Growth stocks are a foundational part of any stock market strategy. Targeting companies that demonstrate increasing revenues and profits is the go-to way for many investors to turn a little bit of savings into a much bigger nest egg over the long term.
But finding the best growth companies isn’t always a simple task.
Sometimes, companies with expanding sales still struggle to lift their stock price. In other cases, companies with poor growth investing metrics enjoy price gains regardless. So, a growth stock isn’t necessarily a great investment by virtue of its growth potential alone.
Or, in other words, there’s more to pay attention to than just the numbers if you’re serious about the best growth stocks.
Today, I’m going to help you find growth stocks that can grow not just their top and bottom lines, but your nest egg, too. Read on as I discuss some of the basic tenets of growth investing, and then I’ll discuss several potential opportunities with growth characteristics.
Disclaimer: This article does not constitute individualized investment advice. These securities appear for your consideration and not as investment recommendations. Act at your own discretion.
What Is a Growth Stock?
A growth stock is an investment that is generally seeing improved sales and profits with each passing year. In theory, this growth will result in higher stock price appreciation as other shareholders realize this success and decide to buy in. Growth stocks tend to be viewed in opposition to value stocks, which might not grow as fast but have substantial underlying operations that the market is underappreciating (for now).
But sometimes, certain metrics matter more than others.
For instance, many growth stocks boast rapid sales growth but generate no net income to speak of as they burn all their cash on expansion. There’s also the issue of expectations to deal with, as successful growth companies reinvest heavily in expansion but sometimes still fall short of Wall Street’s ambitious demands.
Last but not least, always consider the competition—even high-growth stocks can be underwhelming by comparison. For instance, if an e-commerce and cloud services company is growing at a 40% rate, that might actually disappoint shareholders if similar companies are growing at a 50%-plus clip at the same time.
Not all growth stocks are good investments, then, even if they are growing—and even if they’re a very high-growth company. That means you have to look past the surface to really find the best growth stocks to buy.
The Best Growth Stocks to Buy Now
The top growth stocks right now are companies expanding faster than the broader market, as well as their peers. That often involves riding a long-term trend that will result in a durable tailwind for years to come.
Nothing is certain on Wall Street, of course, and growth stocks that showed strong revenue trends or stock price appreciation over the past year might still stumble when things change in the months to come. That said, investors who pay attention to growth stock data can often identify companies moving into favor—and share in their success.
Here are a few examples of growth stocks to watch based on recent performance and financial metrics.
Best Growth Stock #1: Eli Lilly
- Market cap: $567.6 billion
- Dividend yield: 1.0%
- Sector: Health Care
After continued growth and innovation in recent years, Big Pharma mainstay Eli Lilly (LLY) is now neck-and-neck with industry icon Johnson & Johnson (JNJ) as the largest healthcare company in the world. And looking forward, analysts believe LLY still has a significant amount of runway left.
Specifically, the pros anticipate revenue expansion of about 10% this fiscal year and another 20% in fiscal 2024. They also say earnings per share will increase by 10% and 40%, respectively, in each of these years.
You can thank expected continued success from existing medications, such as type 2 diabetes treatment Trulicity and breast cancer drug Verzenio, as well as a very successful research pipeline. One of its most recent winners is mirikizumab, which could become a blockbuster in treating ulcerative colitis, as well as its drug candidate retatrutide, which is showing promise in a massive potential marketplace for diabetes and obesity treatments.
Analysts are bullish on Eli Lilly’s future prospects, too. They have 20 Buy calls on the stock, versus just five Holds and two Sells, according to S&P Global Market Intelligence data.
“Following recent data presented at medical conferences, we believe LLY is building a strong franchise in Alzheimer’s disease (AD) and diabetes/obesity led by donanemab and Mounjaro, with a robust pipeline of next-gen molecules,” says an analyst team at Truist, which rates LLY shares at Buy.
Best Growth Stock #2: First Solar
- Market cap: $19.3 billion
- Dividend yield: N/A
- Sector: Energy
The solar sector can be a bit volatile. But in the age of climate change, there is a durable tailwind for this industry as one of the most popular forms of alternative energy. And among solar stocks, First Solar (FSLR) is near the top of the heap when it comes to both market value and revenue directly attributable to solar arrays.
