If you are a contrarian investor looking for investment ideas, one of the best places to start your search is the list of companies hitting 52-week lows. These are stocks that are, clearly, unloved by investors and, perhaps, the declines are also overdone.

Right now, you’ll find that Intuitive Surgical (ISRG 1.63%), United Parcel Service (UPS 0.35%), and PepsiCo (PEP -1.41%) are all near their 52-week lows. Here’s a quick look at each one and why they could be right for your portfolio today.

1. Intuitive Surgical is building a foundation

In the second quarter of 2025, Intuitive Surgical placed 395 of its da Vinci surgical robot systems, which was up from 341 in the same quarter of 2024. The number of procedures performed with a da Vinci system rose 17% year over year. Basically, the healthcare company is continuing to grow its installed base of surgical systems. This is hugely important, even though investors are worried about short-term changes in the business environment.

The reason why Intuitive Surgical’s 25% decline from its 52-week high is so interesting is that selling new da Vinci systems isn’t the company’s most important business. In fact, selling surgical robots only accounted for around 25% of the top line of the income statement in the quarter. The rest of the company’s sales come from parts and services, which are recurring income streams. In other words, every new da Vinci sold helps to build the opportunity for future growth in parts and services.

Intuitive Surgical looks expensive on an absolute level, so only growth investors will likely be interested. However, its price-to-sales, price-to-earnings, and price-to-book value ratios are all below their five-year averages. So, the sell-off could be a growth at a reasonable price (GARP) opportunity for more aggressive investors.

2. United Parcel Services is a turnaround story

The first thing that most investors will probably be drawn to with United Parcel Service, or UPS as it is more commonly known, is its nearly 7.7% dividend yield. Be cautious; this is more of a turnaround story than an income story. Basically, the company is working to reset its business, and that risks the possibility of a dividend reset as well. This is why the stock is off its 52-week high by over 35%.

The list of changes that have taken place at UPS is material. There was a new, and more costly, union contract. Management has been making capital investments in technology to increase profitability. The investments being made have resulted in facilities being shut down and sold. And the company is trying to fine-tune its customer base, so it is focused on its most profitable end markets.

That last step has included the pre-emptive decision to drastically reduce UPS’s relationship with Amazon, its largest customer, but one that is also low-margin.

Basically, there are a lot of up-front costs in UPS’s turnaround plan. And that has investors worried about the future. But the necessary nature of package delivery and the fact that it would be hard, if not impossible, to replicate UPS’s infrastructure, suggest a turnaround is likely. Just go in knowing that the lofty dividend yield could be riskier than it seems.

3. PepsiCo is a Dividend King with a high yield

If you are an income investor, you’ll probably find PepsiCo more to your liking. The yield is lower at 4%, but the likelihood of the dividend surviving the current headwinds this consumer staples giant faces is fairly strong. After all, a company doesn’t become a Dividend King without dealing with bad times now and again. Right now is a bad time.

There are a couple of issues. First, consumer staples stocks in general have been having a rough go of it thanks to a push for healthier fare from consumers. PepsiCo’s strongholds of soda, salty snacks, and packaged food aren’t exactly in the sweet spot right now. Second, PepsiCo’s business is underperforming key peers, so Wall Street is extra negative. That’s fair, but given the company’s strong long-term history as a business, it’s probably short-sighted.

Consumer staples giants like PepsiCo have a strong history of adjusting to consumer trends. Sometimes it takes longer than other times, but that can open up an opportunity for income investors who think in decades and not days. Now is probably a good time to consider adding PepsiCo to your dividend portfolio if you don’t already own it.

Three different options for three different investors

You’ll find all kinds of stocks on the 52-week low list, which is the really exciting part for contrarian investors. Sometimes you’ll see a GARP opportunity like Intuitive Surgical pop up. Other times, the list will include solid turnaround stories like UPS. And the list of down-and-out stocks may even include some reliable dividend stocks like PepsiCo from time to time.

If you keep looking, regardless of your investment approach, you’ll eventually find something attractive to own.

On July 31, shares of internet design company Figma (FIG -1.24%) began trading at $85 and finished their first day at over $115. The following day, Figma stock closed at $122 per share, but it’s been all downhill since then.

The stock dropped 39.2% in August even though the S&P 500 was up 1.9% for the month. And things haven’t improved in September. Whereas the S&P 500 is enjoying an unusually strong month with a 3.6% gain as of Sept. 22, Figma stock has plunged another 16.4%.

Adding it all up, the stock reached an all-time high on its second day of trading and is already down 59% from that peak. With this big of a drop, is Figma now a bargain for long-term investors?

Two reasons Figma stock is down

This isn’t one of my two reasons, but it’s worth mentioning that Figma had its initial public offering (IPO) only weeks ago. Regardless of whether an IPO stock is high quality or low quality, volatility is common in these early months.

Figma was practically guaranteed to give investors a wild ride, simply because it’s a recent IPO. It’s why some investors avoid IPO stocks entirely.

General IPO volatility aside, Figma reported results for the second quarter of 2025 on Sept. 3, its first report as a publicly-traded company, and it underwhelmed the investor community. This is one of the reasons the stock is down.

In the second quarter, the company generated revenue of $250 million, which was good for 41% year-over-year growth. In isolation, 41% growth is absolutely stellar.

But there is a twofold concern here. First, this is a deceleration from the 46% growth it reported in the first quarter. Second, the deceleration is only just beginning, according to management.

