Growth stocks are a popular choice among investors for a number of reasons. First, growth companies tend to be favorites of Wall Street analysts, which can result in more coverage and better information for investors. Second, growth stocks often have strong fundamentals, including rising revenue and earnings. Finally, growth stocks tend to be less risky than other types of stocks, making them a good choice for conservative investors. In this article, we will take a look at some of the best examples of growth stocks from different sectors. We hope that this will give you a better understanding of the concept and help you make more informed investment decisions.
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Growth Investing Stocks
When it comes to finding the best examples of growth stocks, many investors look for companies with growth potential that are experiencing above-average revenue and earnings growth. These companies are often in high-growth industries and are well-positioned to continue growing at a rapid pace. While there are many different ways to measure a company’s growth potential, some of the most popular indicators include sales growth, earnings per share (EPS) growth, and analyst forecasts. Here are a few examples of companies that fit this criteria right now:
- Salesforce (CRM): Salesforce is a cloud-based software company that offers customer relationship management (CRM) services. The company has been one of the fastest growing tech firms for many years, with annual revenue growth averaging over 30% since 2013. In its most recent quarter, Salesforce reported 35% year-over-year revenue growth. Analysts expect the company to report EPS of $3.04 in its fiscal 2021, which would represent 27% year-over-year growth.
- Shopify (SHOP): Shopify is an ecommerce platform that enables businesses to sell online. The company has been one of the fastest growing firms in recent years, with annual revenue growth averaging 72% since 2015. In its most recent quarter, Shopify reported 62% year-over-year revenue growth. Analysts expect the company to report EPS of $3.12 in its fiscal 2021, which would represent 34% year-over-year growth.
- DocuSign (DOCU): DocuSign is a cloud-based agreement management platform. The company has been one of the fastest growing tech firms for many years, with annual revenue growth averaging over 50% since 2013. In its most recent quarter, DocuSign reported 52% year-over-year revenue growth. Analysts expect the company to report EPS of $0.93 in its fiscal 2021, which would represent 45% year-over-year growth.
These are just a few examples of companies that fit the criteria for being a growth stock right now. While there are no guarantees in the stock market, these companies appear to be well positioned for continued rapid expansion in the coming years.
What are the characteristics of growth stocks?
Most investors are familiar with the two basic types of stocks: growth stocks and value stocks. Growth stocks are those that are expected to experience above-average growth in their earnings and dividends. They are typically more expensive than value stocks, but they also offer the potential for higher returns over the long term. Growth stocks tend to be issued by newer, emerging companies that are experiencing rapid expansion. They may be in hot industries such as technology or healthcare, or they may be companies that have strong track records of earnings growth. Whatever their specific characteristics, growth stocks offer the potential for higher returns but also come with a higher degree of risk. Before investing in any stock, it’s important to do your own research and understand the risks involved.
How to Evaluate Growth Stocks?
When it comes to investing in stocks, there are many different strategies that can be employed. Some investors focus on value stocks, while others prefer growth stocks. And within the category of growth stocks, there are also various sub-strategies that can be employed. So how do you evaluate growth stocks? Here are a few key things to look for:
1) Companies with strong fundamentals: This includes factors such as earnings growth, revenue growth, expanding profit margins, and so on. Financial strength is important because it gives the company the resources it needs to continue growing.
2) Companies with good management: Management plays a crucial role in any company’s success or failure. Look for a management team with a proven track record of delivering results.
3) Companies with attractive valuations: Even though growth stocks tend to trade at higher valuations than value stocks, you still want to make sure you’re paying a reasonable price. Look for companies that are trading at discounts to their intrinsic value.
4) Companies with solid competitive advantages: A company’s competitive advantage is what sets it apart from its rivals and enables it to sustain long-term profitability. When evaluating growth stocks, look for companies with significant barriers to entry that will protect their market share over time.
Best Growth Stocks in Short-term Gains
The best short-term gain stocks are those that are undervalued and have the potential to generate large profits in a short period of time. Another type of stock that can generate significant short-term gains is a turnaround stock. These are stocks of companies that are in the process of turning their businesses around. Finally, some investors look for stocks that are about to be acquired by another company.
These stocks usually see a significant increase in value in the weeks leading up to the acquisition. While there are many other types of stocks that can generate short-term gains, these three are some of the best.
- Alibaba Group Holding Ltd (NYSE: BABA) – This Chinese e-commerce giant is a great long-term play on the growing middle class in China and other emerging markets. However, it also has near-term upside potential as it continues to gain market share from brick-and-mortar retailers around the world. Alibaba is currently trading at just over 21x forward earnings, making it a relatively cheap stock at current levels.
- Baidu Inc (NASDAQ: BIDU) – Another Chinese tech stock with significant upside potential is Baidu, often referred to as the “Google of China”. The company is benefiting from the growing use of mobile devices and the shift to online advertising in China. Baidu is currently trading at around 30x forward earnings, which isn’t cheap but still leaves room for further gains.
- Facebook Inc (NASDAQ: FB) – Facebook is one of the hottest stocks in the market right now and for good reason. The company continues to dominate the social media landscape and is successfully monetizing its massive user base. Facebook is currently trading at close to 40x forward earnings, so it isn’t cheap but still has plenty of room to run.
