After strong returns in each of the last three years, the S&P 500 might look a bit expensive for some investors. Growth stocks have led the market higher, and overall valuations have climbed higher as a result. Finding a good price on a wonderful business that can keep growing isn't nearly as easy today as it was in the doldrums of the last bear market.
But there are still opportunities out there to invest in growth stocks, even if you only have $250 to get started. These three companies all sport attractive prices relative to their growth potential, making them no-brainers for investors looking for new stocks to buy.
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1. Palo Alto Networks
Palo Alto Networks (PANW +1.37%) is a leading cybersecurity provider with a growing assortment of software solutions to complement its original hardware firewall systems. It's expanded aggressively with acquisitions like CyberArk and Chronosphere to take advantage of the growing trend of enterprises consolidating their cybersecurity needs with a single provider.
As cybersecurity needs expand with growing amounts of enterprise data and workers who need access to systems and information from remote locations, Palo Alto is well positioned to deliver cybersecurity solutions for just about everything a business needs. That should enable it to outpace the fast-growing industry, although it comes with significant upfront costs to develop or acquire new solutions.
NASDAQ: PANW
Key Data Points
The good news for investors is that the shift toward software-based solutions means Palo Alto Networks should see strong margin expansion. That's especially true if it can get existing customers to take more of its services. It saw 23% year-over-year growth in software product revenue last quarter versus 16% overall growth. As a result, operating margin expanded 140 basis points.
Palo Alto Networks stock isn't cheap by traditional metrics. At $176 per share, its forward price-to-earnings ratio is just under 46. Its price-to-sales ratio of 11.7 (based on analysts' estimates) is a bit more attractive. But with its relatively strong revenue growth and expanding operating margin even as it spends heavily on new products and acquisitions, it looks like a great price for the cybersecurity stock.
2. Flutter Entertainment
Flutter Entertainment (FLUT 0.80%) may be better known in the United States as the parent company of Fanduel, the largest online sports betting platform in the country. It sported a 47% net gaming revenue share in the United States for September. But Flutter also holds strong positions in numerous international markets. It's strategically acquired new international betting platforms, such as NSX Group (Brazil) and Snaitech (Italy) over the last couple of years.
Flutter's global scale gives it a significant advantage over smaller competitors in the industry. Its core product works across markets, which allows it to spend more on developing technology, creating new betting products, and marketing. That's a virtuous cycle, as its product and brand strength attract new users, bringing in more revenue and data to improve its product.
NYSE: FLUT
Key Data Points
The strength of Flutter's position can be seen by its consistent position as a top sportsbook in practically every market it enters. Even when new competitors partner with strong existing brands, Flutter is able to maintain its lead. We saw that in the United States when ESPN, one of the strongest brands in sports, failed to make a dent in the sports betting market Fanduel leads. I suspect the rise of prediction markets like Kalshi will face a similar challenge when going up against Flutter.
Flutter expects revenue growth of about 18% for 2025, led by the strength of Fanduel in the U.S. and boosted by its international acquisitions. Adjusted EBITDA won't grow as quickly as the company invests in new products and marketing for its new international platforms. Still, with a stock price of about $165, the company's enterprise value is just 13 times management's 2025 EBITDA outlook. At that price, the stock is a no-brainer.
3. ServiceNow
ServiceNow's (NOW 1.74%) management set a goal of $500 million in annual contract value (ACV) for its generative AI service, Now Assist, at the start of the year. It ended 2025 with $600 million in ACV. Management's targeting a cool $1 billion for 2026.
ServiceNow's AI efforts are built on top of its market-leading enterprise software for IT departments, HR, customer service, finance, and operations. It employs the land-and-expand strategy, selling one service to a company before working with it to take more of its services.
With a low single-digit churn rate, the company generates more and more revenue from each customer cohort every year. ServiceNow says its initial customer cohort from 2010 has grown its spending at an average annual rate of 295% per year (45-fold total) since they signed up.
NYSE: NOW
Key Data Points
AI is supporting the continued growth of its contracts. Revenue climbed 19.5% in the fourth quarter. Meanwhile, its remaining performance obligations are climbing even faster, up 22.5%. That indicates a long runway of continued growth for the business. And with the traction of its AI services, it could see continued ACV and revenue acceleration.
Importantly, it's experiencing strong operating leverage as well, with operating margin expanding to 31% last year and management guiding for 32% in 2026. The company's Rule of 40 score, used by SaaS businesses, comes in at a very respectable 60.
Despite the strong growth in revenue and earnings, the stock trades for about $118, or just 28 times earnings expectations. Given the potential for the stock, investors with $250 could pick up a couple of shares right now at an absolute bargain price.
