Top Growth Stocks

These stocks are outperforming in earnings growth, revenue growth, or both

Close-up of sign with logo on facade of the regional headquarters of ecommerce company Amazon in the Silicon Valley town of Sunnyvale, California, October 28, 2018. (Photo by Smith Collection/Gado/Getty Images)
Top Growth Stocks. Smith Collection/Gado / Contributor / Getty Images

The top growth stocks this month include Tripadvisor Inc., Performance Food Group Co., and Coterra Energy Inc., which lead peers in profit and revenue growth even as the economy slows.

Travel platform Tripadvisor is rebounding thanks to the surge in passenger travel after the pandemic, while distributor Performance Food and energy company Coterra are expanding through both internal growth and acquisitions.

They're outperforming as growth stocks as a group, represented by the Russell 1000 Growth Index, lost a quarter of their value over the past 12 months compared with a 15% drop in the Russell 1000 Index. While growth stocks typically boost earnings, revenue, and share price faster than the broader market, their performance this year is being reined in by rising interest rates, inflation, and supply chain disruptions.

We look at the top growth stocks in three categories: the fastest earnings-per-share (EPS) growth, the fastest sales growth, and combined EPS and sales growth. The market performance numbers above and all statistics in the tables below are as of Nov. 22, 2022.

Top Growth Stocks by EPS Growth

These are the stocks with the highest year-over-year (YOY) EPS growth for the most recent quarter. Rising earnings show that a company's business is growing and generating more money that it can reinvest or return to shareholders. Companies with a quarterly EPS growth of more than 2,500% were excluded as outliers.

Top Growth Stocks by EPS Growth
  Price ($) Market Cap ($B) EPS Growth (%)
Performance Food Group Co. (PFGC) 59.32 9.2 1,970
Tripadvisor Inc. (TRIP) 19.54 2.7 1,600
DTE Energy Co. (DTE) 113.67 22.0 1,430

Source: YCharts

  • Performance Food Group Co.: Performance Food is a food industry distributor and supplier in the U.S. and Canada. The company serves over 300,000 customers including restaurants, healthcare facilities, and schools. The company reported a 20-fold increase in net income on rising revenue during the third quarter on a 42% increase in sales, driven by an increase in prices due to inflation and the acquisition of Core-Mark Holding Co., a supplier to the convenience retail industry.
  • Tripadvisor Inc.: Tripadvisor operates a global travel platform with consumer information on businesses, accommodations, and sites. Profit rose 25-fold due to a 51% increase in revenue in the third quarter, exceeding 2019 pre-pandemic levels, as Tripadvisor benefited from a surge in consumer demand for travel-related services.
  • DTE Energy Co.: DTE Energy is a utility that generates, sells, and distributes electricity and gas in Michigan. It operates other businesses involved in energy trading, industrial projects, and transportation.

Top Growth Stocks by Sales Growth

These are the stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new methods, as well as find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence EPS. However, sales growth can also be potentially misleading about the strength of a business because growing sales for money-losing businesses can be harmful if the companies have no plans to reach profitability. Companies with a quarterly revenue growth of more than 2,500% were excluded as outliers.

Top Growth Stocks by Revenue Growth
   Price ($) Market Cap ($B)  Revenue Growth (%) 
Coterra Energy Inc. (CTRA) 27.50 21.7 472.7
TD Synnex Corp. (SNX) 101.77 9.7 194.9
First Citizens BancShares Inc. (FCNCA) 807.74 11.7 163.7

Source: YCharts

  • Coterra Energy Inc.: Coterra is an independent oil and gas exploration and production company with operations focused in the Permian Basin, Marcellus Shale, and Anadarko Basin. Coterra reported a nine-fold rise in profits on six-fold increase in revenue during the third quarter. The gains were driven by higher prices in its oil and natural gas liquids businesses, and by the October 2021 merger of Cabot Oil & Gas Corp. and Cimarex Energy Co, which created Coterra.
  • TD Synnex Corp.: TD Synnex distributes a broad range of IT products including PC systems, consumer electronics, storage, networking, and servers. The company's third-quarter net income increased by 57% as revenue nearly tripled, driven in part by its merger with Tech Data in September 2021.
  • First Citizens BancShares Inc.: First Citizens offers banking services through subsidiary First Citizens Bank, which holds over $100 billion in assets. The company will pay a $0.75 per share dividend on its Class A and Class B common stock on Dec. 15.

Top Growth Stocks by EPS and Revenue

These are the top growth stocks in the Russell 1000 Index as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY EPS growth. Both sales and earnings are critical factors in the success of a company. Moreover, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with a quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Top Growth Stocks by EPS and Revenue
   Price ($) Market Cap ($B)  Revenue Growth (%)  EPS Growth (%)
Coterra Energy Inc. (CTRA) 27.50 21.7 472.7 837.5
Performance Food Group Co. (PFGC) 59.32 9.2 41.7 1,970
Tripadvisor Inc. (TRIP) 19.54 2.7 51.5 1,600

Source: YCharts

  • Coterra Energy Inc.: See company description above.
  • Performance Food Group Co.: See company description above.
  • Tripadvisor Inc.: See company description above.

Advantages of Growth Stocks

Exceptional Returns: Over the past decade, growth stocks have provided shareholders with eye-watering returns underpinned by historically low inflation and a healthy global economy. Although growth stocks have staged a sharp correction in 2022, the Vanguard Growth Index Fund (VUG)—which holds stocks including iPhone maker Apple Inc. and Microsoft Corporation (MSFT)—still has an annualized return of 15% over the last 10 years. These impressive returns highlight the value of growth stocks and the gains they can add to an investor's portfolio.

Invest in What You Know: Many investors only feel comfortable investing in companies they know. Fortunately, popular growth stocks tend to be household names, giving would-be shareholders the chance to use their products and services before buying shares in these companies. Investors often only think of big technology names when they think of growth stocks, but the group also comprises well-known names in the consumer goods and services sectors, such as Visa Inc. (V) and T-Mobile US, Inc. (TMUS).

Risks of Growth Stocks

Volatility: Investing in growth stocks exposes investors to more extreme price swings, not only from negative company-specific news but also from broad market sell-offs. For example, the technology and consumer cyclical sectors led the stock market lower in the first half of 2022. Before investing in a growth stock, investors can gauge its volatility by looking at beta—a measure comparing its volatility to the whole market. For instance, gaming chipmaker NVIDIA Corporation (NVDA) has a beta of 1.65, meaning that if the S&P 500 falls by 1%, NVIDIA will decline by 1.65%. Similarly, if the S&P 500 gains 1%, NVIDIA stock would rise by 1.65%.

Bubble Prone: Growth stocks can become overvalued as investors push prices to unsustainable levels based on sentiment rather than fundamentals. For instance, many growth internet stocks doubled and tripled in price in the late 1990s despite not generating any earnings. Rationalization arrived in the early 2000s, with the Nasdaq crashing roughly 80% from peak to trough. To determine if a growth stock is in a bubble, investors can compare its price-to-earnings ratio (P/E ratio) to its historical average, such as over a 10-year average. 

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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