Two Exceptional Growth Stocks to Invest in for Long-Term Success

Investing in volatile growth stocks can often lead to significant returns over time. In particular, two industry leaders are well-positioned to increase their shareholder value in the long run.

Historically, growth stocks outperform the broader market.

Take, for instance, the launch of the Vanguard S&P 500 (VOO) and Vanguard S&P 500 Growth (VOOG) index funds, both of which came out on the same day in September 2010. Since then, the growth-focused ETF has consistently outperformed the standard S&P 500:

VOOG Total Return Price data by YCharts

While the Vanguard S&P 500 ETF serves as a solid foundation for a portfolio—especially for those wary of volatility and sudden price dips—the growth fund's impressive returns underscore the wealth-building potential of growth stocks.

In light of this, let us explore two standout growth stocks that are worth considering. If a general growth ETF has proven successful, these carefully selected stocks are likely to perform even better. Although short-term gains can't be promised, investing in these remarkable companies now and holding them for the long term could yield fruitful results.

Alphabet: A Leader in Technology Innovation

I've consistently advocated for investing in Alphabet (GOOG) (GOOGL). Most people are familiar with Google's parent company, its adaptable business practices, and its commanding presence across various sectors, highlighted by its trillion-dollar market capitalization.

What is particularly noteworthy is Alphabet's steady growth trajectory. With a remarkable compound annual growth rate (CAGR) of around 20% over the past fifteen years, the company's revenue has continued to expand significantly. Additionally, its free cash flow growth rate mirrors this impressive trend:

GOOGL Operating Revenue (3 Year Growth) data by YCharts

When compared to other tech giants in the "Magnificent Seven" like Apple and Microsoft, Alphabet's long-term performance remains unmatched. While Tesla may exhibit faster revenue growth, its profitability lags when compared to Alphabet. Even Amazon, known for its rapid growth, appears to be somewhat sluggish next to Alphabet's consistent performance.

Moreover, Alphabet's stock is currently attractively priced, with its Class A shares trading at 26 times trailing earnings and 21.8 times next year's earnings estimates. These metrics indicate that Alphabet is potentially the most reasonably priced stock in the Magnificent Seven.

Combining affordable stock pricing with robust and stable growth, Alphabet is an excellent investment opportunity today.

Intuitive Surgical: Revolutionizing Healthcare

Though my portfolio doesn’t contain many healthcare stocks, Intuitive Surgical (ISRG) stands out as an essential component. Since I first invested in the company over a decade ago, my returns have skyrocketed by 1,740%.

Currently, Intuitive Surgical's stock trades at a high valuation of 95 times earnings, but this is justified by the company's market position and potential for future growth.

The company is well known for its latest generation of da Vinci surgical systems, which have effectively transformed it into a significant player in the artificial intelligence (AI) sector. The upgraded da Vinci 5 systems offer superior computing capabilities compared to previous models, leading to promising operational outcomes.

In the first quarter of last year, the company installed eight of the new machines, followed by 70 installations in the next quarter. By the third quarter, there were 110 shipments attributed to the da Vinci system, accounting for a significant portion of total deliveries. Preliminary figures suggest that 174 da Vinci 5 installations occurred in the fourth quarter, indicating a strong trend of uptake for this innovative system.

I didn't foresee this level of success when I first purchased shares of Intuitive Surgical, but I recognized early on that it was a pioneer in an essential medical advancement. It's noteworthy that a large percentage of surgical procedures are still performed without robotic assistance, despite the numerous benefits—such as shorter recovery times and enhanced surgical outcomes—associated with da Vinci operations.

Intuitive Surgical remains an appealing investment for many, characterized by modest short interest, with just 1.2% of its shares sold short. Furthermore, analysts show overwhelmingly positive sentiment: 23 analysts rate the stock a buy, with only one recommending a sell at this time.

This prompts me to consider increasing my investment in Intuitive Surgical, as its AI-driven surgical innovations are positioned to lead the company into a future filled with growth potential.

growth, stocks, investment