Best Growth Stocks List for Your Portfolio
The best growth stocks list will include a wide range of companies that have above-market revenue expectations for the future. These are innovative businesses that are leaders within their industries.
This list will give you a foundation to work from when comparing and analyzing growth potential. Each of these companies is ahead of the curve. And you may want to get ahead of it as well with a more balanced investment portfolio.
Best Growth Stocks List Breakdown and Definition
It’s always important to do your research before making a big investment. Therefore, we’ll begin by asking: What are growth stocks? They are shares of companies with huge growth expectations, including future increases in revenue above the current market pace.
The biggest factor in recognizing growth stocks is their price-to-earnings (P/E) ratio. This is the current share price of a stock compared with its earnings per share (EPS).
The higher a company’s P/E ratio, the more likely it is to make your growth stocks list. Investors often bid up the share price when they expect higher earnings growth in the future. And in some cases, these companies won’t have any earnings at the present time.
These stocks are largely based on potential and growth projections. That is why there is some level of risk involved.
Since most of these companies don’t pay dividends, an investor can rely only on selling shares to earn any money. If the company doesn’t meet expectations, the investor takes on the risk of losing money.
This list, however, includes the best of the best available on the market today. From blue chip stocks to hidden gems, you will find a great mix of companies.
For example, this growth stocks list includes:
- Alphabet (Nasdaq: GOOGL)
- Amazon (Nasdaq: AMZN)
- Chewy (NYSE: CHWY)
- Dropbox (Nasdaq: DBX)
- Facebook (Nasdaq: FB)
- Netflix (NYSE: NFLX)
- Salesforce (NYSE: CRM)
- Shopify (NYSE: SHOP)
- Square (NYSE: SQ)
- Trade Desk (Nasdaq: TTD).
As you can see, some of these companies are already household names. Others have only begun to light up the market in more recent times.
Nevertheless, these companies have one thing in common: a high compound annual growth rate (CAGR). That’s the mean annual growth rate of an investment over a specific period of time.
Household Name Growth Stocks
You can’t build the best growth stocks list without having Amazon, Facebook and Google in the mix. In fact, these are three of the most powerful companies in the world.
Alphabet is the parent company of Google, the digital advertising and search engine powerhouse with a three-year sales growth CAGR of 17%. That’s actually on the low side for this list. But Google is already one of the largest companies in the world.
Jeff Bezos, on the other hand, has taken Amazon to the top of the e-commerce mountain. And from the looks of it, his company is going to keep climbing to unchartered heights. Amazon’s sales growth CAGR sits at 23% over the next three years.
Lastly, Facebook matches Amazon’s sales growth CAGR at 24%. Despite recent political advertising issues, the social media platform continues to meet and exceed revenue expectations.
You will notice that these CAGRs are on the lower end of this growth stocks list. But they’re actually impressive projections for three companies with a history of extreme growth. In most cases, larger companies’ CAGRs begin to fall off as they expand.
Growth Stock Starlets
You may have heard of some of these companies, while others may be completely new to you. So let’s focus on Salesforce, Shopify and Square.
Salesforce is making headlines for its recent inclusion in the Dow Jones Industrial Average Index for the first time in the company’s history. The cloud software company has shot up over the past few years and now has a three-year sales growth CAGR of 30%.
Shopify is tackling the e-commerce industry as the next biggest competitor to Amazon on this growth stocks list. Surprisingly, its three-year sales growth CAGR is 46%. This number may grow even larger after the company announced a new partnership with Google. This partnership adds Shopify payment options for Google search engine users.
And Square is the digital payments power with a three-year sales growth CAGR of 43%. That’s quite impressive for a company that has already grown its value to more than $26 billion since its inception in 2010.
Investing in the Best Growth Stocks
You need to consider both growth stocks and value stocks if you are looking to diversify your portfolio. Creating a balanced investment structure can help you maximize your gains and minimize your risk.
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Making investments based on projections and expectations can be overwhelming for many investors. However, this growth stocks list gives you a better outlook to make the right decisions for your portfolio.