Buy low, sell high. That’s the trading dream, right?
Every trader wants to find stocks that offer the potential for growth. However, finding stocks that are both attractively priced and offer growth potential can prove tricky. What indicators should you look at, and what types of companies might offer the best return?
In this post, I’ll break down high-growth stocks, including what they are, how to locate them, and 21 examples of high-growth stocks to look at right now.
Table of Contents
- 1 What is a Growth Stock?
- 2 Examples of High-Growth Stocks
- 2.1 1. Alibaba (BABA)
- 2.2 2. Tesla (TSLA)
- 2.3 3. Apple (AAPL)
- 2.4 4. Netflix (NFLX)
- 2.5 5. Nvidia (NVDA)
- 2.6 6. Illumina (ILMN)
- 2.7 7. UnitedHealth Group (UNH)
- 2.8 8. Ulta Beauty (ULTA)
- 2.9 9. Abiomed (ABMD)
- 2.10 10. Amazon (AMZN)
- 2.11 11. Carvana (CVNA)
- 2.12 12. Canopy Growth Corp (CGC)
- 2.13 13. Aurora Cannabis (ACB)
- 2.14 14. Square (SQ)
- 2.15 15. Control4 (CTRL)
- 2.16 16. Voyager Therapeutics (VYGR)
- 2.17 17. Kinross Gold (KGC)
- 2.18 18. Karyopharm Therapeutics (KPTI)
- 2.19 19. Infinera (INFN)
- 2.20 20. Novelion Therapeutics (NVLN)
- 2.21 21. Wayfair (W)
- 3 How To Find And Trade High-Growth Stocks in The Stock Market
- 4 The Bottom Line
What is a Growth Stock?
A growth stock is pretty much just what it sounds like: a stock that has potential for future growth. However, even with such simplicity there’s still plenty of confusion about the characteristics of a growth stock, so let’s clear it up now.
Difference Between Growth Stocks vs. Value Stocks
In particular, a lot of traders have trouble discerning value stocks vs growth stocks, so let’s briefly discuss the key differences between the two.
As the name might implies, growth stocks are stocks that are seen as having potential for future growth.
These companies might be growing at exponential rates that have garnered the attention of investors or analysts.
Usually, these companies are very focused on growing and will re-invest their revenue into expanding.
There are some sectors that are known for growth stocks, such as the biotech/pharma sector, but they can be found in just about every sector.
While growth stocks are most often viewed as being offered by companies with products that will revolutionize the landscape of the field in some way, it’s not always the case.
For instance, Amazon can be (and often is) considered a growth company. Even though it’s huge, it continues to innovate and revolutionize the way we look at retail. This goes to show that there can still be plenty of room for growth even in stocks with a large market cap.
Value stocks are stocks that are currently undervalued. As the name implies, they’re being offered at a very good price, but the price may be poised to increase in the near future.
However, just because of this fact doesn’t mean that you should jump in and buy every stock that’s available at a cut-rate price. Not every value stock will prove to be a gainer.
This means that if you want to buy value stocks, you have to hit your research even harder and more stringently to figure out which stocks are worth your time.
Benefits of Investing in High-Growth Stocks
Here are some of the benefits of investing in growth stocks:
- Growth. Really, one of the biggest draws is right there in the name. Growth stocks are appealing because they are companies that are expected to grow, usually at an above average rate.
- Invest in a promising future. Part of a growth stock’s benefit is that they promise to offer handsome rewards down the line. For instance, even a smaller company now might become an industry leader later.
Or, a small company with an innovative product or service might be acquired by a bigger company later, meaning that you could benefit from that increased value.
- Use swing trading strategies. Day trading, with its fast pace, isn’t for everyone. With growth stocks, traders have the opportunity to approach trades in more of a swing trading state of mind.
You can set entry and exit points that don’t require following the ticker down to the second, and your holds are typically longer.
- Rewards proactive traders. To be an effective trader of growth stocks, you need to be a little bit like a prospector.
If you have the ability to research companies and discern based on fundamental and technical research that you think the value will go up, your proactive research may prove rewarding.
Examples of High-Growth Stocks
What are some of the characteristics of a high-growth stock? This growth stocks list offers some great examples:
1. Alibaba (BABA)
When it comes to stocks with growth potential, Alibaba is a fantastic example. While in the U.S. it’s relatively little known, Alibaba is China’s biggest online retail company.
