidia's new Grace Hopper superchip can help businesses save on energy costs by integrating both the GPU and central processing unit (CPU). These companies can also cut down on capital spending as the new superchip can allow the same level of performance as CPUs. Earlier this month, Nvidia also released its new Nvidia Omniverse platform with new applications and abilities for developers and organizations to optimize their 3D tools and applications using generative AI, allowing its clients to build more complex simulations for their industrial applications. With more companies embracing generative AI as a useful tool to enhance their products and services, Nvidia may be on a multiyear growth runway to churn out higher sales and profits.
Royal Caribbean Cruises
Royal Caribbean Cruises (RCL 2.27%) is one of the largest cruise companies in the world, with a fleet of 64 ships sailing to more than 1,000 worldwide destinations. Pent-up demand for vacations along with the full reopening of borders has resulted in a boom in the cruise sector, causing Royal Caribbean's stock to double year to date. There could be more good news to come as the company announced a strong set of second-quarter earnings amid "accelerated demand" for its cruises and upped its earnings-per-share (EPS) guidance by 33% to a range of $6 to $6.20.
Royal Caribbean reported a better-than-expected set of earnings with total revenue hitting $6.4 billion for the first six months of 2023, almost double the level they were in the prior-year period. The cruise company also reported an operating and net income of $1 billion and $410.9 million, respectively, reversing the losses incurred in the previous year. Free cash flow also turned positive for the same period, coming in at $1.7 billion. Booking volumes for the second quarter stood higher than the corresponding period in 2019, showcasing the strong demand for cruises as people catch up on more than two years of missed vacations. Pricing also logged new records as customers seemed willing to pay just to be able to cruise once again.
Royal Caribbean's Celebrity Cruises recently announced that four of its ships will now sail on more than 40 new itineraries to ports in Florida, capitalizing on this pent-up demand to deliver more varied experiences to its guests. Investors can expect this momentum to continue as people try to recapture the magic of what they had missed during the pandemic closures, ensuring that cruise bookings remain robust in the years ahead.
Palantir Technologies
If you are looking to analyze loads of data, then Palantir Technologies' (PLTR 3.73%) platform may be the one for you. The software company operates a platform for integrating and managing data and adds a layer of AI-driven analysis to make sense of this data and gain insights. The generative AI revolution has caused Palantir's share price to more than double year to date, and there could be more to expect as investors start appreciating what the software company brings to the table. With large corporations and government agencies as clients, Palantir promises to leverage generative AI to further enhance its service offerings and will use this capability to capture more business.
A recent win in May involved a $463 million multiyear contract with the U.S. Special Operations Command to support an AI-enabled mission command platform. Another multiyear agreement was signed with Panasonic Energy to help develop a smart factory with sensors and connected operations. These projects are translating to better results for the company. It recently generated its third consecutive quarter of net profit and its second consecutive quarter of operating profit. Operating cash flow for the first six months of this year nearly tripled year over year while its free cash flow margin hit 18%. Palantir's customer count as of June 30 stood at 421, up 38% year over year, with billings surging by 52% year over year to $603 million. Increased demand for generative AI solutions in sifting through large amounts of data should enable Palantir to continue capturing contracts. The company's recent financial performance may also be an encouraging sign of more to come as its numbers show steady improvement.
