Let your winners run.
That’s the advice shared by the world’s most successful investors. Investing legend Peter Lynch famously said: “Selling your winners and holding your losers is like cutting the flowers and watering the weeds.”
If a stock is running ahead, the best move investors can make is sit back and enjoy the ride. This is especially true if one happens to take a position in a hypergrowth stock. That is a security of a company that is dominating its respective industry, posting accelerating earnings, and whose profits are increasing at an exponential rate.
Such growth stocks are rare, but they can certainly have an outsized impact on a portfolio and lead to long-term wealth. With the stock market at an all-time high, let’s look at three hypergrowth stocks to buy now and hold forever.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) has reasserted itself as the world’s dominant streaming company. It’s also the only profitable one.
As of yesterday, NFLX stock is up 12% after another strong earnings print. Growing subscription numbers are driving the share price higher. In the last six months, the stock has gained 30%, including an 18% rise so far in 2024. News that the company added 13.1 million net new subscribers in Q4 of 2023 has shifted the share price into overdrive.
Now, Netflix has 260.8 million subscribers worldwide, ahead of the 256 million that analysts had expected. Also, the company issued strong forward guidance, increasing its 2024 full-year operating margin forecast to 24%, up from a previous range of 22% to 23%. Netflix is forecasting earnings of $4.49 a share for the current first quarter of 2024, higher than the $4.10 estimated on Wall Street.
The financial results were released on the same day that Netflix announced it will begin streaming professional wrestling in 2025. This marks the company’s most significant move into live sports and entertainment yet.
Netflix’s financial results have improved considerably since it added paid advertisements to its streaming service. And the crackdown on password sharing among users of its platform helped significantly. In the last 12 months, NFLX stock has increased 52%.
ASML (ASML)
ASML (NASDAQ:ASML) is not as well known as many other microchip and semiconductor concerns. In fact, the company’s marketing slogan is: “The most important tech company you’ve never heard of.”
However, the Dutch firm is among the most important semiconductor equipment makers in the world. Business is booming. ASML makes a machine called an “extreme ultraviolet lithography” that is required in the manufacturing of the world’s most advanced microchips. Therefore, demand is surging.
Further, ASML just announced a 30% increase in its full-year sales. The company reported Q4 2023 revenue and profits that trounced Wall Street forecasts. Sales in Q4 were up 12.5% year over year (YOY), and they rose 30% for all of last year compared to 2022. While the strong earnings have ASML stock up 9%, there’s additional room to run. Over the last 12 months, ASML stock is up only 25%, a fraction of the gains seen in other chipmakers.
Advanced Micro Devices (AMD)
News of ASML stock’s strong Q4 print has shares of Advanced Micro Devices (NASDAQ:AMD) up 6%, trading at an all-time high. AMD stock seems unstoppable right now, having already risen 30% in 2024.
In the past 12 months, the share price has gained 140%. Despite the big run, analysts see more runway ahead for the shares. Analysts at Wedbush Securities just reiterated their outperform, buy equivalent, rating on AMD stock and raised their price target to $200 a share, implying another 12% upside.
Advanced Micro Devices is rising on expectations that its latest crop of microchips will position it to take market share from rivals such as Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC). AMD’s latest Ryzen and MI300X accelerator microchips are being hailed as among the most powerful in the marketplace.
In fact, they are capable of powering the most advanced AI models and applications. Many analysts expect AMD to go head-to-head with Nvidia this year and prevail. AMD stock is up 712% in the last five years.
— Joel Baglole
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Source: Investor Place