For the third quarter, Figma expects 33% revenue growth at the midpoint of its guidance range. Again, this is a strong number in isolation but a sharp drop-off for its growth rate nevertheless. And for all of 2025, the company is guiding for a 37% jump from the previous year. This full-year guidance implies just a 30% growth rate for the fourth quarter.

Figma went public and initially surged based on its potential as a growth stock, but its growth is quickly slowing — that’s the first problem. Here’s the second problem: At its peak, the stock traded at over 66 times sales.

Data by YCharts; PS ratio= price-to-sales ratio.

I’ve seen stocks trade at a lofty valuation such as this and still provide investors with positive long-term returns. That being said, this is usually the case for businesses that are still accelerating their top line.

In short, it seems that investors were willing to pay a high price for Figma stock out of the gate, assuming its growth would continue to impress. But looking beyond the initial hype, revenue growth is trending downward, and investors are rethinking the valuation.

Projecting Figma’s performance from here

The Forbes 2000 is a list of 2,000 of the largest publicly-traded companies in the world — these are big fish. And to its credit, Figma has already landed most of them. It counts 78% of the Forbes 2000 as customers, showing how widely adopted its software is.

Moreover, around two-thirds of its customers use three or more of its software products. As far as software businesses go, that’s a strong adoption rate.

However, for investors looking to buy the stock today, this is counterintuitively a headwind. There are relatively few big customers that it could win from here. And upselling its customers to more services is challenging because of how many have already adopted multiple Figma products. With this context, a slowdown in growth makes perfect sense.

In other words, Figma’s business is already so successful that it makes incremental growth harder to find. Some investors may object to this statement, considering the company is still calling for double-digit growth in 2025.

But consider that the company raised its prices by over 20% earlier this year. Much of the growth it’s projecting comes from charging higher prices, which can’t be too regular an occurrence without risking excessive customer churn.

Personally, I believe Figma stock will underperform the market going forward. After all, it’s still trading at over 30 times sales despite the recent sell-off, making it one of the more richly valued software stocks out there. If its revenue growth continues to slow, the valuation will likely keep coming down.

Figma needs something that will truly help the business sustain its growth. The good news is it has $1.6 billion in cash and marketable securities at its disposal that can fund a lot of research and development or fuel acquisitions. But for now, the valuation risk is elevated due to its slowing growth — I wouldn’t buy the stock right now, even after its 59% drop.

The 10 largest growth-focused U.S. companies now make up 38% of the S&P 500. Known as the “Ten Titans,” the list includes Nvidia (NVDA -3.38%), Microsoft, Apple, Amazon, Alphabet, Meta Platforms, Broadcom, Tesla, Oracle (ORCL -5.97%), and Netflix (NFLX -1.87%).

Oracle, Netflix, and Nvidia have been the best performers of the Titans year to date. Let’s determine if these growth stocks have what it takes to continue outperforming next year.

Oracle has innovative ideas, but they come at a price

Oracle has been the standout among the Titans. With a year-to-date total return of more than 40%, it vaulted its market cap above $660 billion.

ORCL Total Return Level data by YCharts.

Oracle was close to dead money in the five years between 2015 and the end of 2019 — gaining just 17.8% compared to 56.9% for the S&P 500. But since the start of 2020, Oracle is up 345% compared to a 100.6% gain in the S&P 500. A big driver of the outperformance is the build-out and adoption of Oracle Cloud Infrastructure (OCI).

Oracle transformed from a database-first company to a fully fledged ecosystem. Not long ago, companies were using Oracle’s database software on third-party clouds. Oracle decided to capture that revenue by building out its own cloud services.

Oracle Integration Cloud hosts software-as-a-service offerings for financial reporting, automated workflows, human resources operations, marketing, personalization, and more. Oracle also offers artificial intelligence (AI)-powered database services. And OCI has been shown to be much more cost-effective for data-intensive operations than Amazon Web Services, Microsoft Azure, or Google Cloud. It’s an especially ideal offering for industries like financial services and healthcare that have complex regulatory frameworks and sensitive information. On its earnings calls, Oracle often discusses how industries are choosing OCI for its security and compliance capabilities.

Oracle was already a leader in enterprise software solutions. And now, it is a major player in the cloud business. The main downside of Oracle is that its valuation is expensive, and it is spending extremely aggressively. Oracle is arguably among the higher-risk, higher-potential-reward Titans. If its investments translate to bottom-line earnings growth, it could continue to be one of the best performers in the group. If not, it wouldn’t be surprising if the stock underwent a sizable sell-off.

Netflix is an entertainment giant that is raking in the cash flow

Netflix’s outsized returns in recent years are partly due to how beaten down the stock was going into 2023. Netflix fell over 50% in 2022, outpacing the broader sell-off in the Nasdaq Composite (NASDAQINDEX: ^IXIC) that year. At the time, other streaming platforms were gaining traction, and Netflix was still inconsistently profitable.

The business model has remained largely unchanged over the past decade. So it’s not a transformational story like Oracle. Rather, Netflix has perfected its craft.

The biggest change has been its content slate — what it spends on, how it markets that content (like the global success of “KPop Demon Hunters,”) and basically just boosting its overall content success rate. The second major change was cracking down on password sharing. This was a resounding success because a lot of new accounts opened up — showing that customers were willing to pay for Netflix because they value the service (again, despite a lot of competition). And finally, Netflix’s ad-supported tier is driving new signups, which accelerates revenue growth.

Netflix is an industry-leading cash cow with high margins. It has become a near-perfect business. The only issue is that the valuation reflects that, as Netflix trades at 52 times trailing 12-month earnings. Netflix could still be a winning long-term stock, but it may need a year or two to grow into its valuation. Therefore, it may not be a standout performer in 2026.

