Growth stocks had the upper hand in 2024: The Morningstar US Growth Index outperformed the Morningstar US Value Index by around 10 percentage points for the year, with growth stocks running up to levels we consider overvalued. Recent selloffs, however, have damped some of that momentum. As a group, growth stocks are down almost 10% in 2025.
What does this mean for growth stocks?
“In our 2025 US Market Outlook, we recommended investors underweight growth stocks as they were trading at a significant premium over fair value,” says Morningstar’s senior US market strategist Dave Sekera. “In fact, the last time they were that high was in early 2021, right before the disruptive technology bubble popped. Since the DeepSeek scare in January, AI stocks have fallen over 20% and have taken the entire growth category down with them. At this point, growth stocks are trading close to fair value, but value stocks remain at a greater discount.”
Our best growth stocks to buy for the long term share a few qualities:
• They land in the growth portion of the Morningstar Style Box.
• The stocks are from companies included on Morningstar’s list of the Best Companies to Own for 2025. Companies on this list have wide Morningstar Economic Moat Ratings and predictable cash flows, and they are run by management teams that make smart capital-allocation decisions.
• They look reasonably priced, which means they’re trading below or near Morningstar’s fair value estimates.
10 Best Growth Stocks to Invest in for the Long Term
The 10 most undervalued growth stocks from Morningstar’s Best Companies to Own list as of March 13, 2025, were:
- Rentokil Initial RTO
- Taiwan Semiconductor Manufacturing TSM
- Manhattan Associates MANH
- Coloplast COLO B
- ServiceNow NOW
- Tyler Technologies TYL
- Autodesk ADSK
- Equifax EFX
- Experian EXPGY
- Copart CPRT
Here’s a little bit about each of these growth stocks for the long term. Data is as of March 13, 2025.
Rentokil Initial
- Price/Fair Value: 0.53
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Mid Growth
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Specialty Business Services
Rentokil Initial tops our list of best growth stocks to buy. The firm’s strategy is sharply focused on the attainment and maintenance of market share leadership in the highly localized pest-control and hygiene-service markets it competes in. Rentokil Initial has completed over 200 acquisitions since 2015, focusing on acquisition targets that build the geographic density of its customers. The late-2022 acquisition of Terminix Global Holdings was a transformative and moat-reinforcing deal and created a new US market share leader, says Morningstar senior analyst Grant Slade. The successful execution of its mergers-and-acquisitions strategy has delivered a durable cost advantage for its pest-control business. Rentokil Initial stock trades at a 47% discount to our fair value estimate of $40.30 per share.
Taiwan Semiconductor Manufacturing
- Price/Fair Value: 0.63
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Large Growth
- Morningstar Capital Allocation Rating: Standard
- Industry: Semiconductors
Taiwan Semiconductor is the world’s largest dedicated contract chip manufacturer, with an almost 60% market share. The firm’s disciplined approach to capital spending in 2024—and possibly in the next few years—reduces risks of oversupply and allows more flexibility in cutting-edge research to maintain its leadership, argues Morningstar analyst Phelix Lee. Taiwan Semiconductor stands to benefit from the growth of artificial intelligence, the Internet of Things, and high-performance computing applications, which may last decades. Taiwan Semiconductor stock trades 37% below our fair value estimate of $273 per share.
Manhattan Associates
- Price/Fair Value: 0.71
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Small Growth
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Software—Application
New to our list of best growth stocks to buy, Manhattan Associates is trading 29% below our fair value estimate. The firm provides software that helps users manage their supply chains, inventory, and omnichannel operations. Morningstar senior analyst Dan Romanoff sees Manhattan Associates as the clear leader in the warehouse management systems software niche: “The company is capable of driving low-double-digit revenue growth annually over the next five years, with even better earnings growth.” Part of this positive outlook comes from the firm’s investment in cloud versions of its software solutions. We think Manhattan Associates stock is worth $230 per share.
Coloplast
- Price/Fair Value: 0.74
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Large Growth
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Medical Instruments and Supplies
Coloplast stock is 26% undervalued relative to our fair value estimate of $14.10 per share. Based in Denmark, Coloplast is a leader in global ostomy and continence care. The firm has a long record of consistent and meaningful innovation that has led to a dominant position in Europe and growth in the US, says Morningstar senior analyst Debbie Wang. Since 2008, the firm has done an admirable job of trimming its cost structure as it focused on profitable growth. Currently, Coloplast is focused on entering new geographies to enhance growth, with an emphasis on the United States.
ServiceNow
- Price/Fair Value: 0.82
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Large Growth
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Software—Application
The second of four software application companies on our list of best growth stocks, ServiceNow stock trades at an 18% discount to our fair value estimate. The company built a best-of-breed software as a service solution for IT service management, then branched out into IT operations management, and has since moved beyond the IT function to become an indispensable solution, says Morningstar’s Romanoff. ServiceNow’s success has been rapid and organic, he adds. The firm already offers high-end enterprise-grade solutions and boasts elite-level customer retention of 98%. We think ServiceNow stock is worth $990 per share.
