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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 underperformed the broader market over the past year. The Growth Index has provided a total return of 7.4% over the past 12 months, below the benchmark Russell 1000 index’s 8.1% total return, as of Feb. 25, 2022. All statistics in the tables below are also as of Feb. 25, 2022.
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
- Boston Properties Inc.: Boston Properties is a developer, owner, and manager of Class A office properties in Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC.
- Digital Realty Trust Inc.: Digital Realty Trust is a real estate investment trust (REIT) which owns and manages technology-related properties. The company focuses on data center, colocation and interconnection-related properties. Digital Realty Trust’s net income surged for Q4 2021, ended Dec. 31, growing more than 18-fold while revenue climbed modestly year-over-year (YOY). The strong performance was attributable in part to record bookings.
- EQT Corp.: EQT is an integrated energy company focused on natural gas production in the Appalachian area. The company explores for and produces natural gas and natural gas liquids (NGLs). Its operations are focused in Pennsylvania, West Virginia, and Ohio. On Feb. 3, EQT announced quarterly cash dividend of $0.125 per share, payable on March 1 to shareholders of record as of Feb. 14, 2022.
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
- Copa Holdings SA: Copa Holdings is a Panama-based provider of airline passenger and cargo service. The Company provides scheduled flights to countries in North, Central and South America and the Caribbean.
- 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. On Feb. 15, Upstart announced the launch of a share repurchase program in which the company is authorized to purchase up to $400 million of common stock.
- EQT Corp.: See company description above.
Top Growth Stocks by EPS and Revenue
These are the top growth stocks in the Russell 1000 Index as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY EPS growth. Both sales and earnings are critical factors in the success of a company. Moreover, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
| Top Growth Stocks by EPS and Revenue | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | Revenue Growth (%) | EPS Growth (%) | |
| EQT Corp. (EQT) | 22.23 | 8.4 | 235.7 | 1,940 |
| Upstart Holdings Inc. (UPST) | 131.55 | 11.1 | 252.0 | 1,440 |
| United States Steel Corp. (X) | 24.36 | 6.4 | 119.4 | 1,600 |
Source: YCharts
- EQT Corp.: See company description above.
- Upstart Holdings Inc.: See company description above.
- United States Steel Corp.: United States Steel is a steel producer with operations in the U.S. and Central Europe. The company makes high value-added steel products, including its proprietary XG3 advanced high-strength steel. It serves the automotive, construction, appliance, energy, containers, and packaging industries. On Feb. 15, the company announced that Christine S. Breves, senior vice president and chief financial officer (CFO) intends to leave the company in 2022. Breves will continue to serve as CFO while the company conducts a search for a permanent replacement.
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