There are two main types of investors in the stock market – income and growth investors.
Income investors prioritise a company’s cash-generation ability so that it can dish out dividends that act as a source of passive income.
While this is undoubtedly important, you should not neglect to include growth stocks within your portfolio.
Growth investors focus more on growing the value of their portfolio by parking their money in promising, fast-growing companies.
Here are four solid US growth stocks that you may consider adding to your buy watchlist to help power the growth of your investment portfolio.
Alphabet (NASDAQ: GOOGL)
Alphabet is a technology company and the holding company of search engine Google.
The company also owns the video-sharing site YouTube and offers a cloud service to clients called Google Cloud.
For the first nine months of 2023 (9M 2023), Alphabet reported a 6.9% year on year increase in revenue to US$221.1 billion.
Operating profit also rose 6.9% year on year to US$60.6 billion while net profit climbed 14.6% year on year to US$53.1 billion.
The technology company also generated a positive free cash flow of US$61.6 billion for 9M 2023, 40% higher than the US$44 billion churned out a year ago.
Google Cloud is seeing increased adoption, with revenue for the third quarter of 2023 (3Q 2023) rising 22.5% year on year to US$8.4 billion.
The division also posted an operating profit of US$266 million for Google Cloud, reversing the operating loss of US$440 million in 3Q 2022.
Just this week, Alphabet introduced its most advanced artificial intelligence (AI) model called Gemini.
Gemini is capable of more sophisticated reasoning and can understand information better than any of Google’s prior technology.
Okta (NASDAQ: OKTA)
Okta offers an identity management cloud service for clients to allow them to manage their access privileges and authentication.
The software-as-a-service (SaaS) company saw its revenue jump 23% year on year to US$1.7 billion for the first nine months of fiscal 2024 (9M FY2024).
It also generated a positive free cash flow of US$323 million for the period, a reversal from the negative free cash flow of US$7 million in the prior year.
Okta boasts a total of 18,800 customers as of 31 October 2023, an increase from 17,600 at the end of fiscal 2023.
What’s more, the cybersecurity company saw customers with annual contract value exceeding US$100,000 rise to 4,365 for 3Q FY2024, up from 3,930 at the end of FY2023.
The business also enjoyed a dollar-based net retention rate of 115% for the quarter.
Management feels that the company still has massive growth potential as the total addressable market for Okta’s services stood at US$80 billion.
Match Group (NASDAQ: MTCH)
Match Group owns several market-leading dating apps such as Tinder, Hinge, Meetic, OKCupid, and Match.
The company reported a strong set of earnings for 9M 2023 with revenue inching up 4% year on year to US$2.5 billion.
Operating profit soared nearly 61% year on year to US$656.6 million while net profit jumped 52.1% year on year to US$421.9 million.
The dating app specialist also saw its free cash flow for 9M 2023 more than double year on year to US$570.7 million.
The total number of payers dipped from 16.5 million in the third quarter of 2022 (3Q 2022) to 15.7 million in 3Q 2023.
However, the revenue per payer increased from US$16.02 to US$18.39 over the same period.
Match Group has a history of acquisitions to bolster its portfolio of dating apps.
The company acquired South Korean social discovery and video technology company Hyperconnect for US$1.7 billion in June 2021.
Last year, Match Group acquired members-only dating app The League for around US$30 million.
Udemy (NASDAQ: UDMY)
Udemy offers an online marketplace with thousands of courses to let instructors and learners gain knowledge.
Its platform offers a wide range of courses from programming and data science to team building.
The company posted a strong set of earnings for 3Q 2023 and 9M 2023.
Revenue for 9M 2023 rose 16.3% year on year to US$539.4 million.
The business generated a positive operating cash inflow of US$5.3 million, reversing the operating cash outflow of US$30.3 million in 9M 2022.
Free cash flow, however, remained negative for 9M 2023.
There were encouraging statistics reported by Udemy for its enterprise segment.
Total customers increased by 14% year on year to 15,378 with annual recurring revenue jumping 26% year on year to US$443.1 million.
The remaining performance obligations came in at US$518 million for 3Q 2023, up from US$433 million in the same period last year.
Management sees 40% of current core skills that will change in the next five years, translating into around 50% of employees that need to reskill.
It believes that the market opportunity will grow to US$476 billion by 2027, offering Udemy many more years of growth.
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Disclosure: Royston Yang owns shares of Alphabet.