Headquartered in Arizona, First Solar provides photovoltaic energy solutions worldwide, from the U.S. to Japan to Europe to Australia. And business is booming, with FSLR projecting revenue growth of more than 30% both this fiscal year and in fiscal 2024 as well. More importantly, profits are expected to flip from a 41-cent-per-share loss in 2022 to a $7.39 gain this year, then jump nearly 80% to $13.14 in 2024.
Shares have handily outperformed the rest of the S&P 500 index year-to-date in 2023 as investors continue to believe in the long-term growth potential of this stock and the solar industry in general. Short-term volatility can happen based on pricing trends or broader economic activity, but FSLR has proven to be a durable name in an otherwise uncertain alternative energy industry.
BofA Global Securities is one of 14 Buy calls on FSLR shares. They say the company is exhibiting “better than expected execution,” cementing “FSLR’s de-risked, above-average outlook,” and BofA believes FSLR “will outperform on [its] improved outlook, especially relative to peers.”
Best Growth Stock #3: Gen Digital
- Market capitalization: $12.3 billion
- Dividend yield: 2.7%
- Sector: Technology
Gen Digital (GEN) is a stock riding the long-term trend of cybersecurity and hacking concerns. Rebranded in 2022 from NortonLifeLock—a combination of two brands that consumers likely recognize for their security-related services—this growth stock is tailor-made for the risks of a digital age.
Cybersecurity solutions are in high demand generally, but especially of late thanks to Russia’s recent war with Ukraine and increased frequency of malware, viruses, adware and other online threats in the last two years or so. Bigger-picture, cybersecurity risk is an issue that isn’t going away, and it demands constant protection regardless of the ups and downs of other market sectors.
GEN has a strange financial calendar; it actually just ended its fiscal 2023 back on March 31. But regardless of timing, its full-year results were very impressive—including 19% revenue growth, 22% growth in bookings and a 24% jump in operating income. And looking forward, Wall Street is expecting more than 15% revenue growth in fiscal 2024 on top of that.
This isn’t a heavily covered stock, but of the seven analysts looking at GEN, five consider it a Buy—versus two Holds and zero Sells.
On top of this strong performance, GEN also is a rare dividend stock in the tech sector. It offers a consistent 12.5-cent quarterly payday, fueled in large part by the regular subscription revenue it generates from its customers. And given that Gen Digital requires just 25% of total earnings to fund that dividend, the income stream isn’t just sustainable—it’s ripe for additional increases if recent growth trends continue.
Best Growth Stock #4: Microsoft
- Market cap: $2.5 trillion
- Dividend yield: 0.8%
- Sector: Technology
It’s hard to imagine tech behemoth Microsoft (MSFT) growing even bigger, given that it’s already a $2.5 trillion company. But it’s a mainstay of many growth stock portfolios—and for good reason, at least based on projections for the next two years. Revenue is expected to grow at 6% in FY2023 and another 10% in FY2024, with earnings growth of 5% and 13%, respectively.
That’s not massive compared to many smaller companies, but that’s outstanding given a company as big and stable as Microsoft.
You can thank, in part, the booming cloud and Azure businesses at Microsoft. Recent economic uncertainty has caused a deceleration in that growth, but clearly the spending is going to ramp back up in the near future. And with this growth stock up 39% year-to-date to roughly double the returns of the S&P 500 index in the same period.
Naturally, artificial intelligence (AI) is a big focus for investors—as well as analysts. Wall Street is excited about Microsoft’s Copilot technology, which combines the power of large language models with its Microsoft 365 productivity suite.
“We reiterate our Buy rating and raise our [price target] to $400 (from $350) on the back of Microsoft’s latest Copilot announcements,” says Goldman Sachs Equity Research, which is one of 46 Buys on the stock, compared to just six Holds and one Sell. “As Microsoft 365 Copilot will be launched into a base of [more than] 380 million users for $30/user/month, we size the total addressable market at more than $135 billion long-term.”
With reliable subscription revenue and long-term enterprise contracts, Microsoft has a firm foundation and a scale that is unrivaled on Wall Street. And as it continues to expand its cloud services and dive into AI, it might only strengthen its dominance in the years to come.
Best Growth Stock #5: Nvidia
- Market cap: $1.1 trillion
- Dividend yield: 0.1%
- Sector: Technology
Nvidia (NVDA) is the latest high-flying tech stock to reach a market capitalization of at least $1 trillion, thanks to its dominance in semiconductors that are used in cutting-edge technologies. Applications for this firm’s hardware include self-driving cars, AI, cryptocurrency mining, and other in-demand and growth-oriented areas of the 21st century economy.
