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BYD, the electric vehicle manufacturer, has seen its stock price drop, but the company itself continues to show growth.
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SoFi’s recent issues don’t necessarily indicate the broader future of online banking.
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Alphabet, the parent company of Google, is often mistaken for an outdated company, but that’s not quite the case.
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Finding growth stocks that you feel confident about for the long haul can be tricky. It’s typically not hard to find options, but comfort in holding those stocks over time? That’s another matter. You need to consider flexibility and real staying power.
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That said, let’s dive into three growth stocks that appear promising. Interestingly, two are currently available at a slight discount.
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Judging by recent headlines, it would be easy to feel pessimistic about BYD (OTC: Baidi). It’s technically still the largest EV manufacturer globally, producing 474,175 vehicles in the previous month alone. While they face competition from companies like Geely and Xiaomi, their business performance has remained stable, even if profitability is under pressure. The pricing of BYD’s stock doesn’t always reflect the intense competition it faces.
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Yet, there’s still significant long-term potential, especially within China. Sales of new energy vehicles reached a record 1.32 million units last month, surpassing traditional internal combustion engine cars, according to the China Passenger Vehicle Association. Predictions indicate that the Chinese EV market may grow at over 17% annually until at least 2030.
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But what about BYD’s declining profitability? The 33% year-over-year drop in net income last quarter raises eyebrows, doesn’t it?
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It’s a mixed bag. Yes, profit margins are declining, but this seems to be the new normal. The saturation of the Chinese EV market signifies that profits won’t likely keep decreasing. In fact, BYD’s sales are expected to grow over 21% in the next year.
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Importantly, this change in profitability is already factored into BYD’s stock price, which has plummeted 35% since its peak in May.
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Moreover, there’s value that’s not fully represented in this reduced stock price. BYD is developing next-generation EV batteries not just for themselves but also other manufacturers. As the second-largest EV battery maker, they possess the expertise to potentially lead in this market.
If you’re keeping an eye on SoFi Technologies (NASDAQ: SOFI), you might have noticed its stock has been dipping recently. Some of this may stem from sales by insiders or large shareholders, but it’s likely some simply reflects profit-taking after the surge leading up to the launch of their crypto trading platform.
Earlier this month, SoFi announced plans to issue $1.5 billion in new shares, which could dilute existing shareholders. This is quite a hefty endeavor for the market to absorb quickly. Nonetheless, this might actually present a buying opportunity for investors focusing on growth.
SoFi is an online bank that offers a wide range of banking services, exclusively online—no physical branches. And it seems to be working well for them, with revenue climbing 38% year-over-year to $950 million in the last quarter, marking a sustained trend. They also posted a net income of $139 million.
As consumers lean more on technology for managing daily tasks, a recent study indicated that 54% of U.S. consumers prefer mobile banking apps over traditional bank visits. Only a small percentage choose to handle banking in person.
Yes, dilution isn’t an appealing prospect for shareholders, but SoFi could put the funds to productive use.
Lastly, let’s talk about Alphabet (NASDAQ: GOOG). It’s a stock worth considering for long-term investment. While it may not be the growth powerhouse it once was, with the search engine market reaching maturity and competition intensifying, there’s more on the horizon.
Alphabet isn’t limited to just search and Android. They are venturing into various projects that are rapidly becoming significant profit drivers. For example, their cloud computing division saw a remarkable revenue increase of 33%, nearing $15.2 billion in the last quarter, contributing $3.6 billion to net operating income.
This still pales in comparison to their search business, but it’s clear that cloud computing is unexpectedly becoming a key growth area.
YouTube also posted impressive results, generating almost $10.3 billion in ad revenue last quarter. Interestingly, it remains the most popular streaming platform in the U.S. and is unique in seeing a rise in user engagement over recent years.
Moreover, there’s buzz around Alphabet’s potential move into advanced chip manufacturing, especially after reports suggested they are negotiating with Meta Platforms for Tensor processors designed for AI workloads. If they move into AI chip manufacturing, they could tap into a swiftly expanding market expected to grow by nearly 30% annually through 2034.
Clearly, despite Alphabet’s established presence, numerous opportunities for growth still exist.
Before investing in BYD, keep this in mind:
Motley Fool Stock Advisor has identified a set of stocks believed to have exceptional growth potential—BYD isn’t among them. These ten stocks are seen as capable of delivering considerable returns in the coming years.
When you look back at some past recommendations, like Netflix or Nvidia, those who invested early have seen significant returns. In fact, the average return for Stock Advisor stands at 971%, which vastly outperforms the S&P 500.
Don’t miss out on the latest top ten list they offer.
