Growth stocks are your best bet to increase the value of your portfolio and earn that happy retirement.
The key is to buy and own these stocks over the long term as they steadily grow their revenue, profits, and cash flows.
Along the way, their share prices should also march higher in tandem with their financial performance, providing investors with rich capital gains.
Here are four stocks that have attractive attributes that could go on to provide strong share price upside.
Alphabet (NASDAQ: GOOGL)
Alphabet is the holding company for the search engine Google and owns video-sharing site YouTube.
The company also provides a cloud service (Google Cloud) and is working to introduce generative artificial intelligence (AI) in all its products.
Alphabet reported a stunning financial performance for 2023 with revenue rising 8.7% year on year to US$307.4 billion.
Operating profit increased by 12.6% year on year to US$84.3 billion while net profit climbed 23% year on year to US$73.8 billion.
The search engine behemoth also generated a positive free cash flow of US$69.5 billion for 2023, up 15.8% year on year.
This strong momentum has continued into the first quarter of 2024 (1Q 2024) with the company reporting a 15% year-on-year jump in revenue to US$80.5 billion.
Operating profit climbed 46.3% year on year to US$25.5 billion with net profit surging by 57.2% year on year to US$23.7 billion.
In a surprise move, Alphabet’s board also initiated a cash dividend programme, paying out a quarterly dividend of US$0.20 per share.
Alphabet has introduced its latest generative AI software Gemini, a multi-modal system that can generalise, understand plus operate across different types of information including text, code, audio, image, and video.
Google plans to embed its Gemini AI into Chrome desktops and is also in talks with Apple (NASDAQ: AAPL) to let Gemini power the latter’s iPhone AI features.
Zscaler (NASDAQ: ZS)
Zscaler is a cybersecurity firm that operates a platform to protect customers from cyberattacks and data loss.
Its Zero Trust Exchange platform is the world’s largest in-line cloud security platform distributed across more than 150 data centres worldwide.
Zscaler announced a strong set of earnings for the first half of fiscal 2024 (1H FY2024) ending 31 January 2024.
Revenue jumped 37.5% year on year to US$1 billion with gross profit increasing by 37% year on year to US$793.1 million.
Its free cash flow more than doubled year on year for 1H FY2024 to US$325.5 million from US$158.4 million.
The company also saw encouraging customer momentum and snagged higher-value business overall.
The number of customers with more than US$1 million in annual recurring revenue (ARR) jumped 31% year on year to 497.
Those with more than US$100,000 of ARR increased by 21% year on year to 2,820, with more than 40% of all customers coming from Fortune 500 companies.
Management believes the company has a serviceable addressable market of US$72 billion along with more than 600 million potential business-to-business users, giving it a long runway for continued growth.
Sea Limited (NYSE: SE)
Sea Limited is a technology company with three main arms – e-commerce (Shopee), gaming (Garena) and digital financial services (SeaMoney).
Shopee is one of the dominant e-commerce players in the region while Garena’s Free Fire game was the most downloaded mobile game in 1Q 2024.
Revenue for 1Q 2024 jumped 22.8% year on year to US$3.7 billion, led by a 30.6% year-on-year increase in revenue for the e-commerce division to US$2.95 billion.
Although Sea Limited incurred a net loss of US$23 million for the quarter, the business generated a positive free cash flow of US$441.5 million.
The company saw Shopee achieving its highest-ever quarterly orders and gross merchandise value (GMV) for 1Q 2024.
GMV leapt 36.4% year on year to US$23.6 billion while gross orders soared 62.5% year on year to 2.6 billion.
Free Fire also registered positive growth for the quarter with monthly average users jumping 24% year on year.
Quarterly paying users for the division also grew 28.8% year on year to 48.8 million.
Atlassian (NASDAQ: TEAM)
Atlassian operates a service and work management software platform to help organisational teams organise, discuss, and complete shared workloads.
The company has been growing its business over the years as its Jira Software and Jira Service Management platform gained popularity.
For the first nine months of fiscal 2024 (9M FY2024) ending 31 March 2024, Atlassian’s revenue increased by 24.3% year on year to US$3.2 billion.
Gross profit improved by nearly 24% year on year to US$2.6 billion.
The work management platform also generated a positive free cash flow of US$1 billion for 9M FY2024, 75% higher than the US$572.1 million churned out a year ago.
Customers with more than US$10,000 in cloud ARR also increased by 18.7% year on year to 44,336.
During its recent Investor Day 2024, Atlassian’s management revealed that the company has a massive total addressable market of US$67 billion comprising software development (US$17 billion), service management (US$15 billion), and work management (US$35 billion).
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Disclosure: Royston Yang owns shares of Apple and Alphabet.
