5 Best Growth Stocks To Buy For the Next 5 Years

In this article, we discuss the 5 best growth stocks to buy for the next 5 years. If you want to read about some more growth stocks, go directly to 11 Best Growth Stocks To Buy For the Next 5 Years.

5. Cisco Systems, Inc. (NASDAQ:CSCO)

Number of Hedge Fund Holders: 63    

Cisco Systems, Inc. (NASDAQ:CSCO) designs, manufactures and sells Internet Protocol-based networking and other products related to the communications and information technology industry. It is one of the best growth stocks to invest in. On October 14, Cisco Systems revealed that it has partnered up with Microsoft. With this alliance, Cisco and Microsoft Teams will soon offer the ability to run Microsoft natively on the former’s room and desk devices from the first half of 2023.

On August 31, KGI Securities analyst Jackson Chiang upgraded Cisco Systems, Inc. (NASDAQ:CSCO) to Outperform from Neutral with a $53 price target.  

At the end of the second quarter of 2022, 63 hedge funds in the database of Insider Monkey held stakes worth $1.9 billion in Cisco Systems, Inc. (NASDAQ:CSCO), compared to 66 in the previous quarter worth $1.7 billion.

In its Q1 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Cisco Systems, Inc. (NASDAQ:CSCO) was one of them. Here is what the fund said:

“Cisco Systems (NASDAQ:CSCO) traded lower as investors weighed how supply chain concerns would impact sales growth. The company has been upgrading its switching and routing offerings, which should lead to strong demand as on-site locations upgrade infrastructure.”

4. Twilio Inc. (NYSE:TWLO)

Number of Hedge Fund Holders: 64 

Twilio Inc. (NYSE:TWLO) provides a cloud communications platform that enables developers to build, scale, and operate customer engagement within software applications in the United States and internationally. It is one of the top growth stocks to invest in. On August 23, Krisp, a global software company, revealed its partnership with Twilio which will allow Twilio Video customers to achieve high-quality audio when building video experiences through Twilio Video. Krisp will help Twilio Video customers to create an exceptional audio experience.

On October 19, Cowen analyst J. Derrick Wood maintained an Outperform rating on Twilio Inc. (NYSE:TWLO) stock and lowered the price target to $100 from $125, noting growing headwinds around marketing budgets which could impact portions of the portfolio of the firm. 

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in Twilio Inc. (NYSE:TWLO) with 6.8 million shares worth more than $472 million. 

In its Q2 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Twilio Inc. (NYSE:TWLO) was one of them. Here is what the fund said:

“Twilio Inc. (NYSE:TWLO) offers a full suite of cloud-based communications software, services and tools that allow companies in a wide range of businesses to build omnichannel communications capabilities (video, chat, voice, SMS, fax and email) directly into their customer-facing applications without needing to build backend infrastructure and interfaces. The company also provides software tools that allow its users to gather and categorize customer data (its Segments offering) and to create next-generation call centers (Flex) to utilize this data in customer interactions. Twilio is the leader in this fast-growing $80 billion Communications-Platform-as-a-Service (or CPaaS) market, having grown its customer base 5x in the past five years to 268,000 customers and a $3.5 billion run rate revenue for 1Q22. The company’s net revenue retention rate has exceeded 125% every year since its 2016 IPO and its customer churn remains less than 4% (for customers with > $30,000 revenue), evidence of the loyalty of Twilio’s customers to its platform (and a high switching cost) as well as the company’s increasing number of offerings. The company’s revenue is generated from both recurring revenues from subscription fees as well as volume-based charges for usage.

TWLO expects to maintain a +30% annual organic revenue growth rate through at least 2024, with long-term gross margin expansion from 56% to 60%-65%, and EBITDA margins approaching 35% as revenue scales. As of 1Q22, TWLO had $4.2 billion net cash and should turn FCF positive this year. Over the next several years, we expect the company to grow its excess cash significantly as the company operates an asset-light business model with low capital needs of just over 1% of current revenue (read more)

3. Snowflake Inc. (NYSE:SNOW)

Number of Hedge Fund Holders: 65  

Snowflake Inc. (NYSE:SNOW) provides a cloud-based data platform in the United States and internationally. It is one of the elite growth stocks to invest in. On October 17, Snowflake revealed that it has made a partnership with OpenApp, an advertising technology consortium and one of the largest broadcasting companies in the US. SnowFlake bought a 5% stake in OpenApp. It’s also the first company from outside the TV to purchase a stake in a consortium. 

On October 20, Piper Sandler analyst Brent Bracelin maintained an Overweight rating on Snowflake Inc. (NYSE:SNOW) stock and lowered the price target to $218 from $220, noting several factors that could further pressure billings, revenue, and free cash growth estimates into 2023.

Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Altimeter Capital Management is a leading shareholder in Snowflake Inc. (NYSE:SNOW) with 17 million shares worth more than $2.4 billion. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Snowflake Inc. (NYSE:SNOW) was one of them. Here is what the fund said:

“During the quarter, we added to three of our cloud infrastructure positions – Snowflake Inc. (NYSE:SNOW), Cloudflare, Inc., and Datadog, Inc. While investors are concerned that a weakening macroeconomic environment will be a near-term headwind to growth as customers may slow down their cloud expansions, we remain focused on the long term – duration of growth, competitive advantages, and innovative capabilities and are happy to increase our positions at a more attractive price. For example, Snowflake, the leading data cloud provider, during its recent user conference, announced several new products, which significantly expand its addressable market…(read more)

2. Sea Limited (NYSE:SE)

Number of Hedge Fund Holders: 65   

Sea Limited (NYSE:SE) engages in digital entertainment, e-commerce, and digital financial service businesses. It is one of the premier growth stocks to invest in. On October 14, Sea Limited announced that it has partnered up with Penjana Kapital Sdn Bhd, an agency under the purview of the Ministry of Finance, to co-organize the 8th installation of Capital Connections to manage a vibrant startup and venture capital ecosystem in Malaysia. 

On August 18, investment advisory Barclays maintained an Overweight rating on Sea Limited (NYSE:SE) stock and lowered the price target to $114 from $125. Analyst Jiong Shao issued the ratings update. 

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Sea Limited (NYSE:SE) with 8.2 million shares worth more than $548 million. 

In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:

“Sea Limited (NYSE:SE), a global digital gaming and e-commerce company, detracted from performance for the period held. Similar to other online consumer businesses, Sea faced significant multiple compression in the quarter, exacerbated by a slowdown in user growth at its key Free Fire digital game and mounting investments in its e-commerce operation, particularly in new markets like Brazil. We exited our position as we lost confidence in the long-term unit economics in some of Sea’s new markets and were concerned by the simultaneous slowdown in revenue growth and increase in underlying cash burn.”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 72   

Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. It is one of the elite growth stocks to invest in. On October 20, the CEO of Tesla Elon Musk said that Tesla could be worth more than Apple and Saudi Aramco combined. On October 20, Tesla’s CEO said that its engineering team had turned its focus on a next-generation electric car platform which will be half the price of Tesla’s Model 3/Y platform. 

On October 20, RBC Capital analyst Joseph Spak maintained an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) stock and lowered the price target to $325 from $340. 

At the end of the second quarter of 2022, 72 hedge funds in the database of Insider Monkey held stakes worth $7.2 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 80 in the preceding quarter worth $11.3 billion. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Tesla, Inc. (NASDAQ:TSLA) was one of them. Here is what the fund said:

“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:

First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic; second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships. Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE, not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful. (click here to read more…)

You can also take a peek at 10 Best Bargain Stocks To Buy Right Now and 10 Best Infrastructure Stocks To Buy Now.

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