GOOG

Alphabet Inc.

2181.62
USD
-0.27%
2181.62
USD
-0.27%
2044.16 3042.00
52 weeks
52 weeks

Mkt Cap 698.49B

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3 Growth Stocks That Are Screaming Buys in May

The market's decline over the past six months has hit growth stocks harder than the broader market, but that's also left some values for investors. As in any broad decline, some companies with strong businesses and great cash flows have been thrown out with the bathwater. I think there are some screaming buys in growth stocks that haven't been this cheap in years. Moderna (NASDAQ: MRNA), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and Adobe (NASDAQ: ADBE) are three stocks at the top of my list of long-term winners. 1. Moderna The explosion in Moderna's stock was driven by its successful COVID-19 vaccine, and that will remain a strong product for the company. But you can see below that the company is more than a start-up -- it now has $18 billion in sales and a price-to-sales ratio of just 3.3. While the COVID-19 vaccine revenue Moderna is currently generating may not last forever, the company has proven that its technology works. It's testing an HIV vaccine, as well as vaccines against influenza and RSV, among others. I think that mRNA will fundamentally change how we treat health conditions in the future, and Moderna is a clear leader, which is why this is a great growth stock today. 2. Alphabet Big tech companies have some big advantages in an environment where capital is becoming more scarce and companies that are losing money are facing major challenges. A company like Alphabet is flush with cash and continues to grow at a double-digit rate by building faster than competitors and acquiring small bolt-on companies. What stands out at Alphabet is the fact that revenue is up 82% in the last three years and free cash flow has jumped 149%. That's an incredible performance at a time when advertising spending has been under pressure for many tech companies. Alphabet has some of the best tech products in the world, with search, Gmail, and Android, among others. This is a company that will continue to grow and make lots of money for the foreseeable future, and with shares trading at 21 times earnings this is a great buy today. 3. Adobe Another underappreciated growth stock is Adobe. The company makes a suite of creative tools that are popular around the world, but it's also the creator of the immensely popular PDF file type. You can see below that Adobe's revenue is up 147% in the last five years, yet the stock trades for a lower P/E ratio than at any time but the 2020 crash. A price-to-earnings ratio of nearly 39 isn't cheap, but this is a subscription business that's very sticky for users and commands a high premium in the market. In the first quarter of 2022, Adobe said that adjusted revenue jumped 17%, cash from operations was $1.77 billion, and annualized recurring revenue was a whopping $12.57 billion. That's strong performance in an environment where GDP was negative. This is a great business, and right now it looks like a great buy for long-term investors. Great buys are out there The market may be down, but there are companies that are performing extremely well that will add value for shareholders long-term. I think Moderna, Alphabet, and Adobe are among the best buys today, and a decade from now we'll see this as a great entry point. 10 stocks we like better than Moderna Inc. When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Moderna Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of April 7, 2022 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe Inc., Alphabet (A shares), and Alphabet (C shares). The Motley Fool recommends Moderna Inc. and recommends the following options: long January 2024 $420 calls on Adobe Inc. and short January 2024 $430 calls on Adobe Inc. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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