When looking for growth stocks, it can seem like investors have missed the boat. Growth names such as Nvidia And Amazon are close to record highs, and when high-profile investors like Warren Buffett are turning heads to sell stocks, an investor could be forgiven for concluding that the bull market may be over.
Nevertheless, other high-profile investors have been buying shares in recent weeks, and many stocks never recovered to their 2021 highs or retreated after a sell-off earlier this year. So investors can still find buying opportunities, and these stocks could be a good place to start.
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Advanced micro devices (NASDAQ: AMD) is down 34% from its March peak. The chip design company stands out for its ability to compete in the central processing unit (CPU), graphics processing unit (GPU), and embedded markets, often closing competitive gaps in a short period of time.
The gap it is currently trying to close is with Nvidia, which currently dominates the artificial intelligence (AI) accelerator market. Granted, AMD’s Q3 2024 revenue grew 18%, a pittance compared to Nvidia’s triple-digit annual revenue growth in recent quarters.
However, something crucial is happening with the financial situation. The data center segment, which includes AI accelerators, accounts for 52% of company revenue, and revenue grew 122%. This has made the massive 69% revenue decline in the gaming segment less significant, as this once crucial segment now makes up just 7% of AMD’s revenue.
Additionally, Nvidia’s data center segment now represents 88% of the company’s revenue. AMD is on track for a similar transformation of its business, a factor that should accelerate AMD’s overall revenue growth.
Furthermore, while forward price-to-earnings (P/E) ratios are similar, AMD is trading at a price-to-sales ratio (P/S) of 10, well below Nvidia’s at 39. That could mean that AMD’s share price is not do. reflect a significant portion of potential growth, creating opportunities for investors.
For all the attention StarbucksCoffee stock investors could be overlooking a potential opportunity Dutch Brothers (NYSE: BROS). The Oregon-based beverage chain has undergone rapid expansion in recent years.
Between Starbucks, private chains, and countless independent businesses, coffee shops are a highly competitive business indeed. Still, Dutch Bros has grown to more than 950 locations in 18 states, nearly doubling the number of 503 stores three years ago when it launched its initial public offering (IPO). This gives it a clear advantage over Starbucks, which has largely saturated the US market and is heavily dependent on China for its growth.
Dutch Bros stock fell more than 45% as its September 2021 IPO gave way to declines in the 2022 bear market. Still, investors may want to keep the stock in mind as they look at growth. In the third quarter of 2024, revenues of $338 million increased 28%, with a 20% increase in locations and an increase in same-store sales fueling the growth.
Admittedly, the recent move towards profitability has given Dutch Bros a high price-to-earnings ratio. However, despite the rapid growth, its price-to-earnings ratio stands at 3.2, barely more than the 3.0 sales multiple for Starbucks. Given Dutch Bros’ potential for rapid growth in its home market, investors should consider buying before more people and institutions notice this difference.
Innovative industrial properties (IIP) (NYSE: IIPR) is not a household name, but investors should consider its niche in the real estate and cannabis industries. It is a Real Estate Investment Trust (REIT) that leases facilities to medical cannabis growers.
The company develops real estate under its own management. Nevertheless, it has generated a lot of revenue through its sale-leaseback program. This allows it to purchase properties and then rent them back to former owners, providing cash-strapped businesses with financing while boosting revenue streams for IIP.
The stock price is still down 62% from its 2021 high as the company faced delinquent tenants during the 2022 bear market. However, it is also up over 75% from its 2023 low. It showed to be adept at finding new tenants or selling properties when tenants stopped paying, boosting confidence in the stock.
Innovative Industrial Properties has increased its payout at least once a year since its first dividend in 2017. At $7.60 per year, the dividend yield is 5.8%, well above the 1.25% average for the S&P500.
Furthermore, normalized earnings from operations (FFO), a measure of a REIT’s free cash flow, of $8.13 over the trailing twelve months shows that it covers dividend costs. That puts the price-to-FFO ratio at just 14, and with that low valuation, this growth stock with a huge, rising dividend should generate significant returns over time.
If our analyst team has a stock tip, it could be worth listening to. After all, Stock Advisors the total average return is 873% – a market-shattering outperformance compared to 176% for the S&P 500.*
They just revealed what they believe to be the 10 best stocks for investors to buy now… and Advanced micro devices made the list, but there are nine other stocks you might be overlooking.
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*Stock Advisor returns November 11, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy holds positions in advanced microdevices and innovative industrial properties. The Motley Fool holds positions in and recommends Advanced Micro Devices, Amazon, Innovative Industrial Properties, Nvidia, and Starbucks. The Motley Fool recommends Dutch Bros. The Motley Fool on. The Motley Fool has a disclosure policy.
3 Growth Stocks Down 34% to 62% to Buy Now Originally published by The Motley Fool