Nvidia just delivered another blowout quarter

Nvidia reported exceptional second-quarter fiscal 2026 results on Aug. 27 despite the company’s China business being hindered by export restrictions to China.

Even with difficult comps from the second-quarter fiscal 2025, Nvidia grew revenue by 56% and adjusted earnings per share by 54%. Arguably, the most impressive aspect of Nvidia’s results is that it continues to sustain ultra-high gross margins over 70%. Nvidia’s high margins allow it to convert a substantial amount of sales into profit, which is a testament to its edge over the competition and technological leadership on the global stage.

Nvidia gets a lot of attention for its data center business — and rightfully so, as it made up 88% of revenue in the recent quarter. But it’s worth noting that the rest of the business is doing well too. Nvidia’s non-data center revenue, which includes gaming and AI PC professional visualization, automotive, and robotics, was collectively $5.49 billion — up 48% compared to $3.7 billion a year ago.

Nvidia is in its third year of what has been an uninterrupted masterclass of exponential growth on a scale unlike any business the world has ever seen. And somehow, the company still has its foot on the gas with no signs of slowing down.

Nvidia’s outlook for the third-quarter fiscal 2026 calls for $54 billion in revenue even if it ships zero H20 chips to China — all while maintaining a 73% gross margin. That would mark a 54% increase in revenue and just slightly lower gross margins than third-quarter fiscal 2025 and a near three-fold increase in revenue in just two years.

Despite the impeccable results, Nvidia’s valuation isn’t cheap, as investors are pricing in a sustained breakneck growth rate. But Nvidia just keeps delivering, so its 58.4 price-to-earnings ratio is reasonable.

If Nvidia’s stock price remained unchanged for a year but the company grew earnings by 50%, the P/E would drop to 38.9. So even now, with the stock on track to crush the S&P 500 for the third consecutive year, Nvidia remains a top AI stock to buy now.

I expect Nvidia to continue leading the Ten Titans higher in 2026, especially if trade policy with China eases. However, if for whatever reason there’s a slowdown in AI spending from key Nvidia customers, Nvidia could drag down the Ten Titans and the broader market with it.

Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

If you’re like many investors, you either own or want to own the “Magnificent Seven” stocks, which are Apple, Amazon.com, (Google parent) Alphabet, (Facebook parent) Meta Platforms, Microsoft, Nvidia, and Tesla.

You might also want to own companies that could become Magnificent-Seven-like — in other words, terrific growth stocks. But which companies are the next great investments? It can be hard to know, which is why it’s smart to buy a bundle of promising stocks, spreading your risk and opportunity around.

Consider, therefore, investing in the Vanguard Growth ETF (VUG -0.32%), which you can do with as little as $100. (To clarify, a single share recently went for $463, so if you only had $100 to invest, you’d need to buy a fraction of a share, which some good brokerages allow you to do.) An exchange-traded fund (ETF) is a fund that trades like a stock.

Meet the Vanguard Growth ETF

The Vanguard Growth ETF tracks the CRSP U.S. Large Cap Growth Index, which is focused on large-cap companies growing at a faster-than-average clip, and the ETF aims to deliver roughly the same returns, minus its low fees. Specifically, its expense ratio (annual fee) is just 0.04%, meaning that you’ll be charged a whopping $4 per year for every $10,000 you have invested in the fund.

The ETF held 165 stocks, as of June 30, per Vanguard, with 60% of assets in the technology sector, followed by 19% in the consumer discretionary sector. Here are the top 10 holdings, which together made up about 59% of total assets:

Source: Vanguard.com, as of June 30.

You can see that all the Magnificent Seven stocks are there — and among the top holdings. And given that these 10 holdings make up more than half the ETF’s value, it’s clear that the other 155 stocks will be relatively minor holdings for the ETF — and its shareholders. Still, those top 10 companies are in the top 10 because they grew to huge sizes, and it’s not crazy to let your winners run and keep winning.

This ETF and its more well-known fellow index fund, the S&P 500 index fund, are, like lots of others, market-cap-weighted, meaning that the bigger the component company, the more influence it will wield on the index. That’s why the top 10 companies above make up so much of the Vanguard Growth ETF’s value — because they have such hefty market caps.

If you’re in the market for diversification with less concentration, you might look for a good equal-weighted ETF, such as the Invesco S&P 500 Equal Weight ETF, which holds each of its 500-some components in roughly equal proportion. The Invesco equal-weight ETF’s top-10 holdings would, therefore, make up only about 2% or 3% of the overall ETF value.

How has the Vanguard Growth ETF performed?

Here’s how the Vanguard Growth ETF would have rewarded you over several recent periods. I’ll compare its numbers to those of a low-fee S&P 500 index fund, too, and you’ll see that it outperformed the S&P index fund handily:

Source: Morningstar.com, as of August 12, 2025.

There’s no guarantee that it will always outperform, though, and it’s good to remember that since growth stocks tend to fall harder in market downturns, there may be years when it really underperforms. For example, in 2022, when the S&P 500 ETF dropped by around 18%, the Vanguard Growth ETF dropped by 33%. Ouch!

Still, long-term investors have enjoyed solid overall gains, and it’s rarely good to focus on any one year. So go ahead and consider the Vanguard Growth ETF for your growth-stock needs. But perhaps complement it with some other solid index ETFs.