“We see NVDA as the AI company,” says Truist analyst William Stein. “NVDA’s sustained leadership in datacenter compute (massive parallel and heterogeneous compute chips, computers, and software) is owing less to its semiconductor devices, and more to its culture of innovation, ecosystem of incumbency, and very significant software investment. We believe this makes NVDA’s the default choice for AI solutions, and expect NVDA’s superior positioning in this market will lead to ongoing structural fundamental growth.”
This specialization has resulted in red-hot growth at Nvidia—growth that’s expected to continue through at least next year. For the current fiscal year, the company is projecting 45% revenue growth, as well as earnings that will more than double year-over-year. Looking ahead to next year, both revenue and profits are set to rise another 30% on top of that!
Admittedly, NVDA stock has been putting up amazing performance lately that has to eventually level off. Shares are up almost 560% in the last five years—about 10 times the returns of the broader S&P 500 in the same period.
However, the pros still believe this growth stock is for real. A whopping 45 analysts have Buy ratings on NVDA, versus just five Holds and a lone Sell. So the strategy on this company might not be to buy low and sell high … but to buy high and sell higher.
Best Growth Stock #6: SoFi Technologies
- Market cap: $8.6 billion
- Dividend yield: N/A
- Sector: Financial
Typically, financial-sector companies are more commonly classified as value investments instead of growth stocks. That’s because big banks have a lot of hard assets on their balance sheets to prove their worth, as well as strict regulations that prohibit the aggressive risk-taking that tends to characterize a growth stock.
But SoFi Technologies (SOFI) is a unique way to play the high-tech potential of modern finance.
SoFi provides various high-tech financial services, including investing tools as well as a digital portal that connects consumers with various lending products without the overhead of traditional financial institutions. It also operates a technology platform called Galileo—which it acquired in 2020—that offers digital and ecommerce functionality to small businesses.
Admittedly, SoFi currently isn’t turning a profit. But the company is predicting roughly 40% revenue growth this fiscal year and 30% growth next year—along with what Wall Street expects to be a move into profitability in fiscal 2024.
Shares have more than doubled year-to-date on optimism about this growth—such a monster run, that some analysts have hit the sidelines. Still, with seven Buys versus nine Holds and three Sells, Wall Street is more bullish than bearish.
Best Growth Stock #7: Allegiant Travel
- Market cap: $1.6 billion
- Dividend yield: N/A
- Sector: Industrial
Airline carrier Allegiant Travel (ALGT) is the smallest stock on this list as measured by market capitalization.
Allegiant might not strike many investors as a traditional growth stock, given its presence in the ho-hum world of air travel. But this Las Vegas-based discount carrier focuses on under-served cities that many of the big carriers or even larger regional carriers simply don’t want to bother investing in. That focus has allowed ALGT to grow fast, rather than compete with the big international carriers on the popular routes.
Allegiant reported financial results in May, which included 30% year-over-year revenue growth for the quarter. Earnings growth was off the chart, too; profits were up more than 1,000% as the company rebounded dramatically from the last of its pandemic-era disruptions.
Admittedly, growth at that clip might not be sustainable. Still, Wall Street has more Buy calls (four) than Sell calls (one) on the stock, with a few others (seven) on the sidelines at Hold. And with Wall Street expecting double-digit revenue growth both this fiscal year and next fiscal year, along with a general upswing in both demand as well as pricing for air travel, the future looks bright for ALGT.
Growth Stocks: Frequently Asked Questions (FAQs)
Should I buy growth stocks or a growth exchange-traded fund?
Growth-oriented investing strategies are always in-demand, so there are a host of exchange-traded funds (ETFs) out there that own growth stocks. The largest, the Vanguard Growth ETF (VUG), commands more than $90 billion in assets as proof of the popularity of this approach.
ETFs allow for easy diversification as you invest tactically in growth stocks. But keep in mind that by spreading your money around and reducing your risk, you also limit your upside. Many growth investors are enamored with the idea of a stock that doubles in short order—and that’s almost impossible with an ETF that holds hundreds of different components.
In short: Whether you buy growth stocks or an ETF depends on your personal risk tolerance.
What kind of brokers handle growth stocks?
The good news is, virtually any traditional broker is going to allow you to buy growth stocks. As long as equities are on the table–and that’s the case with virtually all online brokers–you’ll be able to buy any style of stock: growth, value, dividend, you name it.
You can check out our favorite online brokers for beginners for a full list of options, but here’s one of our favorites:
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