3 market-beating growth stocks long-term investors should consider for generational wealth

The best growth stocks are those that outperform leading global indexes with each passing year. Here are three that I swear by.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m primarily a value investor, focused on slow-growth stocks paying reliable dividends. That’s because I’m in it for the long run — aiming for a steady stream of passive retirement income.

However, diversification is paramount to any successful investment strategy. And I’d be a fool to shy away from stocks that have excellent growth potential.

So I hold a few promising growth stocks that I believe any investor would be smart to consider for their portfolio. Several of them have outpaced the FTSE 100 and S&P 500 over the past year — and could continue to do so.

Should you invest £1,000 in Gsk right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Gsk made the list?

See the 6 stocks

Here are three of my favourites.

growth stocks
Created on TradingView.com

Diploma

Diploma (LSE: DPLM) is the second highest-performing stock on the FTSE 100 over the past five years. Up a massive 200%, that’s on par with US tech giant Microsoft

The life sciences, seals and connections specialist has made a series of high-profile global acquisitions lately to boost revenues. It now has operations in Europe, Asia, America and Australia. In total, it’s added six new businesses to the group this year alone.

Created with Highcharts 11.4.3Diploma Plc PriceZoom1M3M6MYTD1Y5Y10YALL9 Apr 20208 Apr 2025Zoom ▾May '20Jan '21Sep '21May '22Jan '23Sep '23May '24Jan '25Jul '20Jul '20Jan '22Jan '22Jul '23Jul '23Jan '25Jan '251k2k3k4k5kwww.fool.co.uk

However, with the price outpacing earnings lately, its price-to-earnings (P/E) ratio is up to 50. Moreover, it’s overvalued by around 39% based on future cash flow estimates. After such an exceptional period of growth, it wouldn’t be surprising if a mild price correction happened. 

But if so, that could be a good buying opportunity – because long term, I think it’s got great potential.

Marks and Spencer

At 140 years old, Marks and Spencer (LSE: MKS) has long been a high-street institution in the UK, once described as “one of the last bastions of middle-class Britishness“. 

Before Covid, it struggled through several years of decline. Competition from high street rivals Next and John Lewis cost it dearly, and it was relegated to the FTSE 250 between 2019 and 2023.

Created with Highcharts 11.4.3Marks And Spencer Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

But lately, things are improving after a restructuring of the business. Now up by 60% in the past year, it’s far outpaced both the FTSE 100 and the S&P 500. Once thought of as an expensive supermarket, a change in pricing structures has made it more competitive. 

In its FY 2024 earnings released in June, revenue was up 9.3% and earnings up 19%.

Barclays

I bank with Barclays (LSE: BARC) so maybe I’m biased in this respect but it’s my favourite bank stock. And no surprise why — the shares are up 51% in the past year, beating both Lloyds and HSBC.

Another area where it beats them is its P/E ratio. At 8.5, it’s higher than most major UK high street banks. That could stifle growth. However, positive earnings forecasts mean the 12-month forward P/E is 7.3 – more in line with the industry average.

Created with Highcharts 11.4.3Barclays Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Much of the recent growth could be attributed to high interest rates. If more cuts come after this week’s initial cut, the growth could taper off soon. And in 2022 and 2023, growth was also subdued by a stifled economy. Should the economy take another dive, banks could be among the hardest hit.

Still, I think it’s one of the most solid and reliable gainers among the big banks. Plus, it’s a fairly solid dividend payer to boot. The 3.4% yield is nothing to write home about but it’s that extra bit of value when times get tough.

Should you invest £1,000 in Gsk right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Gsk made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Mark Hartley has positions in Barclays Plc, Diploma Plc, HSBC Holdings, Lloyds Banking Group Plc, and Marks And Spencer Group Plc. The Motley Fool UK has recommended Barclays Plc, Diploma Plc, HSBC Holdings, Lloyds Banking Group Plc, and Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »

Investing Articles

What’s happening to the Rolls-Royce share price now?

The Rolls-Royce share price has taken a knock from US trade tariffs, but it's still gained more than 50% in…

Read more »

Investing Articles

10 UK shares that are 50% or more off their 52-week highs

These UK shares have been hit hard. And Edward Sheldon believes there could be some opportunities for those with a…

Read more »

Man smiling and working on laptop
Investing Articles

Could IAG’s share price surge over the next year? These analysts think so!

IAG's share price has sunk, reflecting growing concerns over the impact of trade wars on airline profits. Is this a…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£10,000 invested in Apple shares last week is now worth…

Apple shares are down 18% over the past week. It’s a truly phenomenal downward movement, but investors may want to…

Read more »

Investing Articles

Are shares like Tesco a safe haven for investors?

Christopher Ruane sees a lot to like about Tesco shares. But does he see them as a safe heaven in…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

The 2025 stock market sell-off could be a once-in-a-decade opportunity to build wealth in an ISA

If a long-term investor has cash sitting in an investment ISA, now could be a good time to put some…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Is now a good time to start buying shares?

Stock market turbulence can be alarming, but it can also offer opportunity. Our writer considers whether now could be the…

Read more »