My Top 3 Growth Stocks to Buy for 2026 -- Including Nvidia and Netflix, and Netflix Isn't on the List Because of Its Upcoming 10-for-1 Stock Split, and One's Not a Stock
Key Points
Nvidia is a semiconductor giant and recently became the first $5 trillion company.
Netflix has grown so much that it's splitting 10-for-1.
Remember that high-flying growth stocks can pull back more sharply in a market downturn.
- 10 stocks we like better than Nvidia ›
Here comes a new year...and with it, perhaps, a few new stocks for our portfolios. Below, I'm offering a few growth-stock ideas for your consideration.
1. Nvidia
Nvidia (NASDAQ: NVDA) is already in my portfolio, and despite the fact that it has averaged annual gains of 145% over the past three years, the semiconductor company doesn't look wildly overvalued. That's because it's growing so briskly.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
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In its second quarter, revenue soared 56% year over year, thanks to great demand for data centers to accommodate artificial intelligence (AI) technologies. Nvidia recently became the first stock to reach a $5 trillion valuation.
2. Netflix
Netflix (NASDAQ: NFLX) has also grown briskly, averaging annual gains of 26% over the past decade. It's grown so much that management has announced a 10-for-1 stock split. (Yes, it will be nice to own 10 times as many shares, but they'll be valued at roughly a tenth of their former price, so the value of an investor's holdings won't change.)
Third-quarter revenue jumped 17% year over year, and its share of TV time in the U.S. has been growing in the past few years. Netflix's shares seem a little overvalued, with a recent price-to-sales ratio of 10.9 well above the five-year average of 6.6, and a forward-looking price-to-earnings (P/E) ratio of 34 about even with average. So proceed thoughtfully, perhaps buying gradually over time.
3. Vanguard Information Technology ETF
An easy way to quickly invest in about 300-plus growth stocks is via the Vanguard Information Technology ETF (NYSEMKT: VGT). This exchange-traded fund has averaged annual gains of 20% over the past 15 years, and its top holding is Nvidia.
Remember that many growth stocks (and ETFs) can fall sharply whenever the market pulls back. So expect some volatility if you're looking for growth stocks. If that makes you nervous, perhaps consider an ETF such as the Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) -- an S&P 500 index fund, holding each of its 500-some components in roughly equal proportion.
Should you invest $1,000 in Nvidia right now?
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Selena Maranjian has positions in Netflix and Nvidia. The Motley Fool has positions in and recommends Netflix and Nvidia. The Motley Fool has a disclosure policy.
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