The first half of 2025 has been a volatile period for the market.
In a new blog post, Morningstar senior editor Margaret Giles notes that overvalued growth stocks, especially ones tied to artificial intelligence, started a bear market early in the year. By early April, they had fallen enough to trade at a similar discount to the broad market average. But just as fast as the selloff occurred, the snapback rally was equally quick.
What does this mean for growth stocks?
“Just after we turned to overweight equities, stocks — and growth stocks in particular — began a vigorous rally taking the broad market up toward fair value and growth stocks back into overvalued territory,” Morningstar’s chief U.S. market strategist, Dave Sekera, said in the post. “Looking forward, we continue to see idiosyncratic opportunities among growth stocks, but the category is back to trading at a premium to our fair values.”
Giles writes that the best growth stocks to buy for the long term share several qualities. They are from companies that Morningstar includes in its list of the best companies to own for 2025. This means they have wide Morningstar economic moat ratings and predictable cash flows, and are run by management teams that make smart capital-allocation decisions.
These stocks reside in the growth portion of the Morningstar style box and look reasonably priced, as they are trading below or near Morningstar’s fair value estimates.
See the accompanying gallery for 10 growth stocks that Morningstar analysts consider the best to buy for the long term. Year-to-date performance is as of mid-morning trading on July 7.
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