There's a place and time to play safe, but at some point investors need to look at growth stocks if they want to retire early. As World Cup winners Argentina just demonstrated, teams that take initiative instead of always being on the defensive come out on top.
This is what the best growth stocks are all about: going against the grain and taking risks on potential upside opportunities.
But the current market environment doesn't support being 100% contrarian.
The Fed just showed they're still committed to rate hikes, despite earlier rumors about positive changes in monetary policy. Therefore, recession concerns continue to ring loudly.
So investors who are looking to retire early should find the best growth stocks among established blue chip companies. Here are four top companies that still have lots of room to run.
Lam Research (LRCX)
Lam Research (NASDAQ:LRCX) is an American supplier of wafer fabrication equipment and related services to the semiconductor industry. Per its public profile, Lam’s products are used primarily in front-end wafer processing, which involves the steps that create the active components of semiconductor devices and their wiring.
As with other tech firms, Lam disproportionately suffered from the global supply chain disruption. On a year-to-date basis, LRCX stock suffered a steep decline of 38.5% of equity value. While certainly concerning, the back half of 2022 has been much better for Lam Research. In the trailing six-month period, LRCX gained almost 7%.
What should really attract investors to the enterprise, though, is the underlying profitability profile. Currently, the company commands (on a trailing-12-month basis) a net margin of nearly 27%. This ranks better than 88.5% of the competition. As well, its three-year revenue growth rate stands at 26.6%, making it one of the best growth stocks to buy to retire early.
Veeva Systems (VEEV)
Headquartered in Pleasanton, California, Veeva Systems (NYSE:VEEV) is a cloud-computing company focused on pharmaceutical and life sciences industry applications. In other words, Veeva structures itself as a Software as a Solution enterprise for life science applications. Currently, the company commands a market capitalization of $26.45 billion.
As with other tech-related entities, 2022 has not been kind to VEEV stock. Since the start of the year, shares gave up nearly 34% of equity value. However, the business mitigated most of the pain in the second half. For example, in the trailing six months, the market loss pings at 4%.
To be fair, Veeva doesn’t present the most encouraging picture right now. However, if you’re looking for the best growth stocks to buy for early retirement, it’s difficult to overlook VEEV. Presently, the company features a three-year revenue growth rate of 27.3%, beating out nearly 83% of its peers. In addition, Veeva enjoys excellent stability in the balance sheet (with a cash-to-debt ratio of nearly 49 times) and strong profit margins.
To be quite blunt, I was hesitant to include Tencent (OTCMKTS:TCEHY) on this list of best growth stocks to buy for early retirement. Mainly, the pensiveness centered on Tencent’s native China market. While the country recently relaxed its super strict zero-Covid policy, Chinese stocks still present geopolitical jitters. After all, President Xi Jinping secured a historic third term, which is really unprecedented.
With President Xi’s yes men and yes women occupying the seats of power, China lost the pretense that it wasn’t an authoritarian state. When dealing with free markets, authoritarianism should never be part of the discussion.
Nevertheless, the hard numbers from Tencent command respect. Currently, the company features a three-year revenue growth rate of 24%. This stat beats out over 74% of its rivals. In addition, Tencent delivers on the profitability front, which then leads to its return on equity of 22.6%. Such a high ROE indicates superior capacity to convert equity financing into profits, reflecting a high-quality business.
A software technology firm, Adobe (NASDAQ:ADBE) arguably generates the most attention for its Photoshop application. Fundamentally, then, Adobe represents one of the best growth stocks to buy for early retirement due to the gig economy. As white-collar workers discovered during the coronavirus shutdown, working from home facilitates certain benefits in terms of time freedom. However, those freedoms could be going away.
As Resume Builder reported this past September, 90% of companies it surveyed will require their employees to return to the office at least part of the week beginning in 2023. Further, the study noted that “21% of companies will fire workers who do not return to the office.” Should the economy slip into recession as mentioned above, employees will naturally lose bargaining power.
Of course, many if not most will acquiesce. However, a brave few will venture on their own, thus bolstering the gig economy. And since this segment encompasses myriad categories including creatives, Adobe appears to have a cynically bright future.
Originally published on InvestorPlace.com
Josh Enomoto had no positions (directly or indirectly) in any of the securities mentioned in this article at the time of publication. These opinions are the author's and are subject to the InvestorPlace.com Publishing Guidelines.