In this article, we discuss 5 best growth stocks to buy for the next 5 years. If you want to see more best growth stocks to buy for the next 5 years, the risk/reward, and methodology of this list, go directly to 12 Best Growth Stocks to Buy for the Next 5 Years.
5. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 99
EPS Next 5 Year Ratio: 20.64%
The Walt Disney Company (NYSE:DIS) is an entertainment giant that has softer earnings currently partly as a result of the high inflation and streaming losses due to the company trying to grow Disney+. For full fiscal year 2022, The Walt Disney Company (NYSE:DIS)’s direct to consumer business, which includes Disney+ and ESPN+, lost around $4 billion. As a result of the lower earnings base, The Walt Disney Company (NYSE:DIS) has an EPS Next 5 Year Ratio of 20.64% which overstates the company’s growth potential. Nevertheless, The Walt Disney Company (NYSE:DIS) is still a long term growth stock given Disney+ is expected to be profitable by the end of fiscal year 2024.
4. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 117
EPS Next 5 Year Ratio: 18.01%
Salesforce, Inc. (NYSE:CRM) is an enterprise software company with a substantial cloud business that has in recent months laid off around 10% of its workforce and is reportedly considering further job cuts according to Bloomberg on March 24. Given its strong cloud business and substantial scale, Salesforce, Inc. (NYSE:CRM) had free cash flow of $6.3 billion for fiscal 2023, up 19% year over year. With growing demand, analysts expect the company to grow EPS in the future.
117 hedge funds in our database owned shares of Salesforce, Inc. (NYSE:CRM) at the end of Q4, ranking the stock #4 on our list of 12 Best Growth Stocks to Buy for the Next 5 Years.
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 152
EPS Next 5 Year Ratio: 15.51%
Alphabet Inc. (NASDAQ:GOOG) is a tech giant with an EPS Next 5 Year Ratio of 15.51% which might be too high given the increasing competition from the AI powered Bing if the company doesn’t successfully innovate and adjust. Although AI makes mistakes, many users still find the AI powered Bing useful. According to SimilarWeb, Bing has a 2.98% market share and Google has a 90.88% market share as of January 2023. If Bing begins gaining market share, Google could begin losing market share and Alphabet Inc. (NASDAQ:GOOG)’s stock could face headwinds, making it one of the riskiest stocks on our list.
On the other hand, Alphabet Inc. (NASDAQ:GOOG) is one of the leaders in AI which hasn’t released much of its AI technology for various reasons. In the coming year, Alphabet Inc. (NASDAQ:GOOG) has said it plans to launch some of its products.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 240
EPS Next 5 Year Ratio: N/A
Amazon.com, Inc. (NASDAQ:AMZN) is an e-commerce and cloud computing leader that wasn’t profitable for FY 2022 in part given substantial investment spending and the effect of high inflation on the company’s growth. Nevertheless, analysts expect earnings of $1.46 per share for FY 2023, $2.53 per share for FY 2024, and $3.66 per share for FY 2025 according to Barron’s.
As a result of the expected earnings growth and 240 hedge funds in our database owning shares of the stock at the end of Q4, Amazon.com, Inc. (NASDAQ:AMZN) ranks #2 on our list of 12 Best Growth Stocks to Buy for the Next 5 Years. In the long term, Amazon.com, Inc. (NASDAQ:AMZN) could also benefit from the increase in AI processing with more potential demand for its cloud computing business.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
EPS Next 5 Year Ratio: 11.90%
Microsoft Corporation (NASDAQ:MSFT) ranks #1 on our list of 12 Best Growth Stocks to Buy for the Next 5 Years given 259 hedge funds owned shares of the software giant at the end of Q4.
Although Microsoft Corporation (NASDAQ:MSFT)’s EPS Next 5 Year Ratio of 11.90% might overstate its actual growth potential in the next half decade given its smaller EPS base considering its P/E ratio of 31.58, the company is a growth stock given its AI potential. While AI still mistakes now, it is improving and the increases in AI processing could benefit Microsoft Corporation (NASDAQ:MSFT)’s cloud business.
Microsoft Corporation (NASDAQ:MSFT) CEO Satya Nadella said in January 2023, “And as customers select their cloud providers and invest in new workloads, we are well-positioned to capture that opportunity as a leader in AI. We have the most powerful AI supercomputing infrastructure in the cloud. It’s being used by customers and partners like OpenAI to train state-of-the-art models and services, including ChatGPT.”
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