Not all stocks are created equal, and some are better positioned for long-term growth than others. Growth stocks tend to be the ones that dominate their sector and are able to maintain a competitive advantage over rival companies.
They are also stocks that have outperformed the Dow Jones Industrial Average, S&P 500 and even the high flying, tech heavy Nasdaq Composite this year. These are stocks that have provided consistent double-digit gains for their shareholders in the midst of a global pandemic and the worst economic downturn in U.S. history.
These companies have continued to shine as global stock markets crashed and then recovered. With that said, here’s a list of seven growth stocks that investors can ride for the rest of 2020 and beyond:
- Nvidia (NASDAQ:NVDA)
- PayPal (NASDAQ:PYPL)
- Peloton (NASDAQ:PTON)
- Costco (NASDAQ:COST)
- Moderna (NASDAQ:MRNA)
- Apple (NASDAQ:AAPL)
- Domino’s (NYSE:DPZ)
Let’s take a look at why each has notable staying power.
Growth Stocks to Buy: Nvidia (NVDA)NVDA) logo on the indoor wall of a corporate building made of yellow tiles" width="300" height="169">
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Nvidia is now the dominant player when it comes to making graphics processing units that are used for gaming and professional markets, ahead of rivals Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD). This fact is reflected in the company’s share price, which has more than doubled from $196.40 a share in March to a new all-time high of $431.69 in July.
The stock is currently trading near $425 a share, and the accelerated growth is likely to continue through the rest of this year, making it one of the top growth stocks to watch in 2020.
The continued upward trend in NVDA stock is likely to come from sustained growth in the company’s video game segment, where more than 200 million gamers now use the company’s GeForce platform. Revenue from Nvidia’s gaming business generated an 11% compound annual growth rate (CAGR) over the past three years. Also driving the growth story is Nvidia’s push into artificial intelligence, particularly with self-driving vehicles, and cloud computing, where Nvidia is developing a data center business that provides GPUs and other components that are used in cloud-based data storage centers. Nvidia’s data centers are used by major cloud providers such as Amazon’s (NASDAQ:AMZN) AWS and Microsoft’s (NASDAQ:MSFT) Azure.
Analysts, continue to like NVDA stock, which retains a “buy” rating. The high estimate on NVDA stock is for shares to reach $500 in the next 12 months. The median price target on the stock is $412.50 a share. However, analysts have been scrambling to revise their estimates on NVDA stock as it continually breaks through one new all-time high after another.
PayPal (PYPL)PYPL) logo overlays daylight photo of corporate building" width="300" height="169">
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PayPal’s stock has trended steadily upwards in recent months, rising 133% to an all-time high of just under $200 per share. The surge in PYPL stock comes as the company continues to beat earnings estimates as demand for its online payment system strengthens during the novel coronavirus pandemic.
On July 29, PayPal reported second quarter earnings that handily beat estimates. The company announced that its earnings rose 49% compared to a year earlier to an adjusted $1.07 a share. PayPal revenue climbed 25% to $5.26 billion in the three months ended June 30. Analysts had expected PayPal earnings of 88 cents on revenue of $4.99 billion.
Now the market leader in digital payments, PayPal is well positioned to continue prospering throughout the remainder of 2020 no matter what happens with the pandemic or economy. Sheltering in place has only increased demand for digital payments, among companies and consumers. PayPal has also been plotting for strategic growth in coming quarters.
In late 2019, the company acquired Honey, a shopping and awards platform, for $4 billion. And last quarter, at the height of Covid-19 lock down measures, PayPal launched in-store payments via QR codes that support contactless transactions, a very smart move amid a pandemic.
Analysts maintain a strong “buy” rating on PYPL stock, with a median price target of $215 and a high estimate of $235 per share. The consensus view is that PayPal is likely to continue benefiting from the move to online digital payments.
Peloton (PTON)PTON) store front" width="300" height="169">
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Speaking of stocks that have benefited from the global pandemic, how about Peloton? The exercise equipment company has been going gangbusters since Covid-19 forced gyms to shutdown and people to exercise at home.
Robust sales and better-than-expected revenue have launched Peloton stock to new highs this year. Since mid-March, Peloton’s share price has more than tripled to $66 today from just under $20 a share in mid-March.
The latest earnings showed the company’s sales surged 66% year-over-year this spring to $524.6 million. Sales from its internet-connected fitness products such as stationary exercise bikes and treadmills totaled $420 million, up 61% from a year ago and representing 80% of total revenue. Revenue from subscriptions to Peloton’s online virtual fitness classes, notably its spin bike classes, totaled $98 million, up 92% year over year, comprising 19% of total revenue.
Looking ahead to the full year, Peloton is forecasting for total revenue to reach $1.74 billion, which would represent a year-over-year increase of 89%. The company has also raised its 2020 outlook for connected fitness subscribers, which are defined as a Peloton user with a paid subscription, to 1.05 million from 920,000 previously. Wow!
Not surprising that analysts love PTON stock and see continued growth for the company. The company’s stock holds a firm “buy” rating and a median price target of $65 a share. The high price target on the stock is $84 per share. With most gyms and fitness centers closed for the foreseeable future, Peloton can’t really lose.
Costco (COST)COST) warehouse in Auburn Hills, Michigan." width="300" height="169">
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Costco’s appeal to shoppers remains undiminished, as does its placement among growth stocks to buy.
