Those under 50 years of age potentially have decades to build your wealth. Therefore, they should consider allocating some capital to growth stocks, which can potentially generate huge gains in the long run.
Here, I'm going to highlight three growth stocks that have significant long-term potential. They are all listed in the United States, a country with a great history of innovation (and wealth creation for investors).
Amazon
First is Amazon (NASDAQ:AMZN).
Many people see Amazon as an online shopping company. But now it is much more than this.
Today, Amazon has exposure to cloud computing (an extremely profitable area of the business), streaming, digital advertising, artificial intelligence (ai), semiconductors, space/satellite broadband, logistics, autonomous vehicles and more. Overall, it's a monster tech company.
One of the reasons I'm excited about Amazon right now is that, after years of cutting costs, its profits are increasing. By 2024, its net profit is expected to increase by around 36%.
So while the stock is a bit expensive with a price-to-earnings (P/E) ratio of around 40 (which adds risk to the investment case), I'm comfortable with the valuation.
Uber
The second growth action that I want to highlight is Uber (NYSE: UBER).
This is another company that I think is a little misunderstood. Many people still see Uber as a basic ride-sharing company.
However, today, Uber has exposure to food delivery, digital advertising, logistics, train and flight bookings, autonomous vehicles (it has partnered with Alphabet's Waymo), and more, which means it has huge potential.
Like Amazon, Uber is seeing its profits skyrocket. By 2024, net profit is expected to roughly triple to $2.5 billion.
Although it currently has a high P/E ratio of around 50, the multiple is not that inflated relative to earnings growth.
Uber stock has had a strong run in 2023, so there is potential for a pullback in the near term. But from a long-term perspective, I am very optimistic.
It's worth noting that Uber is adding to the S&P 500 index at the end of this month. This could increase interest in the stock.
Snowflake
Finally, we have Snowflake (NYSE: SNOW). It is a data analytics and storage company with a distinguished list of clients (MasterCard, London Stock Exchange, deliveryNHS, etc.).
Snowflake has been growing at an incredible rate over the past few years. And recent results for the quarter ended October 31 showed the company is still flying.
During the period, revenue was $734 million, up 32% year-over-year. Meanwhile, the number of customers with product revenue of more than $1 million in the past 12 months was 436, up 52% from the previous year.
Following these impressive results, several brokers increased their price targets for the stock. citi groupFor example, it raised its target from $191 to $235.
This stock is higher on the risk spectrum, because profits are still quite small at this stage. But I expect profits to increase significantly in the coming years.
It's worth noting that Warren Buffett owns about $1.1 billion in Snowflake shares. In my opinion, this is very encouraging.
