After a brutal 2022, we’ve seen a resurgence in tech stocks so far in 2023. Many stocks in this group have climbed 50% or more so far to start the year. While those types of gains in such a short span seem unsustainable, they do have investors looking for growth stocks to buy and hold.
Once in a while, investors must be willing to pull the trigger amid the downtrends the market provides. Scooping up high-quality businesses when a given stock is in a free-fall can be terrifying. However, the potential returns with such stocks over a longer time horizon can be much more attractive.
Of course, finding quality growth stocks to buy can also be rather difficult. That goes double for more traditional, valuation-based investors.
Valuation likely keeps a lot of investors away from high-quality growth stocks. I had trouble with that too. My mindset shifted once I accepted the fact that high-quality, high-growth stocks commanded a premium — and always will command a premium. If these stocks ever stop commanding a premium, it essentially means that it has run out of growth.
So without further ado, let’s look at a few growth stocks to buy and hold for the long-term.
Palo Alto Networks (PANW)
Given the current landscape of the technology sector, it’s very hard to ignore the secular tailwinds supporting Palo Alto Networks (NASDAQ:PANW). Regardless of the economic backdrop (bull market vs. bear market, recession vs. economic expansion, etc.), there will always be cyber crime.
Cybercriminals will continue to pester, hack and shake-down larger organizations, looking for a payout on their attacks. They will continue to go after customer data from retailers, while attacking governments, defense contractors, consumers and corporations. They’ll sell that data or information and/or look for payment to recover it.
There’s a seemingly endless list of innovative cyber-criminal activity, and firms like Palo Alto must stay ahead of it.
That’s why its business continued to grow throughout 2022. It’s why Palo Alto is still growing, and why it’s now one of the few GAAP-profitable firms in its industry, with a long runway of growth ahead. Notably, analysts expect at least 20% annual revenue growth over the next four years. That’s good enough for me.
The Trade Desk (TTD)
The Trade Desk (NASDAQ:TTD) has been one of my favorite growth stocks to buy and hold. While its share price has been through the wringer — suffering a peak-to-trough decline of roughly 64% — shares have been trying to climb higher in 2023.
The company has so many positives to assess, it’s hard to ignore this name.
Co-founder and CEO Jeff Green and his company have built a true industry-leading platform. This platform is one that has not only continued to grow through the bumpy economic climate we’re in, but one that can operate all over the world. It’s worth pointing out that The Trade Desk can operate in China, a country that Alphabet (NASDAQ:GOOG), Meta (NASDAQ:META) and others don’t have access to.
It’s also worth pointing out that The Trade Desk is a profitable growth stock, and it has been for quite some time. Amid the bear market, many investors can lose focus of these types of realities.
The Trade Desk has strong growth forecasts for the next several years, and analysts expect its bottom line to grow impressively as well.
Salesforce (CRM)
It’s one thing to buy a stock for the next several quarters or years. It’s another thing to buy a stock for a truly long period of time (decades or more). For the latter, they need to be dependable.
I really started pounding the table for Salesforce (NYSE:CRM) about six months ago, because the valuation of this company became too attractive. Anyone who has used Salesforce’s platform knows just how sticky its products are. Management’s commentary about its business (essentially that it’s holding just fine through the economic turmoil), combined with its suddenly reasonable valuation, made Salesforce too hard to ignore.
Now, there’s five activist investors involved in the name. They are looking for CEO Marc Benioff to maximize the firm’s operating leverage, boosting margins and efficiency.
As of last quarter, that’s exactly what the company’s management team is doing. Salesforce reported a top- and bottom-line beat, issuing better-than-expected guidance and reporting very strong cash flow.
— Bret Kenwell
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Source: Investor Place