Understanding Growth Investing
Growth investing allures many, with investors focusing on companies set to enhance their earnings and revenues at rates above the norm. Typically, this trend translates into exceptional stock performance. However, it’s crucial to recognize the added volatility that can come with these stocks, vulnerable to unexpected hurdles.
Evaluating Nvidia
Nvidia once again surpassed market expectations during its recent earnings announcement, propelled by strong demand for AI chips that fueled impressive growth. Notably, earnings spiked by 460% and revenue by 260%, with Data Center sales surging by 430% compared to the previous year. Following the earnings report, shares skyrocketed, maintaining a positive trajectory throughout 2024. The company’s move to undertake a 10-for-1 split and increase its quarterly dividend payout by 150% demonstrates its commitment to rewarding shareholders.
Delving into e.l.f. Beauty
e.l.f. Beauty witnessed a significant surge in its stock post-earnings, marking a turnaround from a prolonged downtrend. With a remarkable growth of nearly 30% in 2024, the company has consistently outperformed the S&P 500, underpinned by a track record of surpassing earnings and revenue estimates in the past ten quarters. This solid performance is further evidenced by a consistent double-digit year-over-year sales growth and a notable earnings increase of 15% highlighted in the latest financial report.
Analyzing Wingstop
Wingstop exhibited robust performance in 2024, with stock prices climbing around 44% due to better-than-expected results, outshining the S&P 500. With a coveted Zacks Rank #1 (Strong Buy), the company’s earnings outlook appears promising. Forecasts anticipate a substantial 37% growth in earnings and a 27% rise in sales for the current fiscal year. Projections extend to FY25, foreseeing an increase of 22% in earnings and 17% in revenue.
The Takeaway
Over the past year, growth-oriented investors have reaped substantial rewards in the midst of a thriving market, capitalizing on significant gains. For those considering this investment strategy, Nvidia NVDA, e.l.f. Beauty ELF, and Wingstop WING each offer enticing prospects. Moreover, all three stocks boast a favorable Zacks Rank, reflecting analysts’ positive outlook.