While the stock reached an all-time high in June of 2018, the threat of a trade war between China and the US caused the stock to lose value.
However, e-commerce in China doesn’t show much sign of slowing down, so Alibaba is poised for continued and potentially considerable growth.
2. Tesla (TSLA)
Tesla Motors has attracted the attention of investors since its IPO, when it debuted for $17 per share in 2010. At the time of this writing, the stock price is about $340 per share.
Earlier in 2018, Tesla hit a rough patch when founder Elon Musk’s exploits landed him (and the stock) in hot water. A potentially crippling cash crunch if the manufacturer didn’t meet its production targets didn’t help matters.
However, this past October, the company announced its first profits since 2016, which has increased optimism about the stock as one with high-growth potential.
3. Apple (AAPL)
Apple of your eye, or pie in the sky? There’s much debate as to whether or not Apple remains a great growth stock.
On the one hand, they’ve got a pending monopoly lawsuit and iPhone sales are down.
On the other hand, overall earnings are good, the company valuation is high, and the stock is available at a good price at the time of this writing, which could it a compelling pick as a growth stock.
4. Netflix (NFLX)
The online streaming giant’s revenues have grown exponentially in the past few years. But does that mean it’s already too late to get in and make a profit?
There are a few reasons to believe that there’s still room for this stock to grow. In spite of raising their fees, Netflix has continued to enjoy expanded subscribers both domestically and internationally.
Analyst reports expect that Netflix will continue to expand and grow in revenue, and its growing list of binge-worthy shows will keep customers coming back. However, keep in mind that in spite of growing revenue, the company has growing expenses, too.
5. Nvidia (NVDA)
You may not have heard of Nvidia, but it’s worth getting to know. In the past 10 years, this tech company based in California has grown a lot. While in 2014 you could have scored shares for less than $20 each, at the time of this writing, shares are $158.
After many years invested in research and development, Nvidia’s efforts are starting to pay off, with big revenue growth in 2018.
With potential growth in selling parts to automobile manufacturers, engineering companies, and artificial intelligence sectors, Nvidia has plenty of space to expand.
6. Illumina (ILMN)
Illumina is the biomedical / genetics sector and has experienced promising growth in the past few years. If you look at their chart, you’ll basically see steady growth since the stock was initially offered.
The current analyst estimates are extremely positive. According to Yahoo Finance, “The company has an earnings growth rate of 22.1% for the next three to five years.”
With a positive outlook like that, Ilumina is understandably considered a growth stock to watch.
7. UnitedHealth Group (UNH)
In general, the UnitedHealth Group has been performing extremely well. In 2018, the stock price has pretty reliably trended upward.
At the beginning of the year prices were in the low $220s, where at the time of this writing, share prices are close to $270, with no sign of a slowdown.
Yet according to analysts, it’s still a good buy, expecting the price to exceed $300 per share in the near future.
As Forbes reports, “cash flows from operations are projected in a range of $17.3 billion and $17.8 billion, which is an indication the insurer has the financial strength to engineer more acquisitions.”
8. Ulta Beauty (ULTA)
Ulta Beauty is dazzling investors, but not necessarily because of their staggering array of bronzer, lip gloss, and body mist. Beauty is in the eye of the stock chart, which suggests plenty of growth potential.
With over 1,000 stores and more opening all the time, the company has established itself as a premier retailer with crowd-pleasing partnerships and over 20,000 different products among their offerings.
The stock may have been overvalued in times past. In mid-2017, for instance, there was a time when shares were close to $315. After a cool-down in late 2017 and early 2018, the stock has been consistently on the rise ever since.
9. Abiomed (ABMD)
Abiomed is a company best known for a minimally invasive heart pump.
In recent months the stock has been down. However, some analysts say it’s more about general market struggles rather than the company losing value.
In the long term, the company’s stock price has been moving upward. At the beginning of 2017 shares were around $200; at the time of this writing, they’re over $300.
10. Amazon (AMZN)
Surely not, you must be thinking. Amazon has surely already peaked, right?
Nope. Amazon shows no signs of slowing down. In 2018 alone, the revenue grew 39%, which is pretty incredible given the size of this retail giant.
