Market volatility has picked up, but it's still too early to call a stock market sell-off. After all, the Nasdaq Composite (^IXIC +0.68%) is down just 4.7% year to date, and the S&P 500 (^GSPC +0.40%) is down a little over 1% at the time of this writing.
It's easy to get complacent when the broader indexes are hitting new highs. But when there is downward pressure, investors may want to ensure they are holding shares in companies that can endure a sell-off or multiyear slowdown. By having a clear investment thesis for knowing what a company does and why you own it, you can ensure your portfolio is built to last and filter out the noise when turbulence hits the stock market.
Three Motley fool contributors were asked to discuss companies that fit this description. Here's why they think Archer Aviation (ACHR +1.76%), Trimble (TRMB +2.83%), and ASML (ASML +0.38%) are three growth stocks worth taking a closer look at even if the market tumbles further.
Image source: Getty Images.
The market may decline, but Archer Aviation can still ascend higher
Scott Levine (Archer Aviation): There's no denying that the S&P 500 has performed extremely well over the past couple of years, but experienced investors know that the party can't last forever. Inflated markets will deflate on occasion to correct their growth paths. Fears tend to take precedence during market downturns, but it's times like these that provide great buying opportunities for leading growth stocks. Archer Aviation, a pioneer in developing electric vertical take-off and landing (eVTOL) aircraft, is a great example.
NYSE: ACHR
Key Data Points
Providing an innovative approach to transportation -- something Archer strives to do with its air taxi service -- doesn't happen overnight. Archer knows this well, as the company was founded in 2018, and is still working to commence commercial operations.
But it's getting awfully close. The Federal Aviation Administration (FAA) recently granted the company its Part 141 certificate, which allows the company to begin training pilots on its Midnight eVTOL aircraft, and it's currently preparing the application for the final requisite FAA certificate, Part 142.
In addition to providing air taxi service or urban air mobility, Archer plans to sell its planes directly to third parties, providing another revenue source. In addition to its agreement with United Airlines, which may purchase up to $1 billion in aircraft, Archer has inked deals with private defense contractor Anduril, as well as a $142 million contract with the U.S. Air Force.
For those keen on spotting investment opportunities that have the potential to soar higher, growth investors will want to take flight with Archer Aviation.
A hidden growth stock with plenty of potential
Lee Samaha (Trimble): The workflow technology company's organic revenue growth was just 6% in 2024, but its key metric, annualized recurring revenue (ARR), grew a far more impressive 16% organically. Moreover, management expects further organic growth of 13% to 15% in ARR in 2025.
NASDAQ: TRMB
Key Data Points
As the name suggests, ARR represents the annualized value of recurring revenue and the growth of subscription and maintenance contracts. This is important for a business increasingly shifting revenue toward software and services rather than its traditional roots in positioning hardware products.
The company's hardware and software connect the physical and digital worlds for its customers in the construction, transportation, and geospatial industries, among others. The hardware collects real-time data (for example, on a construction site or in a transportation fleet) across multiple points. This data is then collated and analyzed to produce insights that can immediately improve a customer's daily workflow. This technology can make critical improvements in construction/infrastructure projects, transportation, etc.
It produces tangible cost and productivity benefits, which are relevant irrespective of the business cycle. In other words, there's an underlying demand for its solutions even if the economy struggles. Moreover, increased adoption of digitally connected technology means it's growing ARR at a double-digit pace even in a weak economy.
As such, it's an outstanding stock to buy on any weakness because investors can be assured, with a high degree of certainty, that it's the type of business that will keep growing in a downturn and accelerate growth when the economy improves.
ASML is a coiled spring for growth in the semiconductor space
Daniel Foelber (ASML): ASML manufactures and designs the most advanced extreme ultraviolet (EUV) lithography machines in the world. The latest models go for about $380 million each and weigh over 330,000 pounds. They are built to support high-volume chip manufacturing applications.
NASDAQ: ASML
Key Data Points
EUV machines simplify production processes and can reduce chip manufacturing costs over time. And with a multi-decade useful life, the machines are well worth the investment for foundries operated by companies like Taiwan Semiconductor Manufacturing, Intel, and Samsung.
As you can see in the chart, ASML's revenue, operating margin, and diluted earnings per share have steadily climbed over the last decade, but have slowed over the last year or so due to underwhelming demand in recent quarters.
Data by YCharts.
ASML is an excellent long-term buy for investors who believe in the growth of semiconductor manufacturing. The company sells its machines to foundries, which in turn get business from chip designers like Nvidia and Broadcom, which sell their products to big tech companies like Microsoft, Amazon, Alphabet, and Meta Platforms.
ASML's position along the semiconductor value chain makes it a catch-all way to benefit from higher capital spending on chips. ASML doesn't really care which chip designs are producing the most cutting-edge chips, so long as foundries are getting more business, and in turn, will demand new cutting-edge machines from ASML.
It's also worth mentioning that ASML has an incredibly attractive valuation right now, with a price-to-earnings (P/E) ratio of 34.1 and a forward P/E of 28.6. That's an excellent price for a company with virtually no competition and arguably the widest moat of any chip stock.
To top it all off, ASML pays a dividend that it aims to grow over time based on the performance of the business. The dividend payment varies from year to year, so ASML isn't a reliable source of passive income. But still, the dividend provides an added incentive to hold the stock long term.
Add it all up, and ASML is a top-tier growth stock to buy now.
