There’s something rather thrilling about a growth stock, like discovering a forgotten bottle of vintage champagne in the cellar. These companies, growing at a pace that would make a greyhound blush, have the potential to turn modest investments into fortunes. Of course, not every contender makes it past the first round, but a select few have the stamina to go the distance.
Allow me to introduce four such stocks, each with a future as promising as a sunny forecast and valuations that don’t require you to sell the family silver. Here’s a rundown of who’s who in the growth stock zoo, and which might find a cozy spot in your long-term portfolio.
1. Nvidia
One can hardly ignore Nvidia (NVDA) these days, what with its performance being more dazzling than a fireworks display at a country fair. Over the past 15 years, it has grown at an average annual rate of 56.1%, turning a modest $1,000 into a princely sum of over $790,000! The past three years have seen it averaging annual gains of 116.5%, which is rather like finding a gold mine in your backyard.
What’s more, it doesn’t seem to be overvalued, with a forward-looking price-to-earnings (P/E) ratio of 41, roughly on par with its five-year average of 39. Nvidia’s growth potential remains robust, particularly as it’s become a key supplier of semiconductor chips for data centers, which are essential for artificial intelligence (AI) computing. Indeed, Nvidia’s data center business has skyrocketed from $3 billion to $115 billion in annual revenue over just five years, with more growth on the horizon. It’s a bit like watching a quiet chap turn into the life of the party.
2. Alphabet
Then there’s Google parent Alphabet (GOOG) (GOOGL), one of the so-called “Magnificent Seven” fast-growing giants. Alphabet is not just about the dominant Google search engine; it’s also home to YouTube, Chrome, Nest, Android, Google Cloud Platform, and more. It’s like a Swiss Army knife of tech, with a tool for every occasion.
Alphabet has also become a leader in AI, incorporating it into offerings such as search. It’s a major player in cloud computing with Google Cloud, and it’s now a dividend-paying stock, having initiated a payout in 2024 and recently increasing it by 5%. Some worry about Alphabet being broken up due to antitrust concerns, but that might not be a bad thing for shareholders, who could end up owning all the pieces, which might be worth more separately. Meanwhile, the stock’s valuation is attractive, with its recent forward P/E of 20, below the five-year average of 22. It’s a bit like buying a Bentley for the price of a Buick.
3. Waste Management
Now, Waste Management (WM) might not sound like the most glamorous of growth stocks, but don’t let its humble origins fool you. Over the past 15 years, it has averaged annual gains of 14.4%-and over the past five and 10 years, it has averaged more than 17%. It’s like discovering that the gardener is actually a baronet in disguise.
Waste Management is particularly appealing if you’re worried about an economic slowdown or recession, as its business is fairly recession-resistant. People might delay vacations or new refrigerators, but garbage collection carries on. With a recent forward P/E of 30, slightly above the five-year average of 27, Waste Management’s stock seems only a touch overvalued. It’s not easy to catch the shares when they’re undervalued, so if you’re a long-term believer, it might be worth snapping up a few shares.
Another plus is its dividend yield, recently 1.4%. While it may not seem like much, it’s been growing briskly. The total annual payout was recently $3.15, up from $2.18 in 2020 and $1.54 in 2015. Waste Management offers both growth and income, like a trusty butler who also happens to be a whiz at investments.
4. Vanguard Information Technology ETF
Finally, there’s the Vanguard Information Technology ETF (VGT). It’s not technically a common stock but an exchange-traded fund (ETF)-a fund that trades like a stock. You can buy shares from any good brokerage. This ETF instantly invests you in more than 300 tech stocks, including top holdings like Nvidia, Microsoft, Apple, Broadcom, and Palantir Technologies.
The reason to consider it as a growth stock is its performance: Over the past five years, it has averaged annual gains of 18.4%. Over the past decade and 15 years, its average annual gains have been 21.5% and 19.6%, respectively. It’s like having a stable of thoroughbreds in your portfolio.
So, consider these suggestions for your long-term portfolio. Keep in mind that should the market suffer a pullback-a common occurrence-growth stocks often pull back more sharply than their value-stock counterparts. If you can’t handle some volatility, think twice before focusing on growth stocks.
And remember, for some or all of your long-term dollars, you can do quite well just sticking with a simple S&P 500 index fund, too. It’s like opting for a reliable old friend rather than a flashy newcomer. 😊
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2025-08-12 03:34