Tyler Technologies
- Price/Fair Value: 0.85
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Mid-Growth
- Morningstar Capital Allocation Rating: Standard
- Industry: Software—Application
Tyler Technologies is the clear leader in the underserved niche market of government operational software, argues Morningstar’s Romanoff. Tyler addresses the needs of cities, counties, schools, courts, and other local government entities. We see the firm’s expanding portfolio as driving larger deals that encompass more solutions. It has established enough of a reputation in the market that it is called upon in most relevant government system searches. Further, Tyler benefits from a fragmented market that includes no companies at anywhere near its size or scale that are focused on the local public institution market. Tyler Technologies stock trades 15% below our $650 fair value estimate.
Autodesk
- Price/Fair Value: 0.85
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Mid-Growth
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Software—Application
Autodesk is the last software application company on our list of best growth stocks to buy. We view the firm as the global industry standard computer-aided design software, says Morningstar director Eric Compton, and we think the firm will stay at the forefront of industry trends. Over 95% of Autodesk’s revenue is now recurring after the company gradually transitioned from licenses over the past eight years. The change enables Autodesk to extract greater revenue per user as it upsells its loyal and increasingly maturing base, adds Compton. The company has nurtured a long-standing network effect via relationships with higher-education programs that expose industry professionals to the software before they enter the workforce. Autodesk stock is 15% undervalued relative to our $290 fair value estimate.
Equifax
- Price/Fair Value: 0.88
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Mid-Growth
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Consulting Services
Equifax, one of the big three credit bureaus in the United States, is new to our list of best growth stocks to buy. The company has been adding new capabilities and expanding its geographic footprint organically and through acquisitions. Equifax’s workforce solutions business is now its largest segment. Workforce solutions includes income verification, primarily for mortgages. Morningstar analyst Rajiv Bhatia expects the firm’s competitive position to persist as the large amount of existing records and the difficulty of convincing employers to share employee information would be too tough for new entrants to overcome. Shares of Equifax stock are trading 12% below our fair value estimate of $270.
Experian
- Price/Fair Value: 0.91
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Mid-Growth
- Morningstar Capital Allocation Rating: Standard
- Industry: Consulting Services
Along with Equifax, Experian is one of the largest US credit bureaus. Experian’s US core credit bureau business is relatively mature, so the company has been expanding through adjacent products and in emerging markets, observes Morningstar’s Bhatia. He thinks the growth of middle-class populations in emerging markets and favorable regulatory changes will drive long-term growth. However, the story in the emerging markets is not seamless, and Experian has faced currency and macroeconomic headwinds. Experian stock trades 9% below our fair value estimate of $50 per share.
Copart
- Price/Fair Value: 0.92
- Morningstar Uncertainty Rating: Medium
- Morningstar Style Box: Mid-Growth
- Morningstar Capital Allocation Rating: Standard
- Industry: Specialty Business Services
Copart rounds out our list of best growth stocks to buy. The firm has grown into the largest online salvage vehicle auction operator in the United States. Copart receives the majority of its vehicle volume through contracts with large auto insurers and sells them on consignment for high margins, often to dismantlers. The company has grown its top line nearly fivefold since 2009 due to a combination of significant land expansion and robust service quality to drive higher salvage vehicle volume, observes Morningstar strategist David Whiston. Copart stock is trading just below our fair value estimate of $57 per share.
What Are the Morningstar Style Box and Fair Value Estimate?
The Morningstar Style Box is a nine-square grid that provides a graphical representation of the investment style of stocks, bonds, or funds. Based on a series of inputs—including a company’s historical and long-term projected growth and its historical and forward-looking price multiples—a stock is classified as either a value stock, a growth stock, or a core stock. A stock is also classified as either small-cap, mid-cap, or large-cap based on its market capitalization.
The fair value estimate, meanwhile, represents what Morningstar analysts think a particular stock is worth. Fair value estimates are rooted in fundamentals and based on how much cash we think a company can generate in the future, not on fleeting metrics such as recent earnings or current stock price momentum.
How to Find More Growth Stocks to Invest in
Of course, there are many other criteria investors can use to find growth stocks to buy for the long term. Here are some tools that investors can use to find more growth-stock ideas to research further
• Investors can use the Morningstar Investor screener to more easily compare growth stocks with each other. One way would be to screen by Stock Style under the Criteria drop-down menu, choosing large growth, mid-growth, small growth, or some combination thereof. Then once you have your results, click on Data & Columns to select Financials data points in the Stocks area. These might be valuation metrics like price/earnings ratios or revenue growth, among others. Then click Update. Once back to the list of stocks, click on the data point that matters most to you to rank the list on that particular data point.
• Investors who’d rather invest in growth stocks through a managed product like an exchange-traded fund or a mutual fund can find ideas to research further in The Best Growth Funds.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
