Wall Street Expects the S&P 500 to Hit a Record High: 2 Highly Recommended Growth Stocks to Buy Now and Hold Forever

Throughout October, Wall Street analysts reduced fourth-quarter earnings estimates for the S&P 500 (^GSPC 1.02%) due to a slowing economy. But the collective wisdom of Wall Street still says the benchmark index will reach a record high in the next year.

Specifically, the S&P 500 carries a 12-month price target of 5,052, implying a 15% gain from its current level of 4,383 (as of Nov. 8). That is a bottom-up forecast that aggregates the median price target on every stock in the index, blending more than 11,000 individual estimates.

Building on that, CrowdStrike Holdings (CRWD 2.03%) and HubSpot (HUBS -0.78%) both carry an average rating of "buy" among analysts, and neither stock has a single sell rating at the present time.

Read on to learn more about these highly recommended growth stocks.

1. CrowdStrike Holdings

CrowdStrike is a market leader in several categories of cybersecurity software, including endpoint security, cloud security, and threat intelligence. Investors can attribute that success to powerful artificial intelligence (AI) and a deep portfolio of integrated products, not to mention the tremendous capacity for innovation that gave rise to those assets in the first place.

The CrowdStrike Falcon platform comprises more than two dozen software modules that address several industry verticals. That strategy is resonating with the market because it supports product consolidation, and many enterprises still rely on dozens of point solutions.

However, the CrowdStrike Falcon platform offers more than product consolidation. It was engineered to capture and analyze data unlike any other solution on the market, and Chief Executive Officer George Kurtz says that makes its AI models "uniquely effective" in detecting and preventing even the most sophisticated attacks.

In short, CrowdStrike simplifies cybersecurity by consolidating workloads on a single platform powered by superior AI. The corollary of its broad portfolio and AI expertise is "unparalleled prevention of malware and malware-free attacks," according to consulting firm Frost & Sullivan. That selling point has translated into strong financial results.

In the most recent quarter, revenue rose 37% to $732 million and adjusted net income (meaning not compliant with generally accepted accounting principles, or GAAP) jumped 109% to $180 million. CrowdStrike also maintained its industry-leading retention rates, meaning the company is not only keeping most customers, but also those customers are consistently spending more over time.

Looking ahead, CrowdStrike has a forward-thinking product roadmap that should keep it at the forefront of the cybersecurity industry. Investors should be especially enthused by Charlotte AI, a generative AI assistant that empowers users to automate cybersecurity workflows with natural language. Morgan Stanley believes CrowdStrike is one of three cybersecurity companies best positioned to monetize generative AI.

The shares trade at about 17 times sales, a discount to the three-year average of 31.1 times and a reasonable price in that context. The cybersecurity market is expected to grow 12.3% annually through 2030, but CrowdStrike should easily outpace the average given its strong competitive position. That's why I wouldn't hesitate to buy this growth stock today.

2. HubSpot

HubSpot has evolved beyond its roots in marketing software to become a full-stack customer relationship management (CRM) platform. The company is still the leader in marketing automation, but its portfolio now includes adjacent applications that help sales, service, and operations teams work more productively.

The HubSpot CRM platform is engineered with small- and medium-sized businesses (SMBs) in mind and the company has earned a strong position in both market segments despite tough competition from industry leader Salesforce. Indeed, research company G2 ranked HubSpot as the best software company in any category in 2023, citing its robust market presence in several software verticals and its high user satisfaction scores.

HubSpot reported solid financial results through the first half of 2023. Revenue increased 26% to $1 billion and non-GAAP net income soared 164% to $132 million. But the company should be able to maintain that momentum as more SMBs adopt CRM software.

HubSpot is also investing in AI product development. The company is already a recognized leader in AI sales assistant software among SMBs, but it recently unveiled a suite of AI-enabled tools and features that support workflow automation and predictive insights across its CRM platform. The company will gradually launch new AI products in the coming quarters.

Shares currently trade at about 11 times sales, a discount to the three-year average of 17 times sales and a reasonable price to pay. The CRM market is projected to grow at 13.9% annually through 2030, but HubSpot should have no problem outpacing the industry average given its strong market presence. That's why this highly recommended growth stock is worth buying.

Wall Street does not know the future, but history says the S&P 500 is headed higher

As a final caveat, no one actually knows what the S&P 500 will during the next year, not even the most brilliant Wall Street analyst. But the index has consistently reached new highs throughout history, and investors have no reason to expect a break from the historical pattern.

To that end, the S&P 500's next record high is just a function of time. It will happen sooner or later, so patient investors should feel comfortable buying stocks like CrowdStrike and HubSpot in the current market environment.