The Best Growth Stocks I'd Buy Right Now

The markets are off to a rocky start this year, and many of my favorite growth stocks have gone on sale alongside this volatility. Whether it is the conflict in Iran, software stocks selling off from the artificial intelligence (AI) threat, a soft housing market, weak consumer spending, or worries about an ROI on AI capex investments among mega-cap tech stocks, it can feel like a scary time to invest.

However, while I wouldn't recommend going all in amid the current turbulence, I believe there are interesting pockets of opportunity across the market. While the industrial growth stocks below are down 30% and 43% respectively from their 52-week highs, they are two of my favorites. Here's the case for investing in them today.

Image source: The Motley Fool.

Rocket Lab: Down 30%

First things first. Rocket Lab (NASDAQ: RKLB) stock will be volatile for the foreseeable future, so investors need to be on board with this before buying. That said, founder-led Rocket Lab might have more growth optionality than any other stock on the market.

While the company is only the No. 3 launch provider in U.S. behind SpaceX and Blue Origin, its vertically integrated model and end-to-end space solutions offer investors immense growth potential. While they may be (literal) moonshots, Rocket Lab could help with once-unthinkable projects like:

• Missile and direct energy weapon defense systems (Golden Dome or SHIELD program)
• Supporting missions to the Moon, Mars, and beyond
• Offering silicon solar arrays for use in space-based data centers if they become a reality
• In-space manufacturing or mining
• Orbital servicing, refueling, or even space debris removal

Said another way, Rocket Lab is poised to play a key role in the creation of many new industries, thanks to its full suite of space offerings, including launch, spacecraft, payloads, satellites, and mission support. Speaking to the company's transformational operations, founder and Chief Executive Officer Peter Beck explained:

Rocket Lab is repeatedly winning large awards that have historically been the exclusive domain of the legacy aerospace primes. We are seeing a new world order established in the defense world with the rise of companies like Anduril and Palantir [Technologies] playing leading roles in disrupting slow, bloated traditional players. Rocket Lab USA, Inc. is clearly doing this in space and unseating the old guard.

While Beck's quote focuses on Rocket Lab's potential to further disrupt the defense market, I think it applies to numerous industries, including telecommunications, Earth observation, and even space tourism.

However, the elephant in the room right now is that Rocket Lab's next-gen, semi-reusable, and medium-payload-capable Neutron rocket launch got delayed again -- this time until Q4 of this year at best. While the part of the rocket that failed in stress testing was hand-laid by a third-party contractor, it is nonetheless disappointing as SpaceX and Blue Origin continue to build out their leadership. While I'm not panicking about this delay, if the company misses again in Q4, it could signal broader operational issues, given the previous postponements.

Ultimately, Rocket Lab's revenue and backlog grew by 38% and 73%, respectively, in 2025, while its gross margin improved again by over 7 percentage points. With the stock trading at 62 times sales, investors need to realize there is ample risk in the company's lofty valuation. However, this premium valuation also better enables the company to raise funds by offering shares.

I look forward to making small purchases of Rocket Lab stock over time, as the stock's $40 billion market capitalization pales in comparison to the potential size of the new industries it could help create. That said, please don't go all in at today's prices -- add to a position over time in increments if you're interested.

Badger Meter: Down 43%

If literal rocket science is a bit too exciting an investment proposition, leading water management solutions provider Badger Meter (NYSE: BMI) and its 120 years of operations may be a steadier, simpler option.

Badger Meter offers a suite of digital smart water solutions, like flow measurement, sewer monitoring, network communications, software, and water quality and pressure monitoring. In simplest terms, as outdated, mechanical water metering infrastructure needs to be replaced, Badger Meter's advanced metering infrastructure (AMI) brings its customers' water systems into the modern age.

With 85% of its sales coming from this replacement demand -- and with only 40% of in-use water connections using AMI -- Badger Meter has generated powerful growth, with the stock delivering total returns of 17% annually since 2000. This is even after the stock dropped 43% from its high over the last year.

While Badger Meter may not be the most high-flying growth stock out there, with sales growing by 9% annually over the last decade, its net income and free cash flow have risen by 18% and 30% each year over the same period.

As remarkable as Badger Meter's run was, its price-to-free cash flow (P/FCF) ratio went from the low 20s in 2019 to above 50 in 2024, meaning the stock was priced for perfection. While recent quarterly results were fine, they weren't perfect, and the stock has cratered this year.

However, this divergence between the stock's slide and Badger's resilient operations creates an opportunity for investors -- especially as the company's nascent software business continues to boom. It grew sales by 28% annually over the last five years.

Now paying a well-funded 1% dividend yield, which has seen its payments rise by 13% annually over the last decade, Badger Meter looks like an outstanding growth stock to buy while it trades at a more reasonable 26 times FCF. While Rocket Lab and Badger Meter are on different ends of the risk and excitement spectrums, they're both core holdings for me, and I will continue to add to each of them over time.

Josh Kohn-Lindquist has positions in Badger Meter, Palantir Technologies, and Rocket Lab. The Motley Fool has positions in and recommends Palantir Technologies and Rocket Lab. The Motley Fool has a disclosure policy.