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The S&P 500 started the year with a bang, confirming the presence of a bull market, then going on to reach multiple record highs. The index now is heading for a 20% annual gain -- that's after last year's 24% increase. And growth stocks, players that tend to increase earnings faster than the general market or their industry, have led the way.
But if you haven't heavily invested in these sorts of stocks, don't worry. It's not too late to get in on the action. We don't know exactly how long this bull market will continue, but history tells us bull markets last significantly longer than bear markets. The average bull market, from 1926 through 2017, lasted nearly nine years compared with less than two years for a bear market, according to First Trust data.
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And, when you invest for the long term, your growth stocks may boost your portfolio over more than one bull market. So, it's important to choose wisely. Which companies still make great stocks to buy in 2024 and beyond? Let's check out two that are red hot.
Image source: Getty Images.
1. Nvidia
Nvidia(NASDAQ: NVDA) has soared 2,500% over the past five years, and momentum isn't slowing. The stock is heading for a gain of more than 170% this year. Why all of the excitement? Nvidia is a key player in the hot growth area of artificial intelligence (AI), a market that's worth $200 billion today and is forecast to reach $1 trillion by the end of the decade.
Nvidia's graphics processing units (GPUs) are high-powered chips that handle multiple tasks simultaneously, making them ideal for key AI tasks like the training and inferencing of models. On top of this, Nvidia has developed a complete portfolio of AI products and services to suit the needs of any company launching an AI platform.
All of this has driven big results, with Nvidia's earnings climbing in the triple digits quarter after quarter -- and to record multi-billion-dollar levels. In the most recent quarter, revenue rose to $30 billion. At the same time, gross margin has reached mind-boggling levels beyond 70%. This means Nvidia isn't just generating a lot of revenue -- but, importantly, the company is highly profitable too. Nvidia also plans on innovating annually in order to stay ahead of competition and keep its top spot.
Today, Nvidia shares are trading for 47x forward earnings estimates. This isn't cheap, but it seems very reasonable considering the company's growth so far and potential for revenue to keep roaring higher well into the future.
2. CrowdStrike
CrowdStrike(NASDAQ: CRWD) hit a stumbling block a few months ago when a faulty software update triggered the biggest information technology outage ever. Customers couldn't access their data so had to halt operations such as flights or medical appointments and surgeries. Though some customers took weeks to recover, the cybersecurity giant issued a fix in less than an hour and made aggressive moves to ensure such an event doesn't happen again.
The outage struck in the last two weeks of the second quarter, so this most-recent quarterly report offers us evidence of the company's resilience. CrowdStrike said the event delayed the signing of deals -- as they generally close at this point in the quarter. But, importantly, most of the deals remain in the pipeline and weren't canceled by potentially worried customers. In fact, the company reported "multiple" deal expansions, with many customers even choosing to sign for a number of years.
The impact of the event may not be over, but CrowdStrike expects it to lessen in the coming quarters and even predicts "an acceleration of the business" later next year.
This along with the company's solid earnings track record are reasons to be optimistic about CrowdStrike over the long term. In the recent quarter, annual recurring revenue climbed 32% to $3.86 billion -- and more than $217 million was new revenue added during the quarter. CrowdStrike also grew GAAP net income by five times year over year and reached record operating cash flow and record free cash flow.
CrowdStrike stock has climbed more than 500% over the past five years, and the stock traded for more than 100x forward earnings estimates prior to the July outage -- it's now down to 83x, offering investors a great opportunity to buy this red hot stock on the dip.
Should you invest $1,000 in Nvidia right now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Nvidia. The Motley Fool has a disclosure policy.