Selena Maranjian has positions in Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Since writing about FIRE in 2009, I’ve favored investing in growth stocks over value stocks. As someone who wanted to retire early from finance, my goal was to build as large a capital base as quickly as possible. Once I retired, I could convert these gains into dividend-paying stocks or other income-generating assets to cover my living expenses if so desired.

Although more volatile, you’ll likely generate more wealth faster by investing in growth stocks. By definition, growth stocks are expanding at a rate above average, which means shareholder equity also tends to compound faster. As equity investors, that’s exactly what we want. Instead of receiving a small dividend, I’d rather have the company reinvest capital into high-return opportunities.

Once a company starts paying a dividend or hikes its payout ratio, it’s signaling it can’t find better uses for its capital. If it could generate a higher return internally—say, improving operating profits by 50% annually through tech CAPEX—it would choose that instead. Think like a CEO: if you can reinvest for outsized returns, you do it. You don’t hand out cash unless you’ve run out of high-ROI projects.

The whole purpose of FIRE is to achieve financial independence sooner so you can do what you want. Growth stocks align with this goal; value stocks generally don’t.

My Growth Stock Bias

I’m sure some of you, especially “dividend growth investors,” which I consider a total misnomer, will disagree with my view. But after 29 years of investing in public equities, working in the equities divisions at Goldman Sachs and Credit Suisse, retiring from finance in 2012 at age 34, and relying on my investments to fund our FIRE lifestyle, I’m speaking from firsthand experience.

Without a steady paycheck, I can’t afford to be too wrong. I’ve only got one shot at getting this right. Same with you.

Given my preference, my 401(k), rollover IRA, and taxable accounts have been heavily weighted toward tech stocks since I started Financial Samurai. Some of my growth holdings—Meta, Tesla, Google, Netflix, and Apple—have certainly taken hits in 2018, briefly in 2020, and again in 2022. But overall, they’ve performed well. Technology was clearly the future, and I wanted to own as much of it as I could comfortably afford.

I no longer consider Apple a growth stock given its innovation slowdown and entrenched market position. But it was once a core compounder in my portfolio.

My Occasional Value Stock Detours (and Regrets)

Despite my beliefs, I sometimes can’t resist the lure of value stocks. In the past, I bought AT&T for its then-8% yield—only to watch the stock sink. I bought Nike when it looked cheap relative to its historical P/E after the Olympics, but it didn’t outperform the index either.

My latest blunder: UnitedHealthcare (UNH). I mentioned how I was losing $6,000 in UNH in my post, The Sad Reality Of Needing To Invest Big Money To Make Life-Changing Money. Hooray for another case study!

After UnitedHealthCare (UNH) plummeted from $599.47 to $312, I started buying the stock. I was amazed that a company this large, with such pricing power, could lose half its value in just a month. Surely, I thought, the market was overreacting to the latest earnings report and would soon realize the operational picture didn’t justify a 50% drop.

But the stock kept sliding, hitting $274. I bought more. For several weeks, UNH clawed back above $300, and I felt vindicated. Then it tanked again—this time to $240—after another disappointing earnings report. I added some shares, but by then, I had already reached my comfortable position limit of about $46,000.

To be thorough, value stocks are shares of companies that investors believe are trading below their intrinsic or fair value, usually based on fundamentals like earnings, cash flow, or book value. The idea is that the stock is “cheap” relative to its fundamentals, and the market will eventually recognize this, leading to price appreciation.

I Really Don’t Like UnitedHealthCare

I have a hate, hate, acceptance relationship with UnitedHealthcare. Ever since I had to buy my own health insurance in 2015, my view of the company soured. Back then, our monthly UNH premium was $1,680 for two healthy thirtysomethings who rarely used the medical system. Outrageous.

But what were we supposed to do, manipulate our income down to qualify for subsidies? I know many multi-millionaire FIRE folks who do, but it feels wrong so we haven’t. Medical costs in America are so high that going without insurance is financial Russian roulette. We had no choice but to pay.

Since 2012, we’ve paid over $260,000 in health insurance premiums. Then we finally had a legitimate emergency—our daughter had a severe allergic reaction. We called 911, took an ambulance to the ER, and got her stabilized. We were grateful for the care, but not for the bill: over $1,000 for the ER visit and $3,500 for a 15-minute ambulance ride.

And what did UnitedHealthcare do? Denied coverage. My wife spent a year fighting the usurious ambulance charge before we finally got partial relief. We were furious.

Today, we begrudgingly pay $2,600 a month for a silver plan for our family of four and still have little confidence UNH will do the right thing when the next big medical bill arrives.

So when the stock collapsed by 50%, I figured: if the company is going to keep ripping us off, I might as well try to profit from it. Big mistake so far.

Why Chasing Value Stocks Slows Your FIRE Journey

Now, let me explain three reasons why buying value stocks over growth stocks is usually a suboptimal move for FIRE seekers.

1) Impossible to bottom tick a value stock

Whenever a stock collapses, it can appear deceptively attractive. The instinct is to see tremendous value, but if the stock falls 50% and earnings per share (EPS) also drop 50%, the valuation hasn’t actually improved—it’s just as expensive as before.

The trap many value investors fall into is buying too much too soon. This is how you end up “catching a falling knife”—and getting bloodied. I was down about $10,000 at one point, or 17% from my initial purchase.

After investing since 1996, I know better than to go all-in early. Yet I still bought my largest tranche—about $24,000 worth—when UNH was around $310–$312 a share. As it continued to slide, I added in smaller amounts. By the time the stock fell to $240, I was mentally waving the red flag once I’m down about 20% on a new position. So I only nibbled instead of gorged, much like buying the dip in the S&P 500 overall.

