Many of Wall Street’s favorite growth stocks have seemed almost unstoppable. Their hot runs continue while their valuations begin to swell well above historical averages. As a result investors may be wondering if it’s a good idea to do a bit of trimming.
Taking a profit every now and then, especially at new highs in a stock, is just good practice, after all. I’m not against profit-taking on some of your biggest winners if you’re a bit light on the dry powder. However, I also find that punishing your winners could cause one to leave money on the table.
Indeed, if you’re a trader, the name of the game is about buying low and selling high. However, if you’re a long-term investor who wants to create serious wealth over a number of years, I’d argue that punishing your biggest growth winners may not be the best idea. In this piece, we’ll check in with three “unstoppable” growth stocks that I still view as worth buying right here.
Unstoppable Growth Stocks: SharkNinja (SN)
SharkNinja (NYSE:SN) is a lesser-known consumer products company whose products you may already unknowingly own. If there’s a Shark vacuum in your closet or a Ninja blender in your kitchen cupboard, you’re already a customer.
What separates the firm from other home and kitchen appliance makers is the amount of innovation.
Shark and Ninja products are not only high-tech and easy to use but also relatively affordable. It’s no wonder the $10.8 billion company is viewed as a disruptor of an old, typically low-tech home appliance industry.
Looking ahead, I expect SharkNinja to keep incorporating new technologies. Whether we’re talking about AI-assisted navigation for its IQ Robot Vaccum or self-cleaning brush rolls, it’s clear that SharkNinja is a tech-first company that just happens to make fantastic products. If it keeps innovating, my guess is it’ll continue to take market share away from rivals. I expect their rivals may have been caught flatfooted when it comes to innovative features.
At writing, SN stock is up over 83% in the past year. It’s been a marvelous run, but I still don’t see it as markedly expensive at 57.3 times trailing price-to-earnings (P/E) relative to its growth.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a semiconductor company that hasn’t received as much attention as the big GPU makers. At least the attention didn’t come in the earlier months of the so-called AI race. The tides are changing, though. QCOM stock just recently made a new all-time high after its explosive year-to-date parabolic melt-up.
Year to date, shares are up close to 44%. And they’re probably not done rising, given tailwinds ahead and the still not-so-expensive 26.8 times trailing P/E multiple.
More than 26 times P/E is pricy by QCOM stock standards. However, it’s still not even close to the multiple of other AI chip high flyers. I view this relative discount as an opportunity. I believe this even with the stock experiencing a surge of momentum behind it going into June 2024.
Qualcomm’s latest AI-capable chips, Snapdragon X Elite, found a home in the latest Microsoft (NASDAQ:MSFT) Copilot+ PCs, which were unveiled a few days ago. Moving ahead, I’d not be surprised if other PC makers followed Microsoft’s playbook by going for the Snapdragon X over other processors.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, GOOGL) is an AI company that’s really starting to pick up speed in the AI race. With shares currently on a seven-session winning streak, thanks in part to an action-packed annual I/O event, I find GOOG stock to be one of the mega-cap Magnificent Seven plays you just have to own, even at new highs close to $180 per share.
Like it or not, Alphabet is an AI-first innovator, but the firm must be careful not to “force feed” the latest and greatest AI technologies to its many Google search users. Make no mistake: Gemini is a compelling large language model (LLM) that could, one day, top ChatGPT. However, many people who go to Google’s website want an old-fashioned page with links, not an AI-generated answer.
Sure, AI summaries could enrich the search engine experience. But I think they could also hurt the experience for many users who probably would have gone to Gemini or ChatGPT if they wanted an AI answer rather than a simple list of links.
Search is still incredibly relevant in the AI age, especially with the number of hallucinations many of today’s top LLMs can still generate. As Alphabet rolls out AI across the search experience, look for management to pay close attention to user feedback. Either way, Alphabet is the king of search and perhaps one of the top dogs in AI, making it a must-hold for the long term.
Simply put, GOOG stock looks like a bad candidate to take profits in right now—it’s still a buy in my books.
On the date of publication, Joey Frenette held shares in Microsoft and Alphabet (Class C). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.