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Growth investing is one of two main fundamental investment strategies. It contrasts with value investing, the other strategy. Investors employing a growth investing strategy will typically place the majority of their portfolio in growth stocks, which are shares of companies whose earnings or sales are expected to grow at a significantly faster rate than the rest of the market. They generally don’t pay dividends since all earnings are usually reinvested back into the business in order to generate even more earnings or revenue in the future. The primary way investors expect to earn profits from growth investing is through capital gains. Classic examples of growth stocks include Facebook Inc. (FB), Amazon.com Inc. (AMZN), and Netflix Inc. (NFLX).
Growth stocks, as represented by the Russell 1000 Growth Index, have outperformed the broader market over the past year. The Growth Index has provided a total return of 39.5% over the past 12 months, above the Russell 1000’s total return of 30.5%, as of March 2, 2021. All statistics in the tables below are as of March 2.
Here are the top 3 stocks with the fastest EPS growth and the top 3 stocks with the fastest sales growth.
Top Growth Stocks by EPS Growth
These are the stocks with the highest year-over-year (YOY) earnings per share (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.
Source: YCharts
- Freeport-McMoRan Inc.: Freeport-McMoRan is a leading international mining company with significant reserves of copper, gold, molybdenum, cobalt, oil, and gas.
- IAC/InterActiveCorp: IAC/InterActiveCorp (Dotdash, including Investopedia.com, is a wholly-owned business of IAC/InteractiveCorp) is a media holding company that, through its subsidiaries, provides media and Internet services. Its business segments include ANGI Homeservices, Vimeo, Search, Emerging & Other, and Dotdash.
- Zoom Video Communications Inc.: Zoom Video Communications is a provider of video-first communication platform and Web conferencing services. It offers cloud-based HD video conferencing, mobility, and Web meetings. Zoom recently announced financial results for its 2021 fiscal year (FY), which ended January 31, 2021. Annual net income rose 2,556.9% as annual revenue increased 325.8%. The company’s exceptionally strong growth was driven by an increase in demand for its video communication services as many people were forced to work or study from home amid lockdowns and shelter-in-place measures related to the COVID-19 pandemic.
Top Growth Stocks by Sales Growth
These are the stocks with the highest year-over-year (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, and find growing companies that have not yet reached profitability. In addition, earnings per share 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.
Source: YCharts
- Sage Therapeutics Inc.: Sage Therapeutics develops treatments for central nervous system disorders, including schizophrenia, major depressive disorder, pain, and traumatic brain conditions. The company announced in mid-December the appointment of Barry Greene to the role of chief executive officer (CEO). Greene most recently served as president of Alnylam Pharmaceuticals Inc. between 2007 and September 2020, and as its chief operating officer (COO) from 2003 to 2016.
- Moderna Inc.: Moderna is a clinical stage biotechnology company focused on the discovery and development of messenger RNA therapeutics and vaccines. It develops mRNA medicines for infectious, immuno-oncology, and cardiovascular diseases. The company announced in late February that it is making new capital investments at its manufacturing facilities in order to increase the manufacturing capacity for its COVID-19 vaccine. Moderna plans to supply up to 1 billion doses in 2021 and plans to expand capacity to 1.4 billion doses in 2022.
- Global Blood Therapeutics Inc.: Global Blood Therapeutics is a biopharmaceutical company that develops therapeutics to treat blood-based disorders.
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