7 Growth Stocks to Buy Before 2024 Comes to a Close
Updated October 22, 2024 at 12:39 pm
Growth stocks have the potential to outperform the stock market and net substantial returns for their investors. These stocks have significantly higher revenue growth than most of their peers and catalysts that suggest the growth can continue.
Some of the best growth stocks have produced generational gains within a few years. Nvidia’s 2,500% gain over the past five years is hard to beat, but you don’t have to narrow your focus toward big tech to find incredible gains. For instance, Abercrombie & Fitch is back in style and has gained more than 700% over the past five years.
Investors must differentiate between these assets to identify the best stocks to buy right now to boost their portfolios’ performance. This list of growth stocks can offer a good starting point and potentially put you in a position to beat the market.
Key Takeaways Vault’s Viewpoint on October’s Growth Stocks
- Growth stocks are known to outpace the stock market and have the ability to outperform benchmarks like the S&P 500 and Nasdaq Composite.
- These seven stocks represent a diverse portfolio of potential stock picks with a high propensity for future growth.
- Investors, like yourself, should look for companies with rising revenue and profits that have promising long-term catalysts.
- Be aware of potential risks, as growth stocks have their own set of unique challenges, like deceleration in revenue growth, which can result in substantial valuation declines.
- Spreading your capital across several growth stocks can minimize risk and increase your total returns. This practice is known as diversification.
7 Growth Stocks to Buy Before 2024 Comes to a Close
Investors can choose from several growth stocks, but some of them look more promising than others. These seven growth stocks continue to report impressive revenue growth while expanding their profits.
Ticker |
Stock |
YTD Performance |
|---|---|---|
| CMG | Chipotle | 33.34% |
| CRWD | CrowdStrike | 24.19% |
| GOOGL | Alphabet Inc Class A | 18.82% |
| DECK | Deckers Outdoor | 38.45% |
| META | Meta Platforms | 66.94% |
| AMZN | Amazon | 26.43% |
| FIX | Comfort Systems USA | 106.85% |
What Is a Growth Stock?
A growth stock is a publicly traded corporation that is exhibiting high revenue growth. These stocks tend to trade at lofty valuations due to their long-term opportunities. Companies that continue to generate high revenue growth while expanding profit margins can significantly outperform the stock market. But growth stocks that report revenue deceleration can see their valuations tumble.
The Due Diligence Behind the Top Growth Stocks
Chipotle (CMG)
The fast food restaurant chain has more than tripled over the past five years and trades at a 55 P/E ratio. Chipotle has more than 3,500 restaurants and continues to grow them at a fast clip. The company opened 52 new restaurants in the second quarter, with 46 including a Chipotlane. Revenue also increased by 18.2% year-over-year while net income jumped by 33.3% year-over-year.
High financial growth rates combined with the company’s goal to open 285 to 315 restaurants this year suggests a long-term growth opportunity.
CrowdStrike (CRWD)
CrowdStrike has regularly outperformed the S&P 500 and the Nasdaq Composite. The cybersecurity stock had plenty of fanfare before the global IT outage. While CrowdStrike is back to being up year-to-date, the stock is more than 30% removed from its all-time high.
Despite the negative news around the stock, revenue grew by 32% year-over-year in Q2 FY25 as profit margins continued to expand. Management is optimistic that the company will get through the IT outage while maintaining a strong relationship with most of its customers. CrowdStrike is approaching $4 billion in annual recurring revenue as more companies amplify their digital defenses.
Alphabet (GOOGL)
The tech conglomerate is a leader in online advertising and cloud computing. The company generated $84.7 billion in the second quarter from its business segments. That’s up by 14% year-over-year. High revenue growth also came with rising profit margins, as Alphabet delivered 29% year-over-year net income growth.
Alphabet shares have rallied by more than 150% over the past five years. Antitrust concerns have resulted in a sharp correction. While those concerns are legitimate, Alphabet now trades at a much lower valuation, presenting a long-term buying opportunity.
Ad revenue is in the spotlight for antitrust concerns, but it’s not the only high-growing segment. Google Cloud generated 29% year-over-year revenue growth and makes up more than 10% of total sales.
