The key to successful investing isn't just knowing which growth stocks are winners right now, but figuring out which stocks will be winners in the distant future. This not only requires a superior product or service but also a company in a business that will be in heavy, growing demand for years to come.
Here's a rundown of three growth stocks that are not only positioned to outperform next year but also for many years beyond 2024.
1. Block
Like so many other payment-tech stocks, Block (SQ 2.32%) has struggled since its 2021 peak. These names were all the rage during the pandemic. With the need for online payment platforms being curbed in the meantime, though, investor interest has since waned. These same investors might also realize the payment space has become very crowded.
But the sellers have arguably overshot their target. Block shares are still down nearly 80% from their late-2021 high, bouncing back only slightly from a three-year low made last month. That's a great entry point into an opportunity not reflected in this stock's price.
Last quarter's results start the bullish case: Revenue was up 24% year over year, pushing its adjusted operating income up from $32 million in the third quarter of last year to nearly $90 million this time.
Look for more solid growth, too. The analyst community says the top-line increase of more than 12% expected for next year should drive profits up to a record of $3.04 per share. More of the same growth is projected beyond 2024 as well.
Data source: StockAnalysis.com. Chart by author.
There are two key drivers of this long-term growth. The first is the ongoing evolution within the payment space.
Small businesses in particular are increasingly looking for better payment solutions at the same time consumers are looking for easier ways to make payments. Block -- the name behind brands like Square, Cash App, Spiral, and others -- has the payment technology to capture this growth.
Josh Saltman, manager of the Baron FinTech Institutional Fund said in his third-quarter letter to the fund's shareholders: "We believe Block's businesses are resilient, and greater management focus on cost discipline should drive further margin expansion. We continue to own the stock due to Block's long runway for growth, durable competitive advantages, and track record of innovation."
The second reason Block stock could rally well beyond next year: co-founder Jack Dorsey is back in charge, taking over in early October. Although most companies are more than their leaders, in the case of Dorsey and Block, he is bringing back some of that old spark that made it a superstar stock.
2. Advanced Micro Devices
When most investors think of computer graphics cards -- including those used in artificial intelligence (AI) -- Nvidia usually comes to mind. And, when investors think about computer processors, Intel is a popular pick.
Advanced Micro Devices (AMD 2.37%) is a distant second to the leaders of both of these markets. And investors are generally advised to own the market leader rather than the second-place rival. In this case, however, the second-place name could offer more net upside than the top names in both businesses.
AMD's share of the computer processor market in Q3 2023 soared from 15% to 19.4% compared to 2022, according to computer-industry news site Tom's Hardware, with gains being made in servers and desktops, as well as laptops.
It was the second consecutive quarter that the company made computing processor gains, too, driven by the debut of several products like updated versions of its EPYC server processor and improved Radeon graphics cards, which offer lots of computing power at a good price.
And there's more than enough growth remaining in graphics processing, AI hardware, and computer processing.
While AMD is still far from the leading name in AI hardware, Precedence Research suggests this sliver of the AI market is set to grow from a little more than $50 million this year to nearly $250 million in 2030.
Over roughly the same time span, the computer processor market could grow only about 6%, according to Global Market Insights. But AMD is still winning a good share of it with its new EPYC and Ryzen chips.
3. Symbotic
Lastly, add Symbotic (SYM 1.62%) to your list of growth stocks that should make you richer in the coming year and beyond.
It's possible that you or someone in your household has purchased an item handled by this company's technology because Symbotic makes industrial robots for retail warehouse sorting.
Its customers include Target, Walmart, Albertsons, and other companies looking to cut costs by improving efficiency. Target and Walmart also want to make their e-commerce operations more competitive, which requires warehouses capable of handling more goods more effectively.
Warehouse robotics was a hot topic a few years back when it was believed the growth of e-commerce would require such solutions. That initial expectation was never quite realized, though. The missing element was AI, which is only just now proving useful in warehouse automation.
By combining its robotics with proprietary self-learning software, Symbotic is finally providing large retailers with the solutions they need. For instance, one of its platforms can take boxes of goods off a pallet and assemble a pallet of different goods to be shipped to a specific site.
And the retail industry is ready to invest in such tech. Last quarter's top line was up 60% year over year, capping off nearly 100% growth for Symbotic's fiscal year, ending in September. Sales are expected to grow another 48% this year, and then another 45% next fiscal year, pushing the company out of the red and into the black.
That should light a fire under the stock, and fanning these bullish flames is the annualized growth rate of more than 16% that Mordor Intelligence expects from the warehouse automation market through 2028.
