After a brutal 2022, we have seen a tech stock resurgence so far in 2023. Many stocks in this group have already surged over 50% to start the year. While gains of this magnitude over such a short period don’t seem sustainable, investors continue searching for growth stocks to buy and hold.
Sometimes, investors must be willing to pull the trigger during market downturns. It can be intimidating to buy high-quality stocks when they’re in free fall, but long-term returns can be much more attractive when taking the plunge during periods of weakness.
Of course, finding high-quality growth stocks to buy is not easy, especially for valuation-focused investors.
Valuation often scares investors away from great growth stocks. I’ve struggled with this myself. However, I’ve changed my mindset after realizing that high-quality, high-growth stocks demand and will always demand a premium valuation. If a stock isn’t getting a premium valuation, it essentially means growth has stalled.
With that in mind, here are three growth stocks that investors can buy and hold for the long term.
1. Palo Alto Networks (NASDAQ: PANW) – $191.55
Given today’s tech landscape, it’s hard to ignore the secular tailwinds supporting Palo Alto Networks (NASDAQ: PANW). No matter the economic environment—bull market vs. bear market, recession vs. expansion—cybercrime is always present.
Cybercriminals constantly evolve their tactics, targeting governments, defense contractors, businesses, and consumers. They steal customer data, demand ransom payments, and disrupt operations. With no end to cyber threats in sight, companies like Palo Alto Networks must stay ahead.
That’s why Palo Alto continued growing throughout 2022 and remains one of the few GAAP-profitable companies in the cybersecurity industry. Analysts expect at least 20% annual revenue growth over the next four years, indicating a long runway for expansion.
For long-term investors, Palo Alto Networks offers high growth potential in an industry with unstoppable demand.
2. The Trade Desk (NASDAQ: TTD) – $60.45
The Trade Desk (NASDAQ: TTD) is one of my favorite growth stocks. Although its stock suffered a 64% decline from peak to trough, it has made a strong comeback in 2023.
There are too many positives with this company to ignore.
Co-founder and CEO Jeff Green has built a best-in-class advertising platform that not only survived a tough economic environment but continued expanding globally. Unlike Alphabet (NASDAQ: GOOG) and Meta (NASDAQ: META), The Trade Desk operates in countries like China, where those tech giants are restricted.
It’s also important to highlight that The Trade Desk is a profitable growth stock. During bear markets, many investors lose sight of profitability, but The Trade Desk delivers both growth and earnings.
Analysts expect strong growth in revenue and profitability in the coming years, making it a compelling long-term investment.
3. Salesforce (NYSE: CRM) – $190.06
Buying a stock for the next few quarters or years is one thing. Buying a stock to hold for decades is another. For the latter, you need trust and confidence.
I started paying serious attention to Salesforce (NYSE: CRM) about six months ago when its valuation became too attractive to ignore.
Anyone who has used Salesforce’s platform knows how sticky its products are. Even in economic downturns, Salesforce remains resilient. When combined with its suddenly reasonable valuation, the stock became too compelling to pass up.
Now, five activist investors are pushing CEO Marc Benioff to maximize operational efficiency and margins.
So far, the company has responded well. In the last quarter, Salesforce beat revenue and earnings expectations, provided strong guidance, and reported robust cash flow.
With a dominant market position, improved efficiency, and a long runway for growth, Salesforce is an excellent buy-and-hold stock for the long haul.
