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Growth investing is one of two main fundamental investment strategies, the other being value investing. Investors employing a growth investing strategy will typically place the majority of their portfolio in growth stocks, which are shares of companies with earnings or sales expected to grow at a significantly faster rate than the rest of the market. They generally don’t pay dividends at this stage, since all earnings are usually reinvested back into the business to generate even more earnings or revenue in the future.
The primary way that investors expect to earn profits from growth investing is through capital gains. Classic examples of growth stocks include Meta (FB), formerly Facebook, Amazon.com Inc. (AMZN), and Netflix Inc. (NFLX).
Growth stocks, as represented by the Russell 1000 Growth Index, have slightly outperformed the broader market over the past year. The Growth Index has provided a total return of 26.3% over the past 12 months, just above the benchmark Russell 1000 index’s 25.5% total return, as of Dec. 16, 2021. All statistics in the tables below are also as of Dec. 16, 2021.
Here are the top three stocks with the fastest earnings per share (EPS) growth, the top three stocks with the fastest sales growth, and the top three stocks ranked according to a 50/50 weighting of their combined EPS and sales growth.
Top Growth Stocks by EPS Growth
These are the stocks with the highest year-over-year (YOY) EPS growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Companies with quarterly EPS of more than 2,500% were excluded as outliers.
Source: YCharts
- LyondellBasell Industries NV: LyondellBasell Industries is a chemical company. It manufactures plastics and chemicals used to make food packaging, home furnishings, automotive components, paints and coatings, and similar items. The company most recently reported results for Q3 2021, ended Sept. 30. For this period, net income surged by 15-fold as sales and other operating revenues climbed by 87.4% year-over-year (YOY). The company said the results were driven mainly by robust demand and a tight market.
- Nielsen Holdings PLC: Nielsen Holdings is a global data and analytics company focused on the media industry. It offers audience measurement and various analytics services. Its services are used by media publishers, marketers, and businesses in the consumer-packaged goods industry.
- Nucor Corp.: Nucor is a maker of carbon and alloy steel, steel deck, steel bearing products, cold finished steel, and other products. The company also is a broker of various types of metals. Nucor reported a nearly 10-fold increase in net earnings as net sales more than doubled in Q3 FY 2021, ended Oct. 2. The company’s steel mills segment and steel products segment posted record results, driving the quarterly numbers.
Top Growth Stocks by Sales Growth
These are the stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, EPS can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability. Companies with quarterly revenue growth of more than 2,500% were excluded as outliers.
Source: YCharts
- Upstart Holdings Inc.: Upstart Holdings is a holding company whose subsidiaries offer a cloud-based artificial intelligence lending platform to make credit more available. The platform also helps bank partners to reduce lending risks.
- Athene Holding Ltd.: Athene Holding is an insurance holding company that issues, reinsures, and acquires retirement savings products through subsidiaries. The company serves customers around the world. On Nov. 29, Athene and Apollo Global Management Inc. (APO), it had reached an agreement to acquire a controlling stake in Aqua Finance valued at roughly $1 billion. Aqua Finance is a fast-growing consumer lending platform. Per the agreement, Apollo will manage the investment on behalf of Athene.
- International Flavors & Fragrances Inc.: International Flavors & Fragrances produces ingredients and solutions for the food and beverage, pharmaceutical, health and wellness, home, and personal care industries. The company provides a portfolio of ingredients used to improve nutritional value, texture, and functionality in a variety of food and beverage applications. It also offers biotechnology-driven probiotics and related products. On Dec. 8, the company announced a quarterly cash dividend of $0.79 per share on its common stock, payable on Jan. 7, 2022 to shareholders of record as of Dec. 28, 2021.
Top Growth Stocks by EPS and Revenue
These are the top growth stocks in the Russell 1000 Index as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY EPS growth. Both sales and earnings are critical factors in the success of a company. Moreover, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
| Top Growth Stocks by EPS and Revenue | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | Revenue Growth (%) | EPS Growth (%) | |
| LyondellBasell Industries NV (LYB) | 89.11 | 29.7 | 87.4 | 1,490 |
| Nucor Corp. (NUE) | 113.90 | 32.6 | 109.3 | 1060 |
| Steel Dynamics Inc. (STLD) | 2.40 | 12.4 | 118.3 | 931.9 |
Source: YCharts
- LyondellBasell Industries NV: See above for company description.
- Nucor Corp.: See above for company description.
- Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company offers products including flat-rolled steel sheet, structural beams, and engineered bar special-bar-quality. On Dec. 16, the company provided earnings guidance for Q4 2021 of between $5.46 and $5.50 per diluted share, which would be record quarterly EPS performance for the company.
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