For investors who envision the next leg of the bull market, finding growth stocks that fit one’s investing criteria is important. Mega-cap growth stocks certainly provide the cash flow and balance sheet stability many are after, with the safety that accompanies a higher risk profile that’s tolerable.

In this article, I’m going to highlight three such companies I think fit the risk profile of most investors looking to catch the upside another leg of this bull market would provide, with some downside protection. These are companies with rock-solid business models that have proven themselves as long-term winners, but have also provided above-average growth rates over time and also trade at reasonable multiples. I know, the unicorns most investors are after.

I’m not saying these stocks are right for everyone. But if you’re a young investor looking for fundamental growth pillars of a portfolio, here are three companies I’d start with.

Key Points About This Article:

• Finding the sort of must-own stocks that can provide the growth and defensive business models that can weather economic downturns is difficult.
• These three companies have the cash flows and balance sheets to do just that, and have done so in the past.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Advanced Micro Devices (AMD)

Advanced Micro Devices (NASDAQ:AMD) is a top semiconductor maker that’s seen its fair share of volatility over the past year. On a year-to-date basis, AMD stock is trading flat, despite a surge into March which saw AMD stock up 50% in a three month span.

The chip maker’s stock price has been volatile for a number of reasons. Most notably, the leader in high-performance chips, Nvidia, continues to dominate the discussion among most investors, leaving little room for competitors to catch up and eventually take share.

The thing is, AMD has been slowly and steadily outperforming, The company’s stock price surged 11% after AMD projected third-quarter revenue at $6.7 billion, exceeding analysts’ $6.62 billion estimate. Second-quarter results also beat expectations, and AMD raised its outlook for AI accelerators, driving growth in artificial intelligence processors.

With the stock below $150 per share, many growth-at-a-reasonable-price investors are starting to look at AMD stock as a potential buy. Some analysts, such as those at Wells Fargo, have AMD stock pegged at a price target of $205 per share, in part due to the company’s $665M acquisition of Silo AI as a strategic move to enhance AI capabilities. Piper Sandler also highlighted recent share price declines as a significant opportunity for investors amid the AI boom.

Despite strong quarterly results and raising its AI chip sales forecast, AMD stock fell 24% since July and is up only 1% for the year, struggling to compete with rival Nvidia. However, analysts remain optimistic, with Wells Fargo raising its price target to $205 and maintaining an “overweight” rating. AMD holds a consensus “strong buy” rating and a median price target 6% above current levels.

BYD Co. (BYDDF)

BYD Co. (OTCMKTS:BYDDF) has thrived despite the EV market slump and low consumer spending, holding an 18% market share globally. In June, international sales rose 156% year-over-year, and BYD sold 1 million new energy vehicles in Q2. The company is expanding aggressively, partnering with Uber to add 100,000 EVs in Europe and Latin America, and signing a $1 billion deal for a new factory in Turkey. Although the EV market is slow to recover, BYD’s strong market presence and expansion efforts make it a stock worth considering at $30 per share.

The company reportedly planning to set up an EV plant in Pakistan as part of its global expansion strategy. At its upcoming brand launch, the company will showcase three models, including an SUV and a sedan, with future plans for battery-electric and plug-in hybrid vehicles. While a spokesperson confirmed BYD’s market entry with these vehicles, details about the factory investment in Pakistan were not disclosed.

For investors looking to play the EV sector from a global angle, BYD would be my optimal way to do so. Don’t take my word for it. Warren Buffett has been aboard this train for a long time. And with the blessing of the Oracle of Omaha, this is a stock that should continue to outperform for a very long time to come. That is, if Buffett doesn’t start cutting his stake in this EV maker anytime soon. I don’t expect that will be the case, given the company’s fundamentals. 

Meta Platforms (META)

Meta Platforms (NASDAQ:META) remains among the top social media stocks I continue to pound the table on. A Magnificent 7 gem with plenty of lead left in its pencil to run higher, Meta has seen growth in its ad revenue and user base, while retaining a favorable valuation at 26-times trailing earnings.

This valuation is important to consider on the back of strong Q2 results which showed 73% net income growth, fueled by continued cost-cutting and efficiency measures. Despite layoffs, Meta has been able to maintain a relatively stable employment base, and increased its active users 7% year-over-year to nearly 3.3 billion. That’s an impressive number, and essentially means Meta reaches more than one-third the global population on a daily basis via its social media empire.

The company’s valuation multiple seems to be very modest, given the company’s 0.5% dividend yield and penchant for distributing earnings to shareholders via stock buybacks. So long as this trend continues, and the company continues to grow its dividend over time, the company should remain a top holding of all long-term growth investors. That’s my view at least.

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