Increased services and offerings including brick and mortar retail such as the Whole Foods takeover give this online juggernaut plenty of seeds from which to continue growing.
Amazon didn’t get to where it is today by accident, and can still be considered a growth stock.
11. Carvana (CVNA)
Carvana markets itself as “the new way to buy a car”. It bypasses the traditional dealership, instead opting for an online platform where you can even arrange delivery of your new car.
Business is good, and in 2018, Carvana has enjoyed its fifth year in a row of triple-digit revenue growth. Yes, triple digit.
Both growing revenue and growing web traffic make this an appetizing pick as a growth stock. But perhaps even more so, the potential for future growth. Carvana has so far grown on selling used cars, but that leaves room to expand into other selling opportunities.
Another reason it could be poised for growth? The company is also making changes in its auto centers and adding new locations, which will bring the service to new markets within the U.S.
12. Canopy Growth Corp (CGC)
At the time of this writing, it would be insane to not include a few pot stocks on a growth stock list.
Canopy Growth Corp produces and sells medical cannabis products including capsules, oils, and help. It’s based in Canada, which recently legalized marijuana and has been experiencing tons of growth.
Recently, there was an issue with many pot stocks losing value, but it’s important to look at what happened. Due to a huge demand, several cannabis companies were unable to meet the sales demands and therefore fell short on projected sales.
However, long-term this doesn’t necessarily mean that they’re on their way down. Once things are figured out in terms of production, there’s still plenty of growth that can be experienced.
13. Aurora Cannabis (ACB)
Aurora Cannabis is another pot stock to watch.
Like Canopy, Aurora Cannabis is poised for some significant growth yet has struggled with some growing pains. Still, with the overall growth of the pot sector, it’s considered a growth stock to watch.
14. Square (SQ)
Square created a revolutionary POS product, and is poised for even more growth.
The company has a reputation for being ahead of the curve, and has risen over 400% since 2015, when it made its stock market debut.
While some say that it’s too late to get in and make a profit, others say otherwise. Its app has been expanding with new features which have helped increase revenue and spending on the platform, so expansion and growth is a distinct possibility.
15. Control4 (CTRL)
It’s a little Big Brother-like: Control4 is a tech company that specializes in connecting devices. You can control things like your lights, security system, and door locks from your phone, even if you’re off-site.
It was a super hot tech stock last year, but as the demand for automation in homes increases, the company has the potential for even greater growth.
Adding to its appeal? The company’s balance sheets look good, and it just launched a program of certified showrooms, which will likely bring more attention to the service.
16. Voyager Therapeutics (VYGR)
Voyager Therapeutics is a healthcare company that is benefitting from the increased demand for new drugs for the aging population.
The industry at large is growing in a big way, delivering growth on average about 30%. However, Voyager has been seen as lagging in growth, which means that it’s not too high priced at the moment.
However, this doesn’t mean it should be overlooked. Just because it isn’t performing as much as its peers at the moment doesn’t mean it won’t grow.
17. Kinross Gold (KGC)
Gold is the name of the game here. Kinross Gold is involved in the mining/processing of gold in the Americas, as well as overseas.
The company has a strong balance sheet, but is lacking in catalysts, so hasn’t gotten a ton of attention lately. This could be a good thing though, because it could make it a diamond — er, gold nugget — in the rough.
When considering a stock like this, it’s important to consider the price and value of gold both right now and in the recent past. There can be a seasonal aspect to gold prices; look for the trend in the charts.
However, commodities like gold have proven to stand the test of time, so this stock could offer great growth opportunities.
18. Karyopharm Therapeutics (KPTI)
This clinical stage pharma company focuses on developing drugs for cancer and other diseases.
The company’s stock has gone up over 60% in the past year at the time of writing, since one of its main drugs has advanced in clinical trials.
While just one product might not alone classify them as a growth stock, the fact that they have several other potential drugs in the early stages means that they could be positioned for some big leaps in the years to come.
19. Infinera (INFN)
Focusing on optical transport networking equipment, Infinera has shed value in recent months due to the potential of losing a key customer to one of its competitors. However, this may mean that it has opportunity.
While such a loss could mean that the stock will go down further in value, According to the Wheaton Business Journal, “Wall Street sell-side analysts are projecting Infinera Corporation (NASDAQ:INFN) to grow at an accelerated rate over the next 5 years. Brokerage firms are looking for the firm to grow 8.10% over the next year and 20.00% over the next five years.”
