Finding elite growth stocks that promise to outperform the market is akin to searching for buried treasure in a vast financial ocean. These companies, characterized by their consistent expansion of revenue, earnings, and market capitalization, stand as beacons of hope for investors on the lookout for long-term gains.
Amazon (AMZN)
Amazon (NASDAQ: AMZN) hit a pivotal turning point in 2023, positioning itself for unprecedented growth. Spearheading the artificial intelligence (AI) revolution, Amazon is poised to claim the title of the world’s largest company by revenue.
The realm of generative AI, projected to burgeon into a $1.3 trillion industry by 2032, attracts Amazon like bees to honey. With its suite of generative AI products – Amazon Bedrock, Amazon Q, Code Whisperer, and AWS Tranium – the tech giant is poised to carve a substantial slice of the lucrative pie. In FY23, Amazon’s revenue soared by 12% year-over-year to $574.8 billion. Operating income surged to $36.9 billion, a notable leap from $12.2 billion in 2022. Particularly enticing for investors was Amazon’s record free cash flow of $36.8 billion and its winning streak in revenue, EPS, and FCF trends, signaling an opportune moment to invest in this elite growth stock.
Netflix (NFLX)
Netflix (NASDAQ: NFLX) lords over the global streaming domain, poised to snatch more market share in the coming decade. Bolstered by successful restructuring efforts and a burgeoning ad plan membership, Netflix flaunts a rosy outlook.
Guided by optimism for FY24 following extensive cost-cutting endeavors in 2023, Netflix witnessed a resurgence in revenue and EPS, coupled with a groundbreaking surge in FCF from operations. In the 2023 fiscal year, Netflix’s FCF skyrocketed to $6.9 billion, while its operating margin inflated by 280 basis points. The introduction of the ad plan membership heralded a fresh avenue for revenue growth, along with stringent measures to curb password sharing. Boasting over 260 million global subscribers, Netflix foresees revenue of $9.24 billion in Q1 FY24, hinting at a 13% YOY growth, and aims for a 520 basis points expansion in operating margins. Thus, Netflix emerges as a premier elite growth stock beckoning investors to partake in its growth journey.
Spotify (SPOT)
Spotify (NYSE: SPOT) solidifies its position as a global music streaming behemoth, poised to deliver substantial returns in the next decade. Inch by inch, the company inches closer to achieving GAAP profitability for an entire fiscal year, paving the way for extraordinary growth.
In 2023, Spotify showcased operational prowess, with a 13% YOY revenue surge to $13.24 billion and a record FCF of $674 million. An unexpected profit of $0.33 per share in Q3 2023 turned heads, indicating a positive trajectory for the company. With diversified growth spanning Latin America and other regions at a robust 15% CAGR, Spotify’s monthly active users hit 602 million in FY23, hinting at an imminent surpassing of the 1 billion MAU mark in the near future. Bolstered by expanding gross margins and double-digit growth in premium subscriptions across all regions, coupled with a robust liquidity position, Spotify shines as a star among elite growth stocks, ripe for investment opportunities.