The point: You have a far better chance of making money buying a growth stock with positive momentum than a value stock with negative momentum. Don’t kid yourself into thinking a turnaround will magically begin the moment you hit “buy.” It’s the same way with buying real estate or any other risk asset. Do not buy too much of the initial dip too soon.

2) Tremendous Opportunity Cost While You Wait for a Turnaround

Stocks collapse for a reason: competitive pressures, disappointing earnings and revenue forecasts, corporate malfeasance, or unfavorable macroeconomic and political headwinds.

For UNH, the drop was a perfect storm: bad publicity, rising medical costs, disappointing earnings, and a Department of Justice investigation into Medicare fraud. After the tragic shooting of a UNH executive by Luigi Mangione, thousands of stories surfaced about denied coverage and reimbursements. Suddenly, the hate spotlight was firmly on UNH.

During the two months I was buying the stock, the S&P 500 kept grinding higher. Not only was I losing money on my value stock position, I was missing out on gains I could’ve had simply by buying the index. Opportunity cost! Another great reason to be an index fund fanatic. If I had allocated the $46,000 I spent on UNH to Meta—one of the growth stocks I was buying at the same time (~$41,000 worth)—I would have made far more.

Turnarounds take time. Senior management often needs to be replaced, which can take months. If macroeconomic headwinds, such as surging input costs, are the issue, improvement can take 12 months or longer. If cost-cutting is required via mass layoffs, the company will take a large one-time charge and suffer from lost productivity for several quarters.

By the time your value stock recovers—if it recovers—the S&P 500 and many growth stocks may have already climbed by double-digit percentages. Unless you have tremendous patience or are already a multi-millionaire, waiting for a turnaround can feel like watching paint dry while everyone else is sprinting ahead.

3) Emotional Drain, Frustration, and Behavioral Risk

Value traps often force you to watch your capital stagnate for months or even years. For FIRE seekers, that is not just a financial hit, it is a psychological one.

Watching dead money sit in a losing position can push you into making emotional, suboptimal decisions, such as swearing off investing altogether. Growth stocks are volatile, but at least you are riding a wave of forward momentum instead of waiting for a turnaround that may never come.

It is like buying a house in a declining neighborhood. You keep telling yourself things will improve. The new park will attract families. The school district will turn around. The city government will stop being so corrupt. But year after year, nothing changes.

Meanwhile, a neighborhood across town is booming. Its home values are doubling, and you are stuck wishing you had bought there instead. That opportunity cost is not just financial. It is mental wear and tear that can drain your energy and cloud your decision making.

Not only do you risk growing regret over tying up hard earned capital in a value stock that never recovers, but you also face the sting of rising investment FOMO. That is a toxic combination for anyone trying to stay disciplined on the path to FIRE.

You might end up doing something extremely reckless to catch up, like go all in on margin at the top of the market. After all, investing is all relative to how you are doing against an index or your peers.

FIRE Seekers Don’t Have Time to Invest in Value Stocks

If you’re pursuing FIRE, you don’t have time for “deep value” stories to play out. Every year you spend waiting for a turnaround is a year you’re not compounding at a faster rate elsewhere. Growth stocks, while more volatile, give you a far better chance of building your capital base quickly so you can reach financial independence sooner.

Just look at the private AI companies that are doubling every six months or even faster. I’m kicking myself for even bothering to invest in a turnaround story like UNH. Life-changing wealth is being created in only a few years with AI. There has never been a period in history where so much money has been built this quickly.

Remember, the FIRE clock is always ticking. The goal isn’t just to make money, it’s to make it fast enough to buy back your time while you’re still young, healthy, and able to enjoy it.

Chasing value traps can lock up your capital in underperforming assets, drain your energy, and delay the day you get to walk away from mandatory work. In the journey to FIRE, momentum and compounding are your greatest allies, and growth stocks tend to provide both.

Post Script: UnitedHealthcare May Finally Rebound

There’s another explanation for my stance on being negative toward value stocks. I may simply be a bad value stock investor who lacks the ability to pick the winners and the patience to hold these turnaround stories for long enough to reap the rewards. Fair enough.

With UnitedHealthcare, though, it seems like the cavalry might be riding in to rescue my poor investment decision. After I wrote this post, it appears Warren Buffett, several large hedge funds like Appaloosa and Renaissance, and Saudi Arabia’s Public Investment Fund are all buying billions of dollars worth of UNH alongside me.

Will this renewed interest from some of the world’s most powerful investors be enough to get Wall Street and the public excited again? We’ll just have to wait and see. Just don’t rely on the calvary to wake up and realize what you’re seeing and save you.

Questions for Readers:

Would you rather own a struggling industry leader with a chance of recovery, or a high-growth disruptor with momentum?

Have you ever owned a value stock that turned around in a big way? How long did you have to wait?

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Sometimes the most exceptional growth stock ideas can be found in unexpected places. BBB Foods (TBBB -6.00%) isn’t a name that most investors are familiar with, and that’s not necessarily a bad thing. Toiling away in obscurity can often be a ground floor opportunity, as long as the floor doesn’t buckle and dump you into the basement.

BBB Foods operates in a sleepy and low-margin industry. It’s also based in a North American country that isn’t exactly a hotbed for investors. BBB Foods is the parent company of Tiendas 3B, a chain of discount grocery stores that is expanding its small-box empire across Mexico.

