Economists at The Conference Board expect U.S. real gross domestic product growth to slow to 1.9% in 2023 and 0.5% in 2024. Many analysts are calling for at least a mild U.S. recession in the near term, so it may become increasingly difficult for investors to find reliable growth stocks to buy. Nevertheless, growth stocks have outperformed value stocks in 2023, and investors anticipate that trend will continue when the Federal Reserve eventually pivots to interest rate cuts.
Here are 10 of CFRA Research analysts’ top growth stocks that have reported at least 15% annual revenue growth in the past three years:
|Stock||Implied upside over Aug. 24 closing price|
|Alphabet Inc. (ticker: GOOGL)||9.4%|
|Amazon.com Inc. (AMZN)||38.8%|
|Nvidia Corp. (NVDA)||27.2%|
|Meta Platforms Inc. (META)||22.1%|
|Tesla Inc. (TSLA)||41.3%|
|Chevron Corp. (CVX)||14%|
|Adobe Inc. (ADBE)||13.2%|
|Salesforce Inc. (CRM)||24.6%|
|Pfizer Inc. (PFE)||18.9%|
|Netflix Inc. (NFLX)||27.8%|
Alphabet is one of the world’s largest online search and advertising companies and is the parent company of Google and YouTube. In the second quarter, Alphabet reported 7% year-over-year revenue growth, which included 28% cloud revenue growth. Analyst Angelo Zino says Alphabet has tremendous earnings and cash flow potential and is positioned to generate sustained annual revenue growth of between 6% and 11% through at least 2025. Zino is particularly bullish on Google’s artificial intelligence opportunities, which include enterprise AI tools and AI search features. CFRA has a “buy” rating and $142 price target for GOOGL stock, which closed at $129.78 on Aug. 24.
E-commerce and cloud services giant Amazon has been one of the best-performing growth stocks of all time. Unfortunately, Amazon shares are down about 20% in the past three years as revenue growth has slowed to just 10.9% in the most recent quarter. Analyst Arun Sundaram says operating profit in Amazon’s e-commerce business improved significantly in the second quarter, and the company’s advertising business is generating impressive growth. Sundaram says growth in high-margin businesses such as advertising and cloud services should boost profits further in coming years. CFRA has a “buy” rating and $183 price target for AMZN stock, which closed at $131.84 on Aug. 24.
High-end semiconductor maker Nvidia has been one of the most spectacular growth stories in the entire stock market in the past 15 years. The company’s sales growth had been on the decline in recent quarters thanks to a cyclical downturn in the semiconductor market, but Nvidia has returned to growth in a big way. In the most recent quarter, Nvidia’s net income grew 843%, and its revenue rose by 101%. Zino says investments in generative AI will be a demand driver, and he projects $23 billion in free cash flow growth in fiscal 2024, compared with $3.8 billion in fiscal 2023. CFRA has a “buy” rating and $600 price target for NVDA stock, which closed at $471.63 on Aug. 24.
Meta Platforms Inc. (META)
Meta Platforms is a market leader in social media and online advertising and is the owner of Facebook, Instagram and other platforms. After three straight quarters of negative year-over-year revenue growth to close out 2022, Meta’s growth rebounded to positive 11% in the second quarter of 2023. Zino says Meta has an attractive valuation and several major growth opportunities, including AI technology, the metaverse and Reels. In addition, he says the company’s margins should improve in coming years. Zino projects 10% revenue growth in 2024. CFRA has a “buy” rating and $350 price target for META stock, which closed at $286.75 on Aug. 24.
Tesla is the leading U.S. electric vehicle manufacturer. Tesla reported impressive 47.2% revenue growth and 19.7% net income growth in the second quarter. Automotive segment revenue was up 46%. Analyst Garrett Nelson says new factories in Texas and Germany coupled with the launch of Cybertruck production set the stage for the next phase of growth for Tesla in 2023 and beyond. Nelson says the Roadster and Optimus robot will be longer-term growth drivers as well. He projects 24% revenue growth in 2023. CFRA has a “buy” rating and $325 price target for TSLA stock, which closed at $230.04 on Aug. 24.
Chevron is a global oil major that operates exploration and production, refining and marketing, and petrochemical businesses. Oil majors aren’t traditionally considered high-growth stocks, but favorable energy market conditions in recent years have made oil stocks some of the highest-growth companies in the market. Chevron reported a 28% year-over-year drop in revenue in the second quarter, but revenue was still up about 30% on a two-year basis. Analyst Stewart Glickman projects a return to revenue growth in 2024 and says Chevron’s acquisition of PDC Energy was attractively valued. CFRA has a “buy” rating and $180 price target for CVX stock, which closed at $157.94 on Aug. 24.
Adobe produces creative content software and other applications used for marketing and e-commerce. Adobe reported record sales and 10% revenue growth in the second quarter, including 10% growth in its digital media segment and 12% growth in its digital experience segment. Zino says Adobe has significant opportunities to monetize AI technology. Adobe is offering its Firefly generative AI models across different platforms as a free offering to standard consumers and as a separate product for enterprise customers. Zino projects 13% revenue growth in fiscal 2024. CFRA has a “buy” rating and $580 price target for ADBE stock, which closed at $512.43 on Aug. 24.
Salesforce is the world’s largest provider of cloud-based customer relationship management software. Salesforce reported 11% revenue growth and 611% net income growth in the first quarter. Zino says Salesforce is attractively valued and has opportunities to improve profitability and expand its market share. He says years of aggressive acquisitions have helped Salesforce compile the most comprehensive portfolio of CRM offerings for enterprise customers of all different sizes. Zino projects between 9% and 11% annual revenue growth through at least fiscal 2026 as customer cloud migration continues. CFRA has a “strong buy” rating and $256 price target for CRM stock, which closed at $205.51 on Aug. 24.
Pfizer is one of the largest global pharmaceutical companies. In the past two years, Pfizer has generated plenty of sales from its COVID-19 vaccine and booster shots. However, the stock is down 29.4% through Aug. 24 this year as COVID sales have died down. Pfizer’s revenue dropped 54% in the second quarter, but the company guided for between 6% and 8% revenue growth this year, excluding COVID product sales. Analyst Sel Hardy says Pfizer’s 19-drug development pipeline has the potential to generate $20 billion in revenue by 2030. CFRA has a “buy” rating and $43 price target for PFE stock, which closed at $36.16 on Aug. 24.
Netflix is a market leader in video streaming and has about 238 million paid subscribers as of the second quarter. Netflix added 5.9 million customers in Q2 and reported 8% subscription growth and 3% revenue growth. Analyst Kenneth Leon says the ongoing shift of TV viewers from linear networks to streaming platforms will be a steady growth driver for Netflix. The company has multiple new revenue streams, including advertising, paid shared memberships and ad-pay subscription plans. Leon projects 7.5% revenue growth in 2023. CFRA has a “strong buy” rating and $520 price target for NFLX stock, which closed at $406.93 on Aug. 24.