A lot of high-quality growth stocks have taken a hit in recent weeks and I think this is a good buying opportunity for long-term investors like myself. In the long run, many of these stocks are likely to climb higher as their revenues and earnings grow.
Here, I’m going to highlight three I’ve been buying for my ISA in the recent sell-off. I reckon these stocks have the potential to make me a lot of money in the long run.
Amazon
First up we have Amazon (NASDAQ: AMZN). It‘s one of the so-called Magnificent 7 stocks.
Amazon has had a significant pullback in the market sell-off. Only a few weeks ago, it was trading near $200. Now however, it’s in the $160s.
At current levels, I see considerable value on the table here. With analysts expecting earnings per share of $5.82 next year, the forward-looking price-to-earnings, or P/E, ratio is under 30. That’s a historically low valuation for this disruptive company.
It’s worth pointing out that consumer weakness (in the online shopping space) is a risk in the short term. This is one reason the shares have pulled back lately.
Taking a five-year view, however, I expect this stock to be sitting at much higher levels. Looking ahead, revenues and earnings should keep growing at an impressive rate thanks to the company’s exposure to cloud computing (19% growth last quarter) and artificial intelligence (AI).
ASML
Speaking of AI, one stock I’ve been buying for more exposure to the theme is ASML (NASDAQ: ASML). It’s a semiconductor manufacturing equipment maker that specialises in technology that can print microscopic patterns onto silicon wafers, enabling the creation of more powerful computer chips.
Like a lot of semiconductor equipment stocks, ASML has experienced a major pullback recently. In the space of a few weeks, its share price fell nearly 30%.
I see this pullback as an amazing opportunity. Next year, revenue and earnings are forecast to grow 33% and 57%, respectively, on the back of the AI boom. So, I think buying shares now – while the P/E ratio is in the mid-20s – is likely to pay off for me.
I’ll point out that I’m not expecting this stock to climb in a straight line in the years ahead. This company can experience lumpy sales and its share price can be quite volatile at times.
In the long run, however, I expect the stock to do well.
KLA Corp
Given the carnage across the semiconductor space, I decided to buy KLA Corp (NASDAQ: KLAC) too. Its share price had fallen more than 20%.
This is another company that’s likely to play a crucial role in the AI revolution. That’s because its technology helps semiconductor manufacturers with quality control and production efficiency.
In the years ahead, the chip industry is likely to experience huge growth on the back of the AI boom. And I see this company as the perfect ‘picks-and-shovels’ play.
A risk here is the ongoing US/China stand-off. This could lead to lower sales for the company in the future (it generates a lot of its revenues in China).
With the stock currently trading on a forward-looking P/E ratio in the low 20s, however, I like the long-term risk/reward skew.