You might not expect your next potential growth stock to be a retailer in Mexico trying to drive prices in an industry with already razor-thin markups even lower. BBB Foods went public with little fanfare last year. However, then you start seeing the accelerating growth, the market share gains, and the upside.

Grab a cart. Let’s go shopping.

It checks out

If you’re familiar with Aldi or Trader Joe’s, you can start to picture what one of the 3,031 Tiendas 3B locations looks like. However, you would have to shrink it down to the size of a large convenience store. There are sometimes as few as three employees working at a time.

Resist the urge to compare this to a bodega. There are a lot more products stocked at a BBB Foods location, and at rock-bottom prices with a heavy flow of shopper traffic. Unlike a bodega, where customers pay a premium for convenience and to cover the stiff overhead relative to the store’s modest sales, BBB Foods has volume turnover and scalability on its side. All of an average store’s operating costs was just 10.5% of the revenue it generated in its latest quarter.

The three Bs don’t stand for the company’s credit rating. The moniker is short for Bueno, Bonito, and Barato, Spanish for “nice, attractive, and affordable.” It’s not just a catchy mantra. Private-label sales accounted for 54% of its sales last year. Aldi and Trader Joe’s shoppers know that game, as private labels account for an even larger percentage of those businesses. The beauty of private-label sales is that a growing chain can leverage that strength to negotiate lower prices from different suppliers. In many cases, a Tiendas 3B store will also carry a popular brand-name alternative. Its own label will sell for a 20% to 30% discount.

BBB Foods went public early last year, the first Mexican company to hit a U.S. exchange in six years. If this is your first time hearing about it, you’re in for a surprise. The hard discounter hit the market at $17.50. It closed just above $28 on Tuesday after another blowout quarter, beating the market with a 60% gain since its IPO.

Price check

Revenue rose 38% to the U.S. equivalent of $995 million in the second quarter that it reported this week. It’s the strongest growth of BBB Foods’ five quarters as a public company. Expansion is a big part of that story. It opened 142 new stores during the quarter, and 528 over the past year. However, the store-level performance is even more impressive.

Comparable-store sales soared 17.7% in the second quarter. This isn’t a fluke. It’s not coming off of depressed results a year earlier. Comps shot 10.7% higher for the same period last year. This is a concept that is resonating with the hyperlocal communities it serves.

It wasn’t a perfect quarter as you work your way down the income statement. Margins narrowed slightly, partly on a boost in logistics overhead related to four new regions that it will hit in the second half of this year. History shows that these bumps in administrative costs can be temporary, but for now it ends a streak of four consecutive quarters of positive adjusted earnings.

This isn’t a bottom-line story right now. Working capital remains negative, as there is an empire to build out here. A chain that topped 3,000 locations during the quarter may seem like a lot, but analysts see room for as many as 15,000 Tiendas 3B stores. With a long runway for top-line growth and analysts targeting reported and adjusted profitability for next year, this is a stock story still early in the telling.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bbb Foods. The Motley Fool has a disclosure policy.

If you’ve got $500 and a long-term mindset, you don’t need to chase the riskiest penny stock or the next meme rocket. A smart growth stock — one with real revenue, real users, and a clear path to profitability — can do a lot of heavy lifting on its own. Especially in this market, where interest rates may have peaked, AI is reshaping entire industries, and consumers are flocking to platforms that feel both human and fun.

So where should that $500 go? Here are two stocks that combine strong business fundamentals with a credible story for the next decade.

Super Micro Computer

Not everyone wants to guess which AI model will win. Super Micro Computer (SMCI 3.73%) makes that decision easier by selling the servers that power all of them.

Over the years, Supermicro carved out a lead in the AI server race by moving faster than rivals like Dell Technologies and Hewlett Packard Enterprise, thanks in large part to its close ties with Nvidia and Advanced Micro Devices. Those close relationships gave it access to chips earlier than competitors — Supermicro’s California headquarters are, as Reuters pointed out, only 10 miles from Nvidia and AMD — helping it prototype and ship customized servers in a matter of weeks. That competitive advantage, together with the strong demand for its liquid cooling systems, made it a go-to supplier for AI infrastructure.

For the trailing 12 months, Supermicro posted $21.57 billion in revenue, nearly triple its total from two years ago. And although fiscal third-quarter 2025 net sales dropped to $4.6 billion (down from $5.68 billion in the second quarter), the company expects net sales of $5.6 billion to $6.4 billion in Q4, a strong rebound likely tied to delayed customer orders.

Growth like this won’t come easy, nor cheap for that matter. Indeed, Q3 operating expenses surged to $293.4 million, up 34% from $219.1 million in the year-ago period, while gross margins dropped to 9.6% from 15.5% in Q3 2024. And with competitors like Dell expanding into its space, those margins could get harder to improve.

Still, Supermicro has leverage. Its modular rack systems offer a plug-and-play approach at a time when enterprises need to move fast but build smart. As more second-tier AI players like hospitals and financial institutions look to stand up their own models, they’ll need hardware that doesn’t require months of integration. Supermicro’s flexibility here could open up a secondary growth channel that’s less dependent on hyperscalers and more tied to the next wave of AI adoption.

Duolingo

Duolingo (DUOL 0.93%) is still the world’s most popular education app.

It’s also still growing. In the first quarter of 2025, the company reported a 38% year-over-year revenue jump to $230.7 million, its highest quarterly haul yet. Monthly active users (MAU) climbed to over 130 million, a 33% year-over-year increase, and the number of paid subscribers rose 40% year over year to a record 10.3 million. A growing slice of that base, about 7%, now pays for the premium Max subscription, which offers AI-driven tutoring and more personalized feedback. Since Max carries a higher price point, its adoption signals a willingness among users to pay more for deeper value, something that could lift Duolingo’s long-term margins.

