2 incredible growth stocks that crushed it in Q4!

Our writer takes a look at two exceptional growth stocks that blew the barn doors off in their most recent quarterly earnings.

| More on:

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.

As the name suggests, growth stocks are judged on their ability to deliver significant gains. The ones that do so consistently, year after year, are usually rewarded with a much higher share price.

Here, I’ll look at a pair of US-listed growth shares that have been marching upwards for years. But in the fourth quarter of 2024, they did the business again and were duly rewarded with further price gains.

Looking at their dominant competitive positions today, I think both are set up for further market-beating performances over the long term. I feel both are worthy of further research.

Intuitive Surgical

The first is robotic-assisted surgery pioneer Intuitive Surgical (NASDAQ: ISRG).

The stock was already up more than 150% in the five years prior to 15 January when the company released a Q4 trading update. Yet the market’s been happy to add another 12% after Intuitive said it expects 25% top-line growth (about $2.41bn) rather than Wall Street’s 14%.

This surprise beat came after it placed 493 of its da Vinci surgical systems during the quarter, including 174 of its latest da Vinci 5 robots. This next-generation iteration has 10,000 times the computing power of its predecessor!

For the full year, Intuitive placed 1,526 da Vinci systems, an 11% increase, taking its total installed base to about 10,000. And it expects full-year revenue of around $8.35bn, a 17% rise.

This is encouraging for shareholders due to the firm’s razor-and-blades business model. The more surgical robots it places, the more revenue it gets from selling instruments and accessories needed to run them. Most of the company’s revenue is recurring.

One key risk here would be another pandemic. During the last one, the company’s revenue declined significantly as operations were delayed or cancelled. Also, trading at 78 times forward earnings, this high-quality stock’s far from cheap.

However, the company remains a global leader in the robotic-assisted surgery space, and the long-term future continues to look very bright.

TSMC

The second company that released blowout Q4 numbers was Taiwan Semiconductor Manufacturing (NYSE: TSM). The stock’s up 9% since the chipmaking giant reported $26.9bn in quarterly revenue (up 38%) and a 57% rise in net profit ($11bn). Both figures beat Wall Street’s expectations.

Many tech firms outsource their chip manufacturing to TSMC, including Apple, Nvidia, Advanced Micro DevicesBroadcom, and Arm Holdings. And it’s custom AI chips that are really driving growth, with revenue from artificial intelligence (AI) accelerators more than tripling in 2024.

The firm’s now predicting revenue will grow at a five-year compound annual growth rate (CAGR) of 20%!

One challenge would be an unexpected slowdown in AI spending, especially as many of TSMC’s other markets are weak right now (notably smartphones and electric vehicles). It’s really the insane growth of AI that’s offsetting this weakness.

As for valuation, the forward P/E ratio’s 25. That strikes me as reasonable for a dominant company growing at 20% a year and capturing around 90% of high-performance computing chip orders.

Looking ahead, the demand for semiconductors is only likely to increase as megatrends like AI, cloud computing, 5G, electric vehicles and robotics play out. TSMC’s perfectly placed to benefit as the chip manufacturer of choice for many blue-chip firms.

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.

Ben McPoland has positions in Intuitive Surgical and Taiwan Semiconductor Manufacturing. The Motley Fool UK has recommended Advanced Micro Devices, Apple, Intuitive Surgical, Nvidia, and Taiwan Semiconductor Manufacturing. 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

Young Caucasian woman with pink her studying from her laptop screen
Investing Articles

Time to buy Nvidia shares before fresh all-time highs?

Nvidia shares began 2025 at an all-time high before a big drop in the last week or two. Our writer…

Read more »

Investing Articles

A top FTSE 100 share to consider for a Stocks and Shares ISA starter portfolio!

While not without risk, a lump sum in this FTSE 100 trust could prove a great way for Stocks and…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

I asked ChatGPT to name the best 5 UK shares to build wealth over 50 – and here they are!

Harvey Jones is looking to build a balanced portfolio of UK shares to fund his final years, and asked ChatGPT…

Read more »

Investing Articles

£10k invested in Scottish Mortgage shares after the DeepSeek crash is now worth…

Harvey Jones thought his Scottish Mortgage shares were heading for a bumpy ride when DeepSeek emerged last month. Then he…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

1 ex-penny stock up nearly 400% in my Stocks and Shares ISA! 

This writer is starting to take notice of a small-cap stock that is 'up' significantly in his ISA portfolio over…

Read more »

Investing Articles

The FTSE 100 index hits new highs! But will Legal & General shares outperform it in 2025?

Legal & General's share price has rocketed almost 8% so far in 2025. Can it continue to outstrip the surging…

Read more »

Investing Articles

Up another 8% in a week! So what’s stopping me from buying IAG shares? 

Harvey Jones is desperate to add high-flying IAG shares to his portfolio before they climb even higher but there's a…

Read more »

Happy couple showing relief at news
Investing Articles

The Bank of England’s slashed its growth forecast but the FTSE 100 doesn’t seem to care!

On the day the UK’s central bank halved its forecast for growth in 2025, the FTSE 100 reached a record…

Read more »