In this article, we discuss the 11 best growth stocks to buy for the next 5 years.

High inflation and rising interest rates are expected to continue to weigh on future economic growth in the United States despite recent figures from the Department of Commerce that reflect a rebounding economy. Newly released GDP numbers show that the US economy grew at an annual rate of 2.6% in the third quarter, up from contractions witnessed in the first and second quarter of the year. The labor market remained robust, adding nearly 4 million jobs in the first nine months, while housing slumped as investment fell to record lows. 

Mark Zandi, the chief economist at Moody’s Analytics, told news platform NPR recently that the new figures should be treated with caution, highlighting that the GDP had gone “effectively nowhere over the last year” as it had gone up and down in the past few months. He added that even though it was up this quarter, in the “net-net, we’re kind of treading water”. Consumer spending has remained sharp even as recession fears rise, rising at an annual rate of 1.4% in the most recent quarter. 

In this macro environment, prominent growth stocks like Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) are trading at mouth-watering valuations. For those who cannot afford these pricier options, there are several other stocks in the growth sector that are priced relatively cheaper and have long-term growth catalysts. As the economy shows signs of rebounding and the Fed signals at slowing down rate hikes, it may be a prudent time to invest in these firms. 

Our Methodology

The companies that operate in the growth sector and have long term growth catalysts were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Best Growth Stocks To Buy For the Next 5 Years

11. Airbnb, Inc. (NASDAQ:ABNB)

Number of Hedge Fund Holders: 57

Airbnb, Inc. (NASDAQ:ABNB) operates a platform that enables hosts to offer stays and experiences to guests worldwide. It is one of the best growth stocks to invest in. On October 3, Airbnb committed $5 million to provide temporary free housing to people displaced by Hurricane Fiona and Hurricane Ian in the US and the Caribbean.

On October 6, Jefferies analyst John Colantuoni maintained a Buy rating on Airbnb, Inc. (NASDAQ:ABNB) stock and lowered the price target to $138 from $140, highlighting the reduced estimates and price targets were consistent across the US internet in anticipation of a slowing macro environment. 

Among the hedge funds being tracked by Insider Monkey, New York-based Renaissance Technologies is a leading shareholder in Airbnb, Inc. (NASDAQ:ABNB) with 5.6 million shares worth more than $499 million. 

In its Q2 2022 investor letter, Brick By Brick Capital, an asset management firm, highlighted a few stocks and Airbnb, Inc. (NASDAQ:ABNB) was one of them. Here is what the fund said:

“What is millennial tech?

It is a term I have coined to describe the type of companies I research. It is a disruptive technology that is changing the status quo of a given industry. For example, Airbnb (NASDAQ:ABNB) with the lodging industry. This definition casts a wide net in terms of what sectors I look at, but it is very specific in terms of what type of companies I look at. I also believe focusing on these companies gives me an inherent edge over Wall St. as they are often older and disconnected from what is truly innovative (…read more)

10. Fiserv, Inc. (NASDAQ:FISV)

Number of Hedge Fund Holders: 59     

Fiserv, Inc. (NASDAQ:FISV) provides payment and financial services technology worldwide. It is one of the top growth stocks to invest in. On October 19, Fiserv and IncumbentFI, a provider of processing services, partnered up to provide programmable payments capabilities to financial institutions, fintech and enterprise businesses. This allows cardholders to transform their card programs. 

On August 11, Evercore ISI analyst David Togut upgraded Fiserv, Inc. (NASDAQ:FISV) stock to Outperform from In Line with a price target of $149, up from $101, noting that the company was embracing a new growth playbook, investing more, acquiring more and reducing free cash flow targets to sustain higher organic revenue. 

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in Fiserv, Inc. (NASDAQ:FISV) with 23.2 million shares worth more than $2 billion. 

In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Fiserv, Inc. (NASDAQ:FISV) was one of them. Here is what the fund said:

“While the threat of disruption risk to these established payment companies should not be taken lightly, it is important to note that many of these emerging disruptors are small relative to the massive global payments network and heavily reliant on the very payment infrastructure they are trying to disrupt. This led us to initiate a position in Fiserv, Inc. (NASDAQ:FISV), whose stock dropped to a level that embedded projections for negative long-term growth despite no current evidence of disruption. We think Fiserv will continue to grow despite perceived disruption risks given its scale and efficiency. Fiserv also owns cloud-based payments hardware and software system Clover, which is both bigger and faster growing than Square; this provides an additional degree of protection against further disruption risk.”

9. Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 60  

Shopify Inc. (NYSE:SHOP) is an ecommerce company that provides an e-commerce platform and services. It is one of the elite growth stocks to invest in. On October 5, Shopify said that it has settled allegations by a group of major educational publishers that Shopify enables piracy on its platform. On October 19, Non-Fungible Tokens (NFTs) affiliated with the Tezos blockchain network were available on the Shopify platform.

On October 21, RBC Capital analyst Paul Treiber maintained an Outperform rating on Shopify Inc. (NYSE:SHOP) stock and lowered the price target to $55 from $60, noting that the expected Q3 revenue was above consensus estimates on stronger gross merchandise volume growth. 

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in Shopify Inc. (NYSE:SHOP) with 14.5 million shares worth more than $391.5 million. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Shopify Inc. (NYSE:SHOP) was one of them. Here is what the fund said:

“Shopify Inc. (NYSE:SHOP) is a cloud-based software provider offering an operating system for multi-channel commerce. Shares fell due to continued post-pandemic e-commerce normalization as economies reopen, concerns about competition following Amazon’s announcement of Buy with Prime, as well as the broader sell-off in growth stocks. We remain shareholders due to Shopify’s strong competitive positioning, innovative culture, and a long runway for growth as it currently addresses less than 1% of global commerce spend.”

8. JD.com, Inc. (NASDAQ:JD)

Number of Hedge Fund Holders: 62    

JD.com, Inc. (NASDAQ:JD) provides supply chain-based technologies and services in China. It is one of the premier growth stocks to invest in. On June 29, JD.com stated that it renewed its strategic cooperation with Tencent, a Chinese multinational technology and entertainment conglomerate, for a period of three years. Tencent will continue to offer the company prominent Level 1 and level 2 access points on its Weixin platform to provide traffic support.

On October 11, Citi analyst Alicia Yap maintained a Buy rating on JD.com, Inc. (NASDAQ:JD) stock and lowered the price target to $85 from $91, highlighting that China’s underlying economic activities and consumption willingness remain weak and the soft sentiment had led to decreasing Q4 earnings of the firm.

At the end of the second quarter of 2022, 62 hedge funds in the database of Insider Monkey held stakes worth $5.5 billion in JD.com, Inc. (NASDAQ:JD), compared to 59 in the previous quarter worth $5.4 billion.

In its Q3 2021 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and JD.com, Inc. (NASDAQ:JD) was one of them. Here is what the fund said:

“We sold JD.com, Inc. (NASDAQ:JD) as a result of the furor over Chinese stocks during the quarter. We had been concerned about China’s lack of respect for investor rights for some time, and Beijing has become significantly more aggressive in asserting itself of late. In addition, the legal structure Chinese companies use to come public in the U.S., a Cayman Islands shell corporation leaves American investors with an unsure path to recovering value should these companies cease to trade on U.S. exchanges. Because of the uncertainty, we exited our position in JD completely. We still love JD’s long-term prospects, but we cannot estimate the legal/regulatory risk associated with these companies anymore. More broadly, we are freeing up cash for some other positions we already own which have declined in this market, and after additional review, remain attractive.”

7. Zendesk, Inc. (NYSE:ZEN)

Number of Hedge Fund Holders: 63  

Zendesk, Inc. (NYSE:ZEN) develops and provides software-as-a-service solutions for organizations. It is one of the prominent growth stocks to invest in. On October 13, Zendesk unveiled the launch of new AI solutions, Triage and Smart Assist, to empower businesses to triage customer support requests automatically and access valuable data at scale. Companies can see value in minutes by understanding intent and sentiment through account-specific and data-driven models.

Among the hedge funds being tracked by Insider Monkey, California-based investment firm Light Street Capital is a leading shareholder in Zendesk, Inc. (NYSE:ZEN) with 7.3 million shares worth more than $540 million.

In its Q4 2021 investor letter, Carillon Towers Advisers, an asset management firm, highlighted a few stocks and Zendesk, Inc. (NYSE:ZEN) was one of them. Here is what the fund said:

“Zendesk, Inc. (NYSE:ZEN) provides customer support software solutions. After successfully navigating the early stages of the pandemic in 2020, the firm has seen its stock cool off on the threat of increased competition from low-cost alternatives. We do not believe that the competitive dynamics have been altered. In fact, the company’s annual revenue growth rate has accelerated in 2021 from the second half of 2020. The shares also currently trade at a deep discount to other cloud-based software vendors.”

