3 of the Best Growth Stocks to Own
These growth stocks with wide economic moats make excellent long-term holdings.
Susan Dziubinski: Hi, I’m Susan Dziubinski, co-host of The Morning Filter podcast. On every episode, Morningstar Chief US Market Strategist Dave Sekera shares a few stock picks. Dave’s picks are always stocks that are trading below what Morningstar thinks they’re worth.
But besides valuation, what other qualities do Dave’s stock picks tend to have in common? For starters, they’re often stocks of companies with wide economic moats. We think companies with wide moats are likely to remain competitive for two decades or more. Dave’s stock picks also tend to be from companies that generate reliable cash flows and that pay at least a modest dividend.
In today’s bonus stock-pick segment, we’re focusing on three growth stocks that have been among Dave’s stock picks in the past. From our perspective, they’re some of the best growth stocks to own for the long term, but we think you should only buy them when they’re undervalued and trading below our fair value estimates.
3 of the Best Growth Stocks to Own
We think Broadcom is one of the best growth stocks to own. The company’s amalgamation of high-value, differentiated, and moaty chip and software businesses generates prolific cash flow. Broadcom’s wide economic moat stems from intangible assets and chip design and switching costs for its software products. Strength in both chips and software allows the company to earn terrific accounting and economic profits. We expect Broadcom to grow rapidly as a result of its skyrocketing AI chip business. We model 46% revenue growth for Broadcom through fiscal 2030, driven predominantly by the growth of its semiconductor revenue and primarily its AI chip business.
Read Morningstar’s full report on Broadcom.
We think Nvidia is another must-own growth stock. The company has carved out a wide economic moat thanks to its market leadership in graphics processing units, hardware, software, and networking tools needed to enable the exponentially growing market around artificial intelligence. The investment case for Nvidia is driven by extraordinary data center growth as AI infrastructure spending expands. We expect data center revenue to rise from $194 billion in fiscal 2026 to $385 billion in fiscal 2027 and $672 billion in fiscal 2028. We expect Nvidia to maintain very high margins, too, with gross margins in the mid-70% range in fiscal 2027.
Read Morningstar’s full report on Nvidia.
Lastly, we think Palo Alto Networks is also among the best growth stocks to own. This cybersecurity standout is a leader in multiple categories spanning network security, cloud security, and security operations. Palo Alto maintains a wide economic moat based on strong customer switching costs and the network effect associated with its offerings. We forecast Palo Alto’s revenue growing at an 18% compound annual growth rate over the next five years. Palo Alto’s business is well positioned to benefit from multiple secular tailwinds. In fact, we’re already seeing robust demand for cyber solutions as companies invest in cyber defense to stave off AI model cyberattacks.
Read Morningstar’s full report on Palo Alto Networks.
For more stock ideas, be sure to tune in to The Morning Filter each week wherever you get your podcasts and visit morningstar.com, too.
Morningstar senior analysts Brian Colello, William Kerwin, and Malik Ahmed Khan provided the research behind this segment.
Watch 3 Stocks to Invest In With More Room to Run for more from Susan Dziubinski.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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