But even for a company with these credentials, the stock struggled lately. Shares dropped about 33% from their May highs, as Duolingo’s daily active users (DAU) rate slipped from 56% in February to 37% by June, according to a Jefferies analyst. The stock is also trading at over 175 times earnings, which is several multiples higher than the S&P 500 index’s price-to-earnings ratio of 30. A valuation like that leaves little room for error, especially when engagement metrics are trending the wrong way.

Still, that premium might be easier to swallow when you zoom out and consider just how fast the education technology market is expanding. By 2030, edtech is expected to hit $348 billion, up from $164 billion in 2024, or a compound annual growth rate (CAGR) of 13.3 %. Meanwhile, the language learning market — Duolingo’s primary stomping ground — is forecast to hit $125 billion by 2034 (up from $11.2 billion in 2024), or a CAGR of 26.7 %.

Given that Duolingo is already the industry’s leading paid language-learning app, it’s not hard to imagine a scenario in which it grows into its valuation, especially if it keeps converting users into paid subscribers.

Bet on fundamentals, not hype

Both Duolingo and Supermicro are playing long games in markets that are only getting bigger. Duolingo is turning language learning into revenue, while Supermicro is selling the picks and shovels of the AI boom. If you’re thinking long-term, investing $500 in one (or both) could buy you a meaningful slice of the future.

Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Jefferies Financial Group. The Motley Fool recommends Duolingo. The Motley Fool has a disclosure policy.

It may come as a surprise, but did you know that buying the right growth stocks can enable you to grow your wealth significantly over time? The key is in selecting companies that demonstrate solid growth and have a long runway to continue increasing their revenue, profits, and free cash flow. By holding these stocks over the years, you can multiply your wealth and build a valuable nest egg for your retirement.

Here are three stocks that could see their share prices increase significantly in the next five years.

Garmin

Garmin (GRMN 1.88%) designs and manufactures a wide range of products for the automotive, aviation, marine, and outdoor recreation markets. The company saw strong demand for its innovative products, and posted higher revenue, net income, and free cash flow, as shown in the table below.

Data source: Garmin. Fiscal years end Dec. 31.

The business continued to report healthy growth in its top and bottom lines for the first quarter of 2025. Revenue rose 11.1% year over year to $1.54 billion, while operating income increased by almost 12% year over year to $332.8 million. Net income came in at $332.8 million, 20% higher than a year ago. Garmin also generated a positive free cash flow of $380.7 million for the quarter. It declared an annual cash dividend of $3.60, amounting to $0.90 per share per quarter. This level of dividend was 20% higher than the $3 annual cash dividend paid out in the prior year.

Garmin’s innovative new products look set to increase the company’s earnings and free cash flow. In April, the company debuted vivoactive 6, its newest health and fitness smartwatch. This product has up to 11 days of battery life, making it convenient for people to use of the watch’s myriad features to track their workouts and lifestyle. Later in the month, Garmin introduced Instinct 3-Tactical Edition, a new line of smartwatches made for extreme sports and rugged activities.

Management updated its 2025 guidance for revenue to come in at around $6.85 billion, representing a nearly 9% year-over-year increase. Garmin’s cutting-edge products and useful features should continue to endear it to new generations of customers, helping it continue its growth trajectory.

BlackLine

BlackLine (BL 0.16%) operates a cloud platform that allows organizations to streamline their financial operations, helping to improve accuracy and efficiency. The company is seeing steadily increasing demand for its services, and it reported higher revenue over the last three years. The business also broke even in 2023 and generated significantly higher free cash flow.

Data source: BlackLine. Fiscal years end Dec. 31.

For Q1 2025, BlackLine reported continued strong financial performance. Revenue rose 6% year over year to $166.9 million, while operating income more than doubled year over year to $3.6 million. However, net income fell by 44% year over year, mainly due to lower net interest income and a significantly higher tax bill. Free cash flow remained healthy at $32.6 million for the quarter. BlackLine’s remaining performance obligations increased by 11% year over year to $913.2 million.

The company continued demonstrating healthy growth, with the total number of customers increasing by 1% year over year to 4,455. More customers also migrated over to BlackLine’s new platform pricing model, bringing the total users to 393,892, an increase from 387,050 a year ago. Management expects 2025’s revenue to be in the range of $692 million to $705 million, with the midpoint of $698.5 million representing year-over-year growth of 6.9%.

BlackLine expanded its artificial intelligence (AI) capabilities by embedding AI agents in every aspect of its financial workflow, ranging from recordkeeping to invoice-to-cash. This move enables its customers to make decisions faster and to obtain real-time insights. With the demand for digitalization staying strong and the company introducing useful innovations for its cloud platform, BlackLine looks set for continued growth.

Dutch Bros

Dutch Bros (BROS 0.14%) is a specialty coffee chain with 1,012 locations across 18 U.S. states as of March 31, 2025. The company has demonstrated strong growth over the years as it aggressively opened new stores. The business broke even in 2023 and became free cash flow positive by 2024.

Data source: Dutch Bros. Fiscal years end Dec. 31.

Q1 2025 saw the company report yet another robust set of earnings. Revenue climbed 29% year over year to $355.2 million, while operating income rose 21.5% year over year to $31.1 million. Net income more than doubled year over year to $15.4 million. Dutch Bros ended Q1 2024 with 876 stores and saw its store count increase by 15.5% year over year to 1,012. Systemwide same-shop sales also grew 4.7% for the quarter, due to an increase in ticket size (3.4 percentage points) and the number of transactions (1.3 percentage points).