Deckers Outdoor (DECK)
Deckers Outdoor is gaining market share on Nike and other established athletic apparel companies. Hoka sales continue to accelerate and helped Deckers Outdoor report 22% year-over-year revenue growth in the first quarter of fiscal 2025. Hoka was the largest segment and delivered 29.2% year-over-year revenue growth.
The company has other brands that performed well. Ugg sales jumped by 14.0% year-over-year while revenue from “Other Brands” more than doubled year-over-year. Deckers Outdoor hasn’t had much success lately with the Sanuk brand, but the company recently sold that component to Lolě Brands.
The decision to sell Sanuk gives Deckers Outdoor more capital and resources to prioritize its more successful business segments. Shares have gained roughly 40% year-to-date.
Meta Platforms (META)
Meta Platforms’ year of efficiency has resulted in significant profit growth. Net income soared by 73% year-over-year in the second quarter, while revenue jumped by a respectable 22% year-over-year.
The company excels in social media, with Facebook, Instagram, and WhatsApp collectively boasting 3.27 billion daily active users. This impressive user base allows the company to effectively retain users across its family of apps, generating substantial ad revenue.
Meta Platforms is also diversifying into augmented reality and artificial intelligence. It can take several years before the company has a meaningful revenue stream outside of online advertising. Luckily, the business model has worked well so far. Shares have almost tripled over the past five years and trade at a 27 P/E ratio, much lower than other growth stocks.
Amazon (AMZN)
Amazon is the e-commerce leader and has defined the industry with free 2-day shipping, Amazon Prime Day and its wide selection of products. But that’s not Amazon’s only growth engine. The company has been gaining market share in cloud computing and online advertising.
The stock has regularly outperformed the S&P 500 and has more than doubled over the past five years. Those gains are likely to continue. Amazon reported $148.0 billion in Q2 2024 sales, which is up by 10% year-over-year. Net income more than doubled, reaching $13.5 billion in the quarter. Cloud computing and online ads should continue to boost the company’s profit margins.
Comfort Systems USA (FIX)
Comfort Systems USA has the lowest market cap on this list, but it’s been crushing the market. The $12 billion HVAC company is up by 70% year-to-date and has surged by more than 700% over the past five years. The stock trades at a 29 P/E ratio and continues to report exceptional financial growth.
The HVAC company reported $1.81 billion in revenue in the second quarter, along with $134.0 million in net income. Those figures are up by 40% and 93% year-over-year, respectively. Comfort Systems USA also closed out the second quarter with a $5.77 billion backlog. Leadership remains optimistic that these strong results will “continue in the second half of 2024 and into 2025.”
How to Choose a Growth Stock
Some growth stocks are obscure companies that few people know. Others are household names. Investors buy growth stocks hoping to outperform the stock market, and some of these investments require high-risk tolerances.
Buying and holding a growth stock only makes sense if it outperforms a benchmark. If the stock does not underperform the S&P 500 or the Nasdaq 100, then you could have bought an index fund or an exchange-traded fund (ETF) instead.
Investors have to closely monitor growth stocks and spend more time looking at their investment portfolios. If you can’t outperform index funds, it makes more sense to buy these funds than continue to search for growth stocks. You can also own growth stocks and index funds instead of only having one or the other.
Growth Stocks vs. Value Stocks
Growth stocks cater to investors who are willing to take more risks in exchange for a higher potential reward. Growth investors still look at valuation metrics but offer corporations more leeway if they have impressive revenue growth and catalysts. Growth investors focus on what a stock can look like within a few years.
Value stocks are less risky but aren’t growing at high rates. These stocks normally have low price-to-earnings (P/E) ratios and single-digit year-over-year revenue growth. Index funds often outperform value stocks since they have a collection of value and growth stocks.
Many corporations within this investment category also offer dividends. Since these corporations have limited growth opportunities, they give out more of their retained earnings to investors.
