Hot Stocks Watch: 3 Promising Stocks to Buy for Growth 

Investors have been piling back into growth stocks — perhaps somewhat begrudgingly — as the group continues to gravitate higher. These promising growth stocks have become top stocks to buy as they continue to rise higher.

Fear of missing out — or “FOMO” — may be driving some of these gains, although the stocks do have robust potential due to their underlying businesses.

Atop investors’ list of concerns: A recession.

Investors have been hearing all about the recession potential throughout the last 18 months, and if it were to come to fruition, investors know what would happen to the stock market. Taking it a step further, they know what will happen to high growth stocks, even if they are of high quality.

However, what if there’s not a recession?

What if the Standards and Practices 500 is in a new bull market, and what if the new uptrend has the potential to drive the index back to new highs? If that’s the case, then promising growth stocks will keep going up, and investors who sniffed them out early will be the ones to cash in on the profits.

The Trade Desk (TTD)

If I have any consistent readers out there, they’ll know that I have been pounding the table on The Trade Desk (NASDAQ:TTD). That’s even as the stock works on its seventh-straight monthly gain. While it’s rallied a ton in that span — up 121% — there’s still opportunities for dip buyers who can hold for the long term.

The company is run by CEO Jeff Green, who has built a powerful market company. When it comes to digital ad spend, 2020 through 2022 had to be one of the hardest environments to navigate. Covid-19 evaporated ad spend shortly into 2020. Worries of a recession coupled with a painful bear market and rising interest rates didn’t make 2022 all that easy, either.

Yet, despite all that, the Trade Desk continued to grow. Revenue climbed 26.5% in 2020, 43% in 2021 and 31.9% in 2022.

What’s even more impressive? The company was profitable and free cash flow positive in all of those years.

PayPal (PYPL)

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There has been almost no love for PayPal (NASDAQ:PYPL), a stock that suffered a peak-to-trough decline of more than 80%, and didn’t bottom until May 26, 2023. With the market in the midst of a five-month winning streak and with a robust performance from tech, PayPal’s lack of participation was a startling disappointment for investors.

However, the stock very quietly has been roaring back to life.

Shares are up 24% from the 52-week low, rallying in five of the last seven weeks (while the two “down weeks” in that stretch were weekly declines of just 0.73% and 0.31%).

The company recently sold off a large portfolio of European-based “buy now pay later” loans. As a result, PayPal de-risked its balance sheet and freed up cash and management already said it plans to give a modest boost to its buyback plan.

Despite the stock’s poor performance, the company is forecast to grow. Despite the recent rally, PayPal stock still trades at just 14.5 times this year’s earnings estimate of $4.95 a share. If we use the GAAP estimate of $3.40 a share, shares still trade at a reasonable 21 times earnings.

DigitalOcean (DOCN)

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DigitalOcean (NYSE:DOCN) stock has come roaring to life lately. While the stock has been trading well throughout the last few months, it’s currently riding a three-week win streak. At last week’s high, shares were up more than 34% in that span, while shares have more than doubled from the 52-week lows in late December.

Of the three stocks on this list, DigitalOcean is certainly the smallest — with a market capitalization of $4.2 billion — and in many investors’ minds, the riskiest name here as well.

However, I like management’s style. While economic risks and uncertainties loom, the company’s brass is focused on shoring up its bottom line and turning profitable. That’s even smarter with interest rates continuing to rise.

Analysts expect about 22% revenue growth this year alongside almost 80% growth in non-GAAP earnings (to $1.69 a share). However, analysts are also forecasting GAAP profitability this year too, which is a bonus.

Now it’s got AI as a catalyst too, after purchasing Paperspace, which allows “small and medium-sized businesses to test and scale their AI models on the cloud.”

On the date of publication, Bret Kenwell held a long position in PYPL, DOCN and TTD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.