6. Marvell Technology, Inc. (NASDAQ:MRVL)

Number of Hedge Fund Holders: 63     

Marvell Technology, Inc. (NASDAQ:MRVL) designs, develops, and sells analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. It is one of the major growth stocks to invest in. On October 20, Marvell Technology stated that leading cable manufacturers were sampling to cloud data center operators their 100G/lane active cables which are powered by Marvell.

On October 18, Deutsche Bank analyst Ross Seymore maintained a Buy rating on Marvell Technology, Inc. (NASDAQ:MRVL) stock and lowered the price target to $55 from $65, noting that chances of fundamental worsening were leading to a very burdening investor positioning heading into semiconductors results in Q3. 

Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Marvell Technology, Inc. (NASDAQ:MRVL) with 4.9 million shares worth more than $214 million.  

In its Q2 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Marvell Technology, Inc. (NASDAQ:MRVL) was one of them. Here is what the fund said:

“Marvell Technology, Inc. (NASDAQ:MRVL) provides infrastructure semiconductor solutions. Investors have recently become concerned about the semiconductor cycle and how demand for Marvell’s products will fare in a slowing economic environment. We remain confident that the company’s portfolio of products is extremely important in parts of the data center server market, which remains healthy and possesses long-term secular trends. The company also has secured strong contract wins in upcoming global 5G wireless infrastructure build-outs, which are generally insulated from macroeconomic pressures. With supply chain issues easing, we believe Marvell remains in a strong position to post continued robust growth.”

5. Cisco Systems, Inc. (NASDAQ:CSCO)

Number of Hedge Fund Holders: 63    

Cisco Systems, Inc. (NASDAQ:CSCO) designs, manufactures and sells Internet Protocol-based networking and other products related to the communications and information technology industry. It is one of the best growth stocks to invest in. On October 14, Cisco Systems revealed that it has partnered up with Microsoft. With this alliance, Cisco and Microsoft Teams will soon offer the ability to run Microsoft natively on the former’s room and desk devices from the first half of 2023.

On August 31, KGI Securities analyst Jackson Chiang upgraded Cisco Systems, Inc. (NASDAQ:CSCO) to Outperform from Neutral with a $53 price target.  

At the end of the second quarter of 2022, 63 hedge funds in the database of Insider Monkey held stakes worth $1.9 billion in Cisco Systems, Inc. (NASDAQ:CSCO), compared to 66 in the previous quarter worth $1.7 billion.

In its Q1 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Cisco Systems, Inc. (NASDAQ:CSCO) was one of them. Here is what the fund said:

“Cisco Systems (NASDAQ:CSCO) traded lower as investors weighed how supply chain concerns would impact sales growth. The company has been upgrading its switching and routing offerings, which should lead to strong demand as on-site locations upgrade infrastructure.”

4. Twilio Inc. (NYSE:TWLO)

Number of Hedge Fund Holders: 64 

Twilio Inc. (NYSE:TWLO) provides a cloud communications platform that enables developers to build, scale, and operate customer engagement within software applications in the United States and internationally. It is one of the top growth stocks to invest in. On August 23, Krisp, a global software company, revealed its partnership with Twilio which will allow Twilio Video customers to achieve high-quality audio when building video experiences through Twilio Video. Krisp will help Twilio Video customers to create an exceptional audio experience.

On October 19, Cowen analyst J. Derrick Wood maintained an Outperform rating on Twilio Inc. (NYSE:TWLO) stock and lowered the price target to $100 from $125, noting growing headwinds around marketing budgets which could impact portions of the portfolio of the firm. 

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in Twilio Inc. (NYSE:TWLO) with 6.8 million shares worth more than $472 million. 

In its Q2 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Twilio Inc. (NYSE:TWLO) was one of them. Here is what the fund said:

“Twilio Inc. (NYSE:TWLO) offers a full suite of cloud-based communications software, services and tools that allow companies in a wide range of businesses to build omnichannel communications capabilities (video, chat, voice, SMS, fax and email) directly into their customer-facing applications without needing to build backend infrastructure and interfaces. The company also provides software tools that allow its users to gather and categorize customer data (its Segments offering) and to create next-generation call centers (Flex) to utilize this data in customer interactions. Twilio is the leader in this fast-growing $80 billion Communications-Platform-as-a-Service (or CPaaS) market, having grown its customer base 5x in the past five years to 268,000 customers and a $3.5 billion run rate revenue for 1Q22. The company’s net revenue retention rate has exceeded 125% every year since its 2016 IPO and its customer churn remains less than 4% (for customers with > $30,000 revenue), evidence of the loyalty of Twilio’s customers to its platform (and a high switching cost) as well as the company’s increasing number of offerings. The company’s revenue is generated from both recurring revenues from subscription fees as well as volume-based charges for usage.

