4 Colossal Growth Stocks You’ll Regret Not Buying In Nasdaq’s New Bull Market | The Motley Fool

Putting your money to work on Wall Street requires patience and perspective. Since this decade began, the three major stock indexes have vacillated between bear and bull markets in successive years, with these swings more pronounced in equity-led growth. Nasdaq Composite (^IXIC 1.99%).

During the bear market of 2022, the Nasdaq Composite climbed the wagon with a loss of 33%. But since this chapter closed, the Nasdaq has gained 51%, and as recently as last month, it led to a new record close above 16,400. This move confirms that the Nasdaq is firmly in a new, albeit new, bull market.

Image source: Getty Images.

What is particularly interesting about this leading index is that it has retreated almost 4% from its all-time high, as of the closing bell on May 2. found in a bargain.

What follows are four colossal growth stocks you’ll regret not buying in the Nasdaq’s new bull market.

Mastercard

The first sensational growth stock that is begging to be bought in the early stages of the new Nasdaq bull market is a leader in payment processing Mastercard (MA 0.56%).

The only real knock against Mastercard is that it is a cyclical company. If the global and U.S. economy were to enter a recession, consumer and business spending is expected to decline, which would have a negative effect on the fees Mastercard charges merchants to process transactions. A couple of leading indicators, including a historic decline in M2 money supply, suggest an increasing likelihood of weakness in the US economy.

On the other hand, history is very much on Mastercard’s side. While most periods of economic expansion last for years, there has not been a single US recession since the end of World War II that lasted longer than 18 months. Prolonged periods of growth allow Mastercard to consistently grow its sales by double digits year after year.

Although a somewhat subtle point, Mastercard’s deliberate avoidance of loans is another reason for its continued success and sustained profit margin of over 40%. Lending companies have to set aside capital to cover potential delinquencies and credit losses that arise during recessions. Focusing strictly on payment processing means Mastercard avoids these pitfalls and recovers from crises faster than most credit institutions.

Plus, Mastercard’s growth track stretches back decades. Cross-border volume growth of 18% in the quarter ending in March indicates just how big the opportunity is to continue expanding its payments infrastructure to underbanked regions such as Africa, the Middle East and Southeast Asia.

While Mastercard may seem a bit pricey at nearly 27 times forward earnings, that’s a 21% discount to its average five-year earnings multiple.

Newmont

A second colossal growth stock to be dumped for not buying in the early stages of the Nasdaq’s new bull market is the gold mining company. Newmont (NO -0.95%). Yes, you read that right… a gold stock that is also a growth stock.

Before delving (sorry for the necessary pun) into the details of the company, it’s important to acknowledge the elephant in the room: the spot price of gold rose to an all-time high in 2024.

The considerable rally in physical gold can be explained by a stubbornly high inflation rate. In other words, people are looking for a place to park their money (instead of letting it sit under the proverbial mattress) where it won’t lose value over time. For decades, gold has been an asset that nervous investors have flocked to during periods of high inflation and/or economic turmoil. If the spot price of gold remains near an all-time high, it should translate into higher profitability for gold miners across the board.

One of the clearest company-specific catalysts for Newmont is its $16.8 billion all-share purchase of Australia’s Newcrest Mining, which closed in November. Newmont expects to recognize $500 million in cost synergies later this year, as well as increase the combined company’s operating cash flow by $2 billion in the two years following closing. The purchase of Newcrest further solidified Newmont’s already impressive gold and copper reserve profile.

To add to the above, Newmont’s size presents clear cost advantages. Newmont has 10 “Tier 1 assets,” which are mines producing at least 500,000 gold-equivalent ounces per year, with a total maintenance cost in the bottom half of the industry and a mine life of more than 10 years.

Newmont’s earnings per share (EPS) are forecast to double between 2023 and 2027 to around $3.20, making this brilliant stock even more delicious for growth seekers.

Image source: Getty Images.

Baidu

The third exhilarating growth stock you’ll regret not adding to your portfolio with the Nasdaq firmly in a new bull market is China-based. Baidu (START 1.49%).

The reason Baidu’s stock has suffered recently is because China’s economy has not recovered from the COVID-19 pandemic as quickly as expected. Several years of strict lockdowns have created kinks in the supply chain that are still being ironed out.

But as I pointed out earlier, patience and perspective are important when investing in Wall Street. Although China’s economic acceleration is taking a bit longer than expected, its burgeoning middle class gives the world’s No. 2 economy by gross domestic product a path to sustained annual growth of 5% (or higher). Most of the big companies based in China, including Baidu, stand to benefit from this broad growth track.

Baidu’s core operating segment is its Internet search engine. Baidu’s Internet search share in China reached about 52% in April 2024, and has been consistently between 50% and 85% for the past 10 years, according to GlobalStats data. Companies are well aware that the best way to reach Chinese consumers is to target their advertising on the Baidu search engine. When China’s economy finds its stride once again, Baidu’s ad revenue should increase substantially.

However, Baidu’s most exciting growth catalyst is artificial intelligence (AI). Enterprise cloud spending is still in its infancy in China, which bodes well for Baidu’s AI Cloud platform. Meanwhile, the subsidiary Apollo Go has exceeded more than 5 million accumulated autonomous trips since its inception. It is perhaps not surprising that Baidu supplies an electric vehicle manufacturer Tesla with its mapping license for data collection on Chinese roads.

Baidu is forecast to grow its EPS by roughly 12% through 2027, but is currently valued at less than 10x forward EPS. That’s what we call a growth stock trade!

NextEra Energy

A fourth colossal growth stock you’ll regret not buying in the Nasdaq’s new bull market is the largest U.S. power company by market capitalization. NextEra Energy (NEE 1.87%).

Generally, utility stocks are slow-growth companies that investors seek out for their low volatility and above-market returns. NextEra has consistently been double or triple the growth rate of other electric companies for more than a decade, which qualifies it as a growth stock in an industry where there are very few.

The not-so-subtle secret to NextEra’s long-term outperformance has been its focus on renewable energy. Of its 72 gigawatts (GW) of capacity, 36 GW can be traced to green energy sources, including 24 GW from wind and 7 GW from solar. No utility in the world has more wind or solar capacity than NextEra Energy.

While investing in cleaner energy solutions has been expensive, NextEra has paid off big. Adjusted earnings have averaged 10% growth since 2013, with dividends growing at a compound annual rate of 11% over the same period. Substantially lower electricity generation costs boosted the company’s earnings and payout growth rates, compared to its peers.

Additionally, NextEra Energy has no intention of reducing its investments in clean energy. Even as the Federal Reserve embarks on its steepest rate-hike cycle in four decades, NextEra plans to bring 32.7 GW to 41.8 GW of collective clean energy projects online between early 2023 and late 2026 .This should help you maintain superior growth. rate within the public services sector.

Shares of NextEra Energy can be snapped up right now by opportunistic growth seekers at less than 19 times consensus EPS forecasts for 2025. That’s a 27% discount to its average forward earnings over the past five years.