Some investors continue to stick with these stocks for their dividends and will bail if the company announces a dividend cut. Investors with dividend-paying value stocks should look at the stock’s dividend payout ratio to assess the long-term viability of dividend payouts. Value stock investors look for equities that offer a decent margin of safety and reliable cash flow.
Value stocks can still outperform growth stocks. Some value stocks are unnoticed gems that turn into growth stocks once they gain momentum and present a lower margin of safety for future investors. Value stocks are also less vulnerable to market downturns and usually have lower betas than growth stocks. Beta measures a stock’s volatility relative to the S&P 500, and a lower value indicates a stock is less vulnerable to sharp price swings.
Growth Stocks vs. Dividend Stocks
Growth stocks and dividend stocks can both deliver long-term returns for patient investors. However, these investments have different approaches toward the same goal.
Growth stocks emphasize appreciation over cash flow. Growth investors are okay with receiving little to no cash flow if the corporation reinvests its capital back into the business. Those reinvestments can speed up growth, but investors often have big expectations for these assets. Investors may expect too much from growth stocks and bid them to excessive valuations.
Dividend stocks usually have lower valuations and lower ceilings. These stocks can still outperform the stock market, but the highest possible gains reside in growth stocks. Some dividend stocks like American Express and Procter & Gamble can still perform well during economic uncertainty. These stocks will get lapped by growth stocks like Nvidia in bullish markets, but dividend stocks often present greater margins of safety.
Dividend investors often receive quarterly cash distributions that they can use to cover expenses or reinvest into the stock. Some investors retire on income from dividend stocks after buying and holding on to shares for many years.
Investors can choose from thousands of publicly traded companies. Not every stock is a growth stock, but among the options, some long-term stocks are better than others. Investors should consider the following factors when deciding which growth stocks make sense for their portfolios:
- Leadership
- High revenue growth
- Rising profit margins
- The industry
- Competitors
Why Would You Want to Invest in Growth Stocks?
Growth stocks capture more headlines than value stocks thanks to their more dramatic price swings and greater potential. Here are some reasons to invest in growth stocks.
- Higher potential returns. Some growth stocks generate more returns in one year than the S&P 500 will accumulate over the next five years. Nvidia has exceeded the S&P 500’s returns by wide margins thanks to its position in the artificial intelligence industry. The stock has gained roughly 2,000% over the past five years while the S&P 500 only has an 85% gain during the same amount of time.
- Under-the-radar opportunities. Some growth stocks aren’t mainstream quite yet. These stocks deliver impressive financial results without much fanfare. Hidden gems can then deliver sizable gains once more people discover them. e.l.f. Beauty is a good example of this trend. The stock went from relatively unknown small cap a few years ago to a large cap stock flirting with inclusion in the S&P 500.
- Portfolio diversification. Each growth stock offers additional portfolio diversification. Spreading your capital across numerous stocks can mitigate risk.
- Dividend growth. Some growth stocks have high dividend growth rates, which can pay off for long-term investors. Microsoft and Intuit both tend to raise their dividend payouts by at least 10% each year. These types of stocks are also called dividend growth stocks, which distinguish them from growth stocks that do not offer dividends.
- Achieve long-term financial goals sooner. Market outperformance via growth stocks can help you retire sooner. If your growth stocks exceed benchmark returns, you can also save up for a house, car or other big purchase sooner.
How to Invest in Growth Stocks
Investing in growth stocks is straightforward once you create a brokerage account and become familiar with how it works. You can follow these steps to invest in growth stocks.
Step 1: Create a Brokerage Account
Investors can choose from many brokerage firms like Fidelity, Vanguard, and Robinhood. Comparing each account’s fees, features, user experiences and other nuances can help you make the right decision.
It’s possible to open brokerage accounts on multiple platforms. Brokerage platforms will ask for basic information like your name, email, and ID when you create an account. You will also have to fund your brokerage account by linking one of your bank accounts.
Step 2: Research Growth Stocks
It’s not a good idea to immediately invest upon opening a brokerage account. You should research several growth stocks and determine what makes a good investment. Some investors focus on fundamentals, while others focus on technical indicators. These two core categories have several subsets.