TWLO expects to maintain a +30% annual organic revenue growth rate through at least 2024, with long-term gross margin expansion from 56% to 60%-65%, and EBITDA margins approaching 35% as revenue scales. As of 1Q22, TWLO had $4.2 billion net cash and should turn FCF positive this year. Over the next several years, we expect the company to grow its excess cash significantly as the company operates an asset-light business model with low capital needs of just over 1% of current revenue (read more)

3. Snowflake Inc. (NYSE:SNOW)

Number of Hedge Fund Holders: 65  

Snowflake Inc. (NYSE:SNOW) provides a cloud-based data platform in the United States and internationally. It is one of the elite growth stocks to invest in. On October 17, Snowflake revealed that it has made a partnership with OpenApp, an advertising technology consortium and one of the largest broadcasting companies in the US. SnowFlake bought a 5% stake in OpenApp. It’s also the first company from outside the TV to purchase a stake in a consortium. 

On October 20, Piper Sandler analyst Brent Bracelin maintained an Overweight rating on Snowflake Inc. (NYSE:SNOW) stock and lowered the price target to $218 from $220, noting several factors that could further pressure billings, revenue, and free cash growth estimates into 2023.

Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Altimeter Capital Management is a leading shareholder in Snowflake Inc. (NYSE:SNOW) with 17 million shares worth more than $2.4 billion. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Snowflake Inc. (NYSE:SNOW) was one of them. Here is what the fund said:

“During the quarter, we added to three of our cloud infrastructure positions – Snowflake Inc. (NYSE:SNOW), Cloudflare, Inc., and Datadog, Inc. While investors are concerned that a weakening macroeconomic environment will be a near-term headwind to growth as customers may slow down their cloud expansions, we remain focused on the long term – duration of growth, competitive advantages, and innovative capabilities and are happy to increase our positions at a more attractive price. For example, Snowflake, the leading data cloud provider, during its recent user conference, announced several new products, which significantly expand its addressable market…(read more)

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2. Sea Limited (NYSE:SE)

Number of Hedge Fund Holders: 65   

Sea Limited (NYSE:SE) engages in digital entertainment, e-commerce, and digital financial service businesses. It is one of the premier growth stocks to invest in. On October 14, Sea Limited announced that it has partnered up with Penjana Kapital Sdn Bhd, an agency under the purview of the Ministry of Finance, to co-organize the 8th installation of Capital Connections to manage a vibrant startup and venture capital ecosystem in Malaysia. 

On August 18, investment advisory Barclays maintained an Overweight rating on Sea Limited (NYSE:SE) stock and lowered the price target to $114 from $125. Analyst Jiong Shao issued the ratings update. 

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Sea Limited (NYSE:SE) with 8.2 million shares worth more than $548 million. 

In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:

“Sea Limited (NYSE:SE), a global digital gaming and e-commerce company, detracted from performance for the period held. Similar to other online consumer businesses, Sea faced significant multiple compression in the quarter, exacerbated by a slowdown in user growth at its key Free Fire digital game and mounting investments in its e-commerce operation, particularly in new markets like Brazil. We exited our position as we lost confidence in the long-term unit economics in some of Sea’s new markets and were concerned by the simultaneous slowdown in revenue growth and increase in underlying cash burn.”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 72   

Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. It is one of the elite growth stocks to invest in. On October 20, the CEO of Tesla Elon Musk said that Tesla could be worth more than Apple and Saudi Aramco combined. On October 20, Tesla’s CEO said that its engineering team had turned its focus on a next-generation electric car platform which will be half the price of Tesla’s Model 3/Y platform. 

On October 20, RBC Capital analyst Joseph Spak maintained an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) stock and lowered the price target to $325 from $340. 

At the end of the second quarter of 2022, 72 hedge funds in the database of Insider Monkey held stakes worth $7.2 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 80 in the preceding quarter worth $11.3 billion. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Tesla, Inc. (NASDAQ:TSLA) was one of them. Here is what the fund said:

“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:

First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic; second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships. Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE, not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful. (click here to read more…)

You can also take a peek at 10 Best Bargain Stocks To Buy Right Now and 10 Best Infrastructure Stocks To Buy Now.

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Disclosure. None. 11 Best Growth Stocks To Buy For the Next 5 Years is originally published on Insider Monkey.