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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 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 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 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 57.2% over the past 12 months, besting the Russell 1000’s 54.4% total return, as of April 26. All statistics in the tables below are as of April 26.
Here are the top 3 stocks with the fastest earnings per share (EPS) growth, the top 3 stocks with the fastest sales growth, and the 3 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 over 2,500% were excluded as outliers.
Source: YCharts
- Flowers Foods Inc.: Flowers Foods produces and sells packaged bakery goods such as pastries and doughnuts. The company’s products are marketed under brand names including Nature’s Own, Dave’s Killer Bread, Wonder, Tastykake, Sara Lee, and Mrs. Freshley’s. The main markets for its products have been supermarkets, drugstores, or foodservice companies, with the remainder sold to mass merchandisers, discount and convenience stores, among others.
- Fifth Third Bancorp: Fifth Third Bancorp is a diversified financial services company operating banks in the Midwest and Southeast parts of the U.S. The company offers retail and commercial banking, investment advisory, and similar services. On April 20, 2021, Fifth Third Bancorp reported net income of $694 million for its Q1 2021, representing a big jump on the $46 million reported in Q1 2020. The company also produced record commercial banking revenue of $153 million for the quarter.
- The Cooper Companies Inc.: Cooper Companies is a medical device company made up of two segments: CooperVision, which manufactures products for contact lens wearers, and CooperSurgical, which sells diversified products and services focused on improving women’s health, fertility, and diagnostics. On March 24, 2021, the company reported that its board of directors elected Robert S. Weiss as chairman and William A. Kozy as vice chairman and lead director, both effective March 23, 2021. Both Weiss and Kozy previously served on the Cooper Companies board.
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, and 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 over 2,500% were excluded as outliers.
Source: YCharts
- Liberty Broadband Corp.: Liberty Broadband owns and operates a broad range of communications businesses, including interests in broadband and cable company Charter Communications Inc. (CHTR) and GCI Holdings, a provider of wireless, data, video, voice, and managed services to customers primarily in Alaska. Liberty Broadband’s board of directors declared on March 15, 2021, a quarterly dividend payable to holders of preferred shares. The dividend of $0.43750001 per share was payable in cash on April 15, 2021, to shareholders of record as of March 31, 2021.
- Quidel Corp.: Quidel develops and manufactures diagnostic healthcare products and solutions. The company’s offerings aid in the detection and diagnosis of critical diseases and other medical conditions. On April 22, 2021, Quidel announced preliminary revenue results for Q1 2021 in the range of $374 million to $376 million. This constitutes approximately 114% YOY gains, driven by the shipment of roughly 15 million SARS tests during the quarter. The company reports full financial results for Q1 on May 6, 2021.
- Zoom Video Communications Inc.: Zoom Video Communications is a provider of video communications services. On April 19, 2021, the company reported the launch of the Zoom Apps Fund, a $100 million venture fund aimed at stimulating growth of Zoom apps, integrations, developer platforms, and hardware. The fund will provide initial investments ranging from $250,000 to $2.5 million to portfolio companies in support of application development.
Top Growth Stocks by EPS and Revenue
These are the top growth stocks in the Russell 1000 index as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY EPS growth. Both sales and earnings are critical factors in the success of a company. Moreover, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
| Top Growth Stocks by EPS and Revenue | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | Revenue Growth (%) | EPS Growth (%) | |
| Zoom Video Communications Inc. (ZM) | 336.42 | 98.8 | 368.8 | 1,640 |
| Liberty Broadband Corp. (LBRDA) | 153.35 | 29.8 | 871.0 | 188.0 |
| Quidel Corp. (QDEL) | 120.33 | 5.1 | 431.7 | 1,420 |
- Zoom Video Communications Inc.: See above for company description.
- Liberty Broadband Corp.: See above for company description.
- Quidel Corp.: See above for company description.
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