Favorable conditions with lower interest rates are advantageous for growth stocks. These companies often surpass market performance during periods of reduced borrowing costs, showcasing robust revenue and earnings growth.
Last year’s unexpected growth stock rebound has investors questioning whether 2024 will follow suit. Regardless of the broader market’s uncertainty, potential opportunities abound. Some 2023 standouts may continue to impress, making them worthwhile considerations for investors.
Diversifying portfolios with quality growth stocks is a wise strategy, and exploring top these picks can offer valuable investment opportunities.
Meta Platforms (META)
Tech and social media giant Meta Platforms (NASDAQ:META) leads this list. The company is positioned to benefit from the prolonged metaverse development.
A challenging 2022 was marked by economic shifts and declining ad revenues. But, META’s recent strong financial performance indicates a macroeconomic rebound. Therefore, it aligns more with economic trends than just the metaverse narrative.
META’s substantial investments in virtual and augmented reality have solidified its leading position in the metaverse landscape. With a notable 184% surge year to date (YTD), the stock’s success underscores its market dominance. Meta Platform’s innovative “Imagine” tool, initially designed for social media creators, aligns seamlessly with its broader metaverse goals. And, the Oculus headset, acquired in 2014, plays a pivotal role in META’s metaverse ambitions. Impressively, it contributed over 20 million VR headset sales despite challenges.
In Q4 2023, Meta Platforms’ CEO Mark Zuckerberg sold $428 million in company stock, his first sale since 2021, under a program announced in July. Despite this, he retains 13% ownership and an estimated $122 billion fortune. META’s stock remained stable, opening at $344.50 per share with an $885 billion market cap.
Shopify (SHOP)
Shopify (NYSE:SHOP) experienced robust growth in recent years. Revenue soared from $1.1 billion in 2018 to $6.6 billion in Q3 2023. Serving over 1 million merchants globally, its U.S. gross merchandise volume accounted for just 10% of e-commerce spending in 2022. In Q3, revenue increased by 25%, outpacing the 9% growth in total e-commerce spending for the year, reaching $1.137 trillion according to eMarketer.
SHOP surged 115% YTD, reaching $76, with the potential to double in 2024. With a remarkable 450% return over the past five years, its asset-light model, generating $1.7 billion in Q3 revenue, reflects sustained success. The platform’s positive cash flow, strategic investments, and record-breaking Black Friday sales of $4.1 billion position Shopify for continued growth and profitability in 2024.
Shopify’s potential for sustained double-digit revenue growth, coupled with its low market penetration and scope for enhancing merchant features, positions it as an attractive long-term investment.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has transformed from a goods-based e-commerce giant to a service-oriented business, a shift benefiting investors.
While online stores contribute 45% of total sales, third-party seller services, a faster-growing segment, constitute 27% of revenue. This transition allows Amazon to profit from providing its platform to other businesses without the complexities of product management and inventory.
Amazon’s Prime subscriptions price increase (up 14% in Q3) and flourishing ad services (up 26% in Q3) are boosting profitability, evident in the record-breaking gross profit margin. This trend, expected to persist in 2024, points to improved profits. So despite potential competition from TikTok in e-commerce, Amazon remains a strategic choice for 2024. While most revenue comes from e-commerce, Amazon’s main profits stem from Amazon Web Services (AWS). The vertical maintains its lead in cloud services amid industry expansion. Further, growing demand for AI applications on AWS positions Amazon for ongoing success in the coming years.
On the date of publication, Chris MacDonald has a LONG position in META, AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