20. Novelion Therapeutics (NVLN)
Here’s another biotech company to consider. While the stock price has been down since it fell short of analyst forecasts, things could be on the up overall.
The company recently announced a big leadership change, and recently announced plans to reduce company costs by $35 million, so there is room for this stock to rebound and offer growth.
21. Wayfair (W)
This online home decor store has grown considerably in the past few years, considering that when it was first offered it was $36 per share and now it’s over $90 per share.
The stock has had a rough patch as of late, with share prices tumbling. However, the target price of this stock is set at $117.10, which means that it may very well increase in price in the future.
How To Find And Trade High-Growth Stocks in The Stock Market
While having a list like the above is a great starting point, to really form a strong growth investing strategy, it will be a better practice to figure out your own methods of finding high-growth stocks. Here are some things to try:
Use a Stock Screener to Find the Best Opportunities
There are so many stocks out there, so how can you tell which ones are going to provide the potential for growth? In a word, screening.
Growth Stock Indicators
For the most effective screening, I use specific indicators to narrow down my choices, including:
- Trending technologies or sectors: At any given time, there are distinct trends in the stock market. By looking at the top gainers, you can usually get an idea of what sectors or technologies might be trending.
For example, right now the marijuana stock sector is red-hot, with little sign of slowing down.
- Insane P/E ratios: Usually, growth stocks with good earnings have very high PE ratios. This is because there’s an expectation that there will be growth very soon.
It’s an indicator that can help you find companies that are right on the edge of realizing the gains they’ve been working toward.
- Growing pains: If companies only grew, every company would become huge and every trader would be rich. However, that’s not how it works in the real world. Growth companies frequently hit speed bumps along the way.
This isn’t necessarily a bad thing if you’re able to discern through fundamental research that the company will rebound.
- Revenue growth: One of the ways I screen for growth stocks is to look for high revenue growth.
This shouldn’t be the final factor in your decision making, because you’ll come up with a lot of false positives. However, it can begin the process of whittling down your list of stocks to consider.
Create Your Own Growth Stock Watchlist
Once you’ve done some screening, you’ve probably narrowed down the choices considerably. Based on these choices, you can set up a growth stock watchlist.
Since you’ve screened things down, you probably have a much shorter list now. To narrow down even further, consider focusing on a specific sector — say, biotech or weed stocks.
From here, you can do some basic stock research to find several strong contenders. This will help you form a short list of stocks to create potential trading plans for and to monitor and see if they meet your criteria.
(Get my tips on how to make an effective watchlist!)
Set Stop Losses
Minimizing losses is important for any trade, but you need to be extremely vigilant about growth stocks, because their movements can be unpredictable.
One good way of limiting losses if the price declines it to set a stop loss on your stock order.
With a stop loss, you set the value based on the maximum loss you’re willing to absorb.
If the price falls below the stop you set, you’ll automatically exit your position at the current market price. This can keep losses from mounting further.
Never Stop Learning
Of course, all of these tips for choosing high-growth stocks will be most effective if you keep increasing your base of knowledge.
As you begin to learn more about growth stocks, you’ll become better acquainted with the markers of a successful trade and what is working. This makes it all the more important to continue investing in your technical knowledge to make sense of this anecdotal knowledge.
To speed up your trading education, consider joining my Trading Challenge. With my student-focused approach as a mentor, you can master trading concepts far faster (and probably make fewer mistakes) than if you tried to do it alone.
In the Challenge, you’ll benefit from frequent webinars, watchlists, and commentary. You’ll also have a community of like-minded traders who are also refining their techniques — you can learn from each other as well as from me.
By learning some of the technical and fundamental skills I teach, you’ll be able to grasp the trading techniques and concepts that will help you understand the market’s mechanics much faster.
The Bottom Line
The idea of investing in a company that has a big growth potential is understandably appealing.
You have the benefit of investing for a relatively low price and growing your account, but it’s generally a faster way to do it than investing in slower-moving blue chip companies.
However, it requires plenty of diligence in determining that the company in question truly is poised for growth and not just being hyped by the PR machine.
Have you invested in growth stocks? What are your thoughts on them? Share your input below.