For instance, fundamental analysts can focus on items like valuation metrics and recent financial reports. Doing some research on growth stocks and investing in general can help you make better decisions.
Step 3: Determine the Growth Stocks You Want to Buy
Write a list of growth stocks you want to buy and decide how much you want to allocate toward each one. Some investors evenly split their money across each growth stock. Other investors prefer to play favorites and put a higher percentage of their portfolios into a few growth stocks that they believe can outperform the others. You can make adjustments as your portfolio and your financial goals change.
Step 4: Initiate a Market Order with Your Brokerage Account
Brokerage accounts let you initiate market orders to immediately buy shares of a stock at the current market price. These transactions take place within seconds, and the stocks will appear in your portfolio soon after. Investors can also place limit orders that require a stock to reach a certain price before an order gets executed.
Step 5: Monitor Your Portfolio
Stock investing doesn’t end after you buy shares. Savvy investors stay on top of the investments in their portfolios to ensure the growth stories remain intact. Investors may get more bullish on a growth stock if it reports higher revenue and earnings growth. But growth investors may trim their holdings of corporations that warn people of lower sales in future quarters.
Alternatives to Growth Stocks
Growth stocks offer many opportunities for investors, but it’s not a good investment strategy to put all of your capital into one asset class. Spreading your funds across various investment classes can mitigate risk. You can even end up with higher returns by considering alternative investments.
Growth Stocks vs. Bonds
Growth stocks deliver higher returns than bonds during bullish markets. But bonds won’t drop as much when markets become less favorable. Many corporations and governments issue bonds with frequent interest payments until the bond matures. If you hold the bond until maturity, you will receive your principal and all of the interest payments. Bond prices are more stable than growth stocks.
Bonds and growth stocks are both sensitive to interest rate fluctuations. Higher interest rates make existing bonds less valuable, but you will still receive your principal and interest payments if you hold them until maturity. Growth stocks also lose value when interest rates increase since the cost of borrowing money goes up. If a company files for bankruptcy, bondholders get prioritized over stockholders.
Growth Stocks vs. ETFs
Growth stocks require investors to pick individual stocks, while ETFs offer instant portfolio diversification. Investors have many choices with ETFs and can follow a benchmark like the S&P 500 or prioritize ETFs with growth stocks. You can even buy ETFs that focus on dividend stocks. ETFs have annual fees expressed as the expense ratio which will reduce your total gains.
The best ETFs take less time to manage since a portfolio manager does the work for you. Some ETF managers are active, which results in higher fees. Other fund managers follow a benchmark and only make portfolio adjustments 1 to 2 times per year. These passively managed ETFs have much lower expense ratios, which allows you to keep more of your gains.
Growth Stocks vs. Mutual Funds
Mutual funds are similar to ETFs since they give you exposure to numerous stocks. But you can’t trade mutual funds throughout the day. Trades for these funds only take place after the stock market closes. Investors can trade growth stocks throughout the day and have more flexibility in modifying their portfolios.
The inability to trade mutual funds offers a key advantage and an important disadvantage. The advantage is that you have no incentive to look at your portfolio each day since the mutual fund’s price won’t change until the market closes. But if significant news causes the stock market to crash in a single day, similar to the 22.6% drop on Black Monday, you’re stuck with the losses if you have a mutual fund. Investors who pick up on this type of event can offload their growth stocks before the losses get worse.
Growth Stocks vs. Cryptocurrency
Cryptocurrencies are more speculative than growth stocks since these digital assets do not have revenue, earnings or valuation metrics. Crypto and growth stocks can both ride momentum, but the best cryptos tend to rally higher during peak bull markets.
Growth Stocks vs. Real Estate
Real estate is less liquid than growth stocks but comes with more tax advantages. Properties also have more potential with leverage thanks to 30-year mortgages and tenants’ cash flow growing with inflation while mortgage payments stay flat.
Growth stocks can generate higher returns than real estate and also have a lower barrier to entry. You only need $1 to buy a fractional share of your favorite growth stock. On the other ha
Editorial Disclosure: We may receive a commission from affiliate partner links included on our site. However, this does not impact our staffs’ opinions or assessments.
