From Morningstar: 2025-03-19 06:03:00

In 2024, growth stocks outperformed value stocks by 10 percentage points, but recent selloffs have dampened momentum, with growth stocks down nearly 10% in 2025.

Morningstar advised investors to underweight growth stocks due to significant premiums over fair value. AI stocks have fallen over 20% since January, bringing growth stocks close to fair value.

Top growth stocks include Rentokil Initial, Taiwan Semiconductor, Manhattan Associates, Coloplast, ServiceNow, Tyler Technologies, Autodesk, Equifax, Experian, and Copart. Rentokil Initial is the top pick, trading at a 47% discount to fair value.

Taiwan Semiconductor, the largest contract chip manufacturer, is undervalued by 37% and well-positioned for growth in AI, IoT, and high-performance computing applications.

Manhattan Associates, a supply chain software provider, is undervalued by 29% and expected to drive double-digit revenue growth annually.

Coloplast, a leader in ostomy and continence care, is 26% undervalued and focused on profitable growth and expanding into new geographies.

ServiceNow, a software as a service company, is undervalued by 18% and offers high-end solutions with elite customer retention.

Tyler Technologies, a government operational software leader, is undervalued by 15% and benefits from a fragmented market.

Autodesk, a computer-aided design software standard, is undervalued by 15% and has a strong recurring revenue base.

Equifax, a credit bureau, is undervalued by 12% and expanding its capabilities through acquisitions.

Experian, another credit bureau, is undervalued by 9% and focusing on emerging markets for growth.

Copart, an online salvage vehicle auction operator, is trading just below fair value, with strong growth potential.

Morningstar Style Box classifies stocks and fair value estimates represent what analysts think a stock is worth based on fundamentals.

Investors can use Morningstar tools to find more growth stocks to invest in, such as the Morningstar Investor screener and The Best Growth Funds list.



Read more at Morningstar: 10 Best Growth Stocks to Invest in for the Long Term