The warehouse grocery retailer continues to attract legions of loyal consumers, each of whom pay a membership fee to shop at its stores. In-person visits to Costco stores were up 14% in June from a year earlier, and the company’s e-commerce business rose a whopping 87% on an annual basis. Costco has been quick to capitalize on the pandemic imposed lock downs, moving to offer same-day home delivery to customers in the U.S. and, more recently, Canada. Given that Costco primarily sells essential food items, the company’s growth potential for the remainder of 2020 should remain intact.
Additionally, Costco continues to expand internationally, with more than 700 stores worldwide. Last year, the company opened its first store in mainland China. With a 90% membership renewal rate, a focus on keeping costs low, and a move to offering selling more products online, Costco looks like a can’t miss investment. The trend line of COST stock has been straight up over the past decade and that trend looks likely to continue. After bottoming at $279.85 a share in mid-March, COST stock has rebounded 18% to reach an all-time high of $331.49 per share. Today, the company’s share price is not too far off that all-time high at about $325.
Analysts remain bullish on COST stock, with a consensus “buy” rating and a 12-month price target of $330 a share. On the high side, analysts see COST stock reaching $375 per share within the next 12 months. Costco is a company that knows its customers and how to maintain growth over the long-term.
Will Moderna be the bio-pharmaceutical company that develops the breakthrough Covid-19 vaccine the world desperately needs? That’s the question on the minds of investors and analysts as they try to evaluate the Cambridge, Massachusetts company.
To be sure, Moderna is a leading contender in the race to find a safe and effective vaccine against the respiratory disease that has killed nearly 675,000 people worldwide.
On July 27, the company announced that it had received an additional $472 million from the U.S. government’s “Biomedical Advanced Research and Development Authority” to support the development of its Covid-19 vaccine. The U.S. government has now invested a total of $955 million in Moderna’s vaccine, which is the first in the United States to begin human trials and is now in a phase three clinical trial with a large group of human test subjects. If the U.S. government investment isn’t a big enough boost of confidence, consider also that Chinese hackers were recently accused of trying to steal data from the company.
Clearly, Moderna is on the right track.
As Moderna gets closer to the commercialization of a Covid-19 vaccine, investors can expect that the company’s stock will continue to rise. It has been a wild ride for MRNA stock so far this year. The company’s share price has more than quadrupled this year, rising from $19.23 to $95.21. There has also been a lot of volatility in the stock price. Each time Moderna reports something positive with its vaccine, the stock price skyrockets. Each time a competitor such as Pfizer (NYSE:PFE) reports a positive development on the vaccine front, MRNA stock falls.
Today, shares are hovering around $75 each.
Given Moderna’s potential, analysts remain quite positive on the stock moving forward. There is currently a consensus “buy” rating on the stock, with no “sell” ratings. The media price target on MRNA stock is $92 a share, with a high forecast of $134 per share. The median price target represents a nearly 25% upside base on the stock’s current price.
Apple (AAPL)AAPL) logo on glass with people in background" width="300" height="169">
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At this point, what more can be said about Apple and its stock? The company founded by Steve Jobs just announced blockbuster third-quarter results and a 4:1 stock split. Apple’s revenue was the highest-ever reported in the third quarter at $59.7 billion, up 11% year-over-year.
Its products and services segment posted double-digit growth, and its earnings per share came in at $2.58, well above analysts’ estimates of $2.04. And the company reported $193.82 billion of cash on hand, which is up from the company’s fiscal second quarter.
The explosive quarterly results and announced stock split sent AAPL stock skyrocketing more than 7% to above $410 per share. AAPL stock is now up more than 80% from its March lows, and seems destined to climb higher. Most encouraging for the company’s growth story is the fact that sales of its core products, such as the iPhone, iPad and Mac computer remain strong and continue to beat analyst estimates.
Going forward, Apple plans to continue diversifying its business with new products and services such as the Apple TV+ streaming service and the Apple credit card that is a joint venture with Goldman Sachs (NYSE:GS).
Clearly investors love AAPL stock, and the stock split that is to be carried out at the end of August and lower the share price to around $100 is likely to attract even more retail investors. Analysts too remain positive on AAPL stock, with a “buy” rating and a median price target of $415.30 per share. The high target on the stock is $480 per share.
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Few fast food restaurant chains are as resilient as Domino’s Pizza. The Ann Arbor, Michigan-based company has bucked the downturn in the restaurant industry this year by focusing almost exclusively on delivery to people who are stuck at home amid the Covid-19 pandemic.
The company recently reported second quarter results that beat analysts estimates. Revenues from its pizza and food deliveries came in at $920 million in the quarter, up 13.4% year-over-year and above the $911.5 million that had been expected by analysts. The diluted earnings per share was $2.99 compared to analysts’ expectation of $2.24.
In fact, despite the global pandemic that has shuttered most restaurants, Domino’s actually opened 84 new restaurants during the second quarter. In the last four quarters, the company has added 859 new restaurants globally through its franchise model. This is quite an impressive feat considering the current environment. And Domino’s continues to innovate in order to improve the delivery experience of its customers (using old pizza boxes to prop-up hot pizza left on people’s doorsteps) and offer new products such as improved chicken wings that customers like and order repeatedly.
The approach bodes well for Domino’s and its shareholders. DPZ stock is up 40% year-to-date at $380 a share. However, the stock has dipped recently from its 52-week high of $422.15. Savvy investors may want to snap up shares now before they rise again. Analysts have a median price target of $440 per share on DPZ stock, with a high estimate of $506 a share. Unsurprisingly, DPZ stock carries a “buy” rating and is certainly one of the key growth stocks to watch today.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. As of this writing, Joel Baglole held shares in NVDA, MRNA, AAPL, MSFT and GS.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.