Identifying growth stocks that will outperform the Nasdaq requires both a pragmatic and forward-thinking approach. These companies exhibit resilience and market dominance in their respective industries. With 2023 coming to an end, there exists a unique class of growth stocks with enormous upside potential.
However, it is important to understand that not all growth stocks are created equally. Some carry more risk than others, so investors should carefully evaluate their risk tolerance. With interest rate cuts on the table in 2024, these growth stocks can soar to new heights.
Now, let’s discuss the 3 best growth stocks that will outperform the Nasdaq in 2024!
Netflix (NFLX)
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Netflix (NASDAQ:NFLX) is an American video subscription streaming service headquartered in Los Gatos, California. It is the largest streaming service in the world with 247.15 million subscribers.
As a global streaming giant, Netflix has revolutionized the way audiences consume content. The company’s restructuring efforts and focus on international expansion has boosted subscriber growth. Additionally, Netflix’s recent crackdown on password sharing shows the company’s long-term commitment to market share gains.
In Q3 2023, Netflix added 8.76 million global subscribers. This was above guided estimates with its new ad-plan membership gaining traction. Netflix now has the ability to appeal to a much wider audience, and recent price hikes could increase profitability. With FCF set to hit a record of $6.5 billion in FY23, Netflix is one of the best growth stocks to buy.
Alphabet (GOOG, GOOGL)
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Google’s parent company, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), stands as a compelling growth stock to buy for 2024. The company has seen strong revenue and EPS growth in FY23, largely driven by the demand for artificial intelligence.
But that is not the only thing going for the company going into the new year. Google Search and YouTube are driving advertising revenue growth, and 2024 might be an even better year. With the expectations of a soft landing, companies’ risk appetite to allocate more capital might be a key driver. In its latest quarterly results, Alphabet revenue grew 11% YOY to $76.7 billion.
However, what was more impressive is the company’s operating income hitting $21.3 billion. Google’s cloud business was a primary driver and AI will continue to drive momentum moving forward. Its new Gemini AI model should not be overlooked, as executives boast its superiority over OpenAI’s GPT-3.5 model.
Shopify (SHOP)
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Shopify (NYSE:SHOP) has reclaimed the $100 billion market capitalization status and 2024 could be a huge year. After significant losses in 2022, restructuring efforts have boosted investor confidence.
Management has made structural changes in the business that could start to materialize in the new year. One of them being the sale of its logistics business to Flexport. The move saw an immediate impact, with operating income swinging from negative to positive. This has also strengthened Shopify’s liquidity, making it well positioned to capitalize on the market opportunities in AI. Additionally, Shopify cut 20% of their workforce as profitability has plagued growth in the year prior.
Analysts project the company to grow top-line revenue by 20% in FY24. With cost-cutting efforts materializing, Shopify is one of the top growth stocks that will outperform the Nasdaq in 2024.