Best Growth Stocks Long Term
While there are no guarantees in the stock market, there are some stocks that have a history of outperforming the rest. These “blue chip” stocks tend to be large, well-established companies with a proven track record of success. Here are three such stocks that have the potential for long-term growth:
- Johnson & Johnson (JNJ:NYSE): This health care giant has seen its stock price steadily rise over the past decade, and it shows no signs of slowing down. With a strong portfolio of products and a global reach, Johnson & Johnson is well positioned to continue its growth trajectory in the years to come.
- Coca-Cola: Another blue chip stock, Coca-Cola is one of the most recognizable brands in the world. The company has a diversified product portfolio and a wide distribution network, both of which give it a competitive advantage. Coca-Cola also has a strong history of paying dividends to shareholders, making it an attractive choice for investors looking for income.
- Apple: Though it has been through some ups and downs in recent years, Apple remains one of the most innovative companies in the world. Its products are hugely popular with consumers, and its brand is highly respected. With a new iPhone release on the horizon, Apple’s stock price is likely to get a boost in the months ahead.
Best Growth Stocks with Higher Risk
Penny stocks, biotechnology, and marijuana are all examples of high-risk, high-reward stocks. Penny stocks are small-cap stocks that trade for less than $5 per share. They are often volatile and speculative, but can offer investors the opportunity to make a large return on their investment. Biotechnology stocks are also high-risk, as they are often based on unproven products or technologies.
However, these stocks can also offer investors the chance to get in on the ground floor of a potentially revolutionary new industry.
Lastly, marijuana stocks have been gaining popularity in recent years as more and more states legalize the use of recreational marijuana. These stocks can be very volatile, but offer investors the potential to make a fortune if the industry continues to grow.
There are many stocks that trade for less than $10 per share that have the potential to generate significant returns for investors. However, it is important to remember that these stocks also tend to be more volatile and carry a higher degree of risk. With that in mind, here are three growth stocks that could be worth considering for your portfolio:
- Aurora Cannabis Inc. (ACB): Aurora Cannabis is a leading producer and distributor of medical and recreational cannabis products. The stock is down sharply from its 52-week highs, making it an attractive option for investors looking for upside potential.
- Canopy Growth Corporation (CGC): Canopy Growth is another leading cannabis company with a focus on the medical marijuana market. The stock has also fallen significantly from its 52-week highs and could offer attractive upside potential for investors willing to stomach the risks.
- HEXO Corp (HEXO): HEXO is a cannabis company with a focus on the Canadian market. The stock has pulled back sharply from its recent highs, making it an interesting option for risk-tolerant investors.
Best Growth Stocks with Low Risk
Investors seeking stability and low risk often flock to blue chip stocks. These are large, well-established companies with a history of paying out dividends to shareholders. While they may not offer the same high potential returns as some more speculative stocks, blue chips are a safe bet for those who want to protect their capital. Here are three of the best blue chip stocks to buy right now.
- Johnson & Johnson (NYSE: JNJ) is a healthcare juggernaut with a market capitalization of over $400 billion. The company has a diverse range of businesses, including pharmaceuticals, medical devices, and consumer goods. Johnson & Johnson has increased its dividend for 56 consecutive years and is currently yielding 2.4%.
- Exxon Mobil (NYSE: XOM) is the largest publicly traded oil and gas company in the world. It has a market cap of $290 billion and a strong balance sheet with plenty of cash on hand to weather any storms. Exxon Mobil currently yields 3.8%.
- Procter & Gamble (NYSE: PG) is a consumer goods giant with over $250 billion in annual sales. The company owns iconic brands such as Gillette, Tide, and Pampers, which have helped it to generate consistent earnings growth for decades. Procter & Gamble recently raised its dividend for the 63rd consecutive year and now offers a yield of 2.7%.
How to Find High-Quality Growth Stocks
Many investors are interested in finding high-quality growth stocks. These are companies that have the potential to generate significant share price appreciation while also providing a safe and reliable investment. Unfortunately, it can be difficult to identify these types of stocks. One way to find high-quality growth stocks is to look for companies with strong fundamentals. This means looking for companies with strong financials, a well-established competitive position, and a proven track record of delivering shareholder value.
Additionally, it is important to pay attention to analysts’ ratings and target prices. When analysts recommend buying a stock and have a high target price, it is usually a sign that the stock is a good long-term investment. Finally, don’t forget to pay attention to valuation. Even the best companies can be overvalued, which means that there is less upside potential.
Therefore, it is important to find stocks that are trading at attractive prices relative to their growth prospects. By following these tips, you should be able to find high-quality growth stocks that offer compelling investment opportunities.
Conclusion
As we have seen, there are a number of different factors to consider when determining whether a stock is a growth stock. However, some of the most important factors include the company’s earnings growth, revenue growth, and profit margin. By taking all of these factors into account, investors can get a better idea of which stocks are likely to experience strong growth in the future.
Investing in stocks can be a smart way to earn a return on your money, but it’s important to understand the different types of stocks and how they work before you start buying to decide the best way how to buy stocks.
In addition, it is also important to keep an eye on the overall market conditions, as this can impact the performance of even the best-performing growth stocks. By keeping all of these factors in mind, investors can make more informed decisions about which growth stocks to buy.
