There's no denying the market is on the defensive these days. The S&P 500 currently sits more than 6% below its late-July peak, knocking on the door of new multi-week lows. Between the prospect of more profit-taking and just being in a lethargic time of year, stocks could be even lower than they are now in the foreseeable future.
If you're a true long-term growth investor, though, with some available cash to invest (say $3,000), you're not worried. Rather, you're eyeing this dip as a chance to put that $3,000 toward some new growth positions.
To this end, here's a closer look at three growth stocks to buy -- or even double up on right now if you already own a stake in any of them.
1. Palantir Technologies
You may not be familiar with Palantir Technologies (PLTR 3.73%). In fact, you may have never even heard of the company. Chances are good, however, you've been impacted by its product, or at least soon will be.
In simplest terms, Palantir Technologies uses digital data to help organizations make better decisions. Whereas companies like Nvidia manufacture artificial intelligence hardware and outfits like IBM make AI systems, Palantir offers an interface that turns data into specific, actionable information. Aircraft manufacturer Airbus, the U.K.'s National Health Service, and utility company Pacific Gas & Electric are all customers, illustrating Palantir's wide range of capabilities.
The stock's not been a great performer of late. In fact, share prices are down 30% from their late-July high, helping lead the marketwide weakness.
Analysts aren't sympathetic, either. The current consensus price target of $14.36 is just a tad above the stock's current actual price. And most analysts are also still content to rate Palantir Technologies shares at a hold -- or worse -- despite this year's projected revenue growth of 16% that's expected to be followed by top-line growth of 19% next year. The analyst community just seemingly can't hold on to its previous enthusiasm for AI's potential ... or Palantir's.
Maybe the stock's rich valuation is a concern. It's still in the red on a GAAP basis, and even though its operational profits are growing in line with its top line, it's an expensive equity no matter how you slice it.
This is one of those relatively rare cases, however, where a company's premise makes it a story stock with a ton of upside potential left to tap. Don't be surprised to see the market start falling back in love with this AI story stock soon.
2. Enphase Energy
Any investor keeping tabs on Enphase Energy (ENPH 3.80%) of late knows this year's been a tough one so far. Oh, its volatility is nothing new. The stock's 63% sell-off from its all-time high made late last year, however, is extreme.
What gives?
One reason is this solar power equipment maker's shares have proven highly sensitive to changes in California's so-called "net metering" rules, which allowed homeowners to sell solar-produced power back to the state's utility service providers. Meanwhile, current and would-be homeowners are unsure if the investment in solar systems makes sense given home values' uncertain future and the growing difficulty of insuring these systems, particularly in Florida, where it's often sunny but also frequently stormy.
Let's also not ignore the fact that supply chains are still somewhat broken, and general economic lethargy is prompting consumers and corporations alike to cinch up their proverbial purse strings.
And these headaches are taking a clear toll on Enphase's sales and earnings. Although its fiscal (and calendar) second-quarter top line was up a healthy 34% year over year and therefore doubled per-share profits, its top line is apt to slightly sink year over year for the quarter now coming to a close. Next quarter is going to be even tougher.
Take a step back and look at the bigger picture, though. While the current bout of economic turbulence may be stifling purchases of home and business solar power systems, this is only a temporary headwind. The Solar Energy Industries Association and Wood Mackenzie still jointly predict that the U.S. will add a record-breaking 32 gigawatts of new solar power production capacity this year. That's up 52% from last year's net installations, with the solar power capacity in the U.S. on pace to triple between last year and 2027. Residential installations make up a big chunk of this past and projected capacity growth.
And that's an important detail for anyone considering investing in Enphase Energy. While its power inverters are certainly capable of handling utility-scale loads, Enphase's strength lies in serving the small-scale at-home market. The company's equipment integrates things like EV chargers, energy storage solutions, and even appliance-specific options into a single app.
3. ASML
Last but not least, add ASML (ASML 2.04%) to your list of growth stocks to buy if you're sitting on $3,000 in idle cash you'd like to put to work.
In simplest terms, ASML makes the equipment that chipmakers such as Intel and Taiwan Semiconductor Manufacturing need to manufacture their chips.
There was a time when semiconductor companies could handle this foundry work on their own or hire a variety of third-party manufacturers to do it. But as electronics in general (and computers in particular) have become far more powerful than thought possible just a couple of decades ago, the process for making chips, circuit boards, and computer processors has become stunningly advanced but equally complex.
Enter ASML, or more specifically, ASML's ultraviolet lithography (light-based etching) systems that bring super-small circuity into existence. These machines are powerful, necessary, and perhaps most important, proprietary. Although it can be imitated, between its patents and the sheer complexity of much of its technology, ASML's equipment can't be easily copied or even competed with. Indeed, the company's intellectual property has prompted ASML to be likened to a monopoly -- albeit a legal one -- in that it's the only company in the world that makes at-scale extreme ultraviolet lithography systems.
And the data supports the claim. Despite economic headwinds, this year's top line is expected to grow more than 22% following last year's 14% improvement. Income is growing accordingly.
ASML Revenue (Quarterly) data by YCharts
Do look for this growth to slow down next year, as the chip market stabilizes in conjunction with global economic stability (hopefully).
Even so, this company is in an incredible competitive position, serving a semiconductor market that's not only never going away, but never likely to stop growing.