Dutch Bros intends to continue its expansion plan by opening at least 160 new shops this year. Revenue is projected to be around $1.565 billion for 2025, representing a year-over-year growth of 22.3%. Same-store sales growth is expected to be positive, in the range of 2% to 4%.

Management recently communicated its long-term growth plan during its Investor Day session, with a target of 2,029 shops by 2029. Annual revenue growth is expected to be in the range of around 20% per year, with shop contribution margin at around 30%. Dutch Bros estimates that its total addressable market is more than 7,000 shops nationwide, giving the business ample opportunity to continue growing its presence and increase its top and bottom lines.

Many companies have failed to disrupt the complicated U.S. healthcare market. Hims & Hers (HIMS 6.75%) may finally be succeeding in cracking the code. The online telehealth platform focuses on circumventing the insurance market; its business of selling affordable medications directly to individuals is growing like a weed, and expects to generate $6.5 billion in revenue by 2030.

It has had a tumultuous start to 2025, as Hims & Hers waged a battle to sell new weight loss medications on its online marketplace. Now, with momentum back on its side, the stock is up 118% year to date and 446% in the last five years. Let’s take a deeper look at this company, and see whether you might want to buy Hims & Hers stock for your portfolio now.

Disrupting the healthcare market

Hims & Hers’ model is simple. It has two separate web platforms — Hims for men and Hers for women — that sell medications and deliver to customers’ front doors. It began with sexual health, but has moved into dermatology, hair loss, mental health, and now weight loss medications.

A key to its success has been avoiding the insurance market with products that don’t break the bank. Customers loathe dealing with health insurers in the United States, and sometimes would rather not use insurance at all. Plus, some of these products aren’t covered by insurance.

This strategy has helped the company close in on over $2 billion in projected revenue in 2025. To keep up this impressive growth, Hims & Hers wants to offer weight loss medications, which have been a blockbuster set of drugs for the pharmaceutical market. For a while the popularity of these drugs, such as Novo Nordisk‘s Wegovy, left them in short supply; that allowed third parties such as Hims & Hers to produce them as a compounding pharmacy and sell them at much cheaper prices. This ended up generating $200 million of Hims & Hers’ $1.4 billion in 2024 revenue.

But with the shortage of Wegovy over and the compounding pharmacy exception ended, the company’s weight-loss business was at a major turning point. Luckily, at the end of April Hims & Hers announced a partnership with Novo Nordisk that seems to resolve this issue: It gives Hims & Hers the ability to sell Wegovy directly on its platform. Hims & Hers is not an exclusive supplier of the drug — or any drugs on its marketplaces, to be fair — but it hopes to use its subscription business model, marketing expertise, and simplified user proposition to drive sales for Novo Nordisk in the huge obesity-care market.

Going abroad and personalization

Besides weight loss drugs, Hims & Hers has more ambitions to reach its goal of $6.5 billion in revenue by 2030. Just recently, the company announced its intent to acquire European competitor Zava so it could expand its telehealth service to Europe. The acquisition will add a platform with 1.3 million active customers in the U.K., Germany, France, and Ireland. It makes sense that Hims & Hers can supercharge growth for the platform with its plethora of medications offered to customers, keen marketing skills, and subscription-based selling model.

Over the long run, Hims & Hers aims to make healthcare for its customers more personalized. This includes unique drug combinations, its own outsourcing facility, and at-home testing capabilities. Details remain sparse, but the vision is clear: disrupting more and more of the trillions of dollars spent on healthcare by building a business that people actually enjoy interacting with. This is why 2.4 million active customers use Hims & Hers today.

HIMS Gross Profit Margin data by YCharts.

Should you buy Hims & Hers stock?

A revenue goal of $6.5 billion seems well within reach by 2030. Hims & Hers is only at 2.4 million active customers, and there are tens of millions of people in the United States alone who could start using or switch to one of its telehealth platforms. Add on the Zava acquisition in Europe, and the runway for growth gets even larger.

The company has an impressive gross profit margin of 77%, which should lead to high levels of profitability at scale. On $6.5 billion in future revenue, it could very well post a net profit margin of over 20%, and achieve $1.5 billion in bottom-line profits and free cash flow. A 20% profit margin is easily achievable because of its high gross margins and the fact it currently spends 40% of revenue on marketing today, a figure that has come down over time and should come down even more as Hims & Hers keeps scaling.

However, Hims & Hers has played fast and loose with laws and regulations in the past. It sold weight loss drugs when the legality of doing so was unclear, and although that dispute seems to have been resolved, management could easily start playing with fire again and burn its reputation as a trusted provider of medications.

Otherwise, this looks like a fantastic growth stock that just doubled its addressable market with the Zava acquisition. Today, Hims & Hers has a market cap of $12.3 billion. You might think it’s overvalued because of the stock’s recent run-up in price, but the numbers show that patient investors could be rewarded by holding for the long term.

A $12.3 billion market cap is only around 8 times my 2030 earnings estimate of $1.5 billion, which would be a dirt cheap price-to-earnings (P/E) ratio for a fast-growing company compared to the current market cap. Most likely, the stock will be valued at a higher multiple than 8, meaning that the stock will be higher in five years. It doesn’t come without risks, but if you’re a growth investor, you might love Hims & Hers stock for its long-term potential.