When looking to invest $1,000 or more, it's a great idea to think about diversification. You might want to pick up two or three stocks that each offer you something different -- from exposure to a particular industry to investment in a type of story, such as growth or recovery, for example. It's always a great idea to favor diversification in your portfolio so that if one stock or industry slumps, others may compensate.
Right now, as the S&P 500 (^GSPC 0.01%) marches higher and interest rates decline, it's the perfect time to add a few growth stocks to your portfolio. And these three offer you this potential, as well as three very different stories.
One is a tech stock leading in the billion-dollar artificial intelligence (AI) market. Another is a biotech that's seen its stock price slip -- but its drug candidates, set to serve a high-demand market, could quickly turn that situation around. Finally, the third is a cruising giant that's seen revenue soar -- and should benefit from a lower interest rate environment.
1. Nvidia
You probably have heard the name Nvidia (NVDA -0.77%) here and there, even if you're not a tech investor. The AI chip designer has roared into the spotlight thanks to the strength of its products -- top-performing graphics processing units (GPUs), as well as related tools like enterprise software that have become essential for companies along their AI journey. All this has resulted in double- and triple-digit revenue growth, with earnings reaching well into the billions of dollars.
Nvidia faces rivals, but they will have trouble unseating this market giant -- and likely won't be able to do so. That's because Nvidia is fully committed to innovation, updating its already top-performing chips annually. This doesn't leave others much time to catch up.
Meanwhile, this chip leader is operating in a market that's booming -- and there's no end in sight. That's because the AI spending we are seeing now is being used to create the AI that will be applied to real-world problems a few years down the road. This use of AI already has started, but it should be much more pronounced in the future -- and Nvidia's GPUs are needed throughout every stage, even as AI is put to use. This makes the stock a great one to buy now and hold for the long term.
2. Viking Therapeutics
Viking Therapeutics (VKTX 6.60%) has seen its stock fall 55% over the past year, and I see this as a big opportunity for investors seeking the next biotech star for two reasons. The decline hasn't been linked to any bad news about the company's development pipeline. And Viking actually has reported fantastic results from trials of its leading candidates that also happen to address a high-growth market: weight loss.
The market for weight loss drugs is on its way to nearly $100 billion by the end of the decade, according to analysts, and by that time, Viking may be able to share in that growth.
The company's candidate, VK2735, is being developed in both oral and injectable formats. The oral candidate is involved in a phase 2 trial, while the injectable is closer to market, as it's in a phase 3 trial right now.
VK2735, a dual GLP-1/GIP receptor agonist, is of the same class as Eli Lilly's wildly popular drugs, Mounjaro and Zepbound -- both prescribed to patients aiming to lose weight. Demand is so high that there's plenty of room for a new kid on the block like Viking to generate major growth, too.
That's why now, with the stock price down, is a fantastic time to get in on this biotech story.
3. Carnival Corp.
Carnival Corp. (CCL -1.04%) (CUK -0.75%) struggled a few years ago during the early days of the pandemic because it was forced to temporarily halt sailings and increase debt to keep its business going.
But in more recent times, Carnival has demonstrated its strength, as demand for its cruises has soared, leading to record revenue and a return to profitability. In the latest period, Carnival's revenue reached its highest quarterly level ever, at more than $8 billion, and net income reached a record too, at $1.9 billion.
Carnival is scoring a win thanks to steps it's taken to favor profitability -- such as replace older ships with more fuel-efficient ones -- and it's also benefiting from the general popularity of its cruises and travelers' love of cruising. On top of this, a lower interest rate environment should boost Carnival by lowering the cost of the company's variable-rate debt -- and lower interest rates also are favorable for consumers' wallets, meaning they may feel more comfortable about booking a cruise.
Today, Carnival stock trades for 13x forward earnings estimates, a reasonable level for a company that's succeeded along the recovery path, returned to growth, and is well positioned for more success over the long term.
