The top growth stocks this month are a diverse bunch, and include up-and-coming electric vehicle manufacturer Lucid Group Inc, airline Copa Holdings SA, and one of the world’s largest oil tanker
companies, Frontline PLC. These companies have above-average revenue and earnings growth driven by underlying fundamentals or industry dynamics, and investors in these companies have been rewarded with double-digit returns year to date.
These names have outperformed both the Russell 1000 Index, up 7% this year, and the Russell 1000 Growth Index, up 14%. While growth stocks have been hampered by rising interest rates, inflation, and supply chain disruptions, these companies prove that growth can still be achieved in this tough macro environment.
We look below at the top growth stocks in three categories: fastest earnings-per-share (EPS) growth, fastest sales growth, and combined EPS and sales growth. The statistics in the tables below are as of March 27.
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 quarterly EPS growth of more than 2,500% were excluded as outliers.
- Copa Holdings SA: Based out of Panama, this airline operates 372 daily flights to destinations in the Caribbean as well as North, Central, and South America through its fleet of 97 aircraft. According to the company’s annual report, revenues increased 30.6% year over year during the fourth quarter of 2022, due to higher air travel demand.1 In February, load factors were 85.9%, up from pre-COVID levels of 83.6%.
- GlobalFoundries Inc.: GlobalFoundries manufactures semiconductors at facilities spread across three continents. In 2022, the company reported record gross margin and net income.3 The company announced in February an agreement with General Motors (GM) to act as the exclusive manufacturer of the carmaker’s U.S.-made microchips.
- Aptiv PLC: Aptiv designs and produces auto parts—with 131 manufacturing facilities and a presence in 48 countries—focusing on connectivity, safety, and environmental sustainability in its vehicle components. Despite supply chain disruptions and macroeconomic uncertainty, the company increased revenues 12% year over year in 2022 while operating margins increased to 9.1% from 8.8%. Growth is expected to continue in 2023, with the company guiding for $18.7 billion to $19.3 billion in revenues—an increase of 7 to 10 percent.
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.
- Lucid Group Inc.: Lucid Group designs and manufactures luxury electric vehicles (EVs). One of the most closely watched newcomers to the EV scene, Lucid produced 7,180 vehicles and delivered 4,326 in 2022, generating $608 million in revenues for the year. In 2021, the company produced about 400 cars and delivered about 300.
- Mirum Pharmaceuticals Inc: Mirum is a biotech company focused on the development and commercialization of drugs for orphan diseases, particularly liver-related disorders. Mirum’s lead drug Livmarli generated revenues of $75 million for 2022, with expectations for 50% U.S. net sales growth this year.
- Nano Dimension Ltd: Nano Dimension is a provider of intelligent machines for additively manufactured electronics, which involves printing full circuit boards and high-performance electronic devices. Nano Dimension ended 2022 with $44 million in revenues, up from $10.5 million in 2021, driven primarily by its buyout of Amantec, a medical, jewelry, and industrial parts printer.
Top Growth Stocks by EPS and Revenue
These are the top growth stocks 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.
- Frontline PLC: Frontline owns one of the largest oil tanker fleets in the world, operating 82 vessels across multiple global destinations. Frontline recently reported its highest quarterly net income ($215.5 million) in 14 years, owing to surging Chinese demand for crude. The strong market rates also allowed Frontline to pay down $60 million of the $275 million owing on its revolving credit facility.
- Copa Holdings SA. Based out of Panama, this airline operates 372 daily flights to destinations in the Caribbean as well as North, Central, and South America through its fleet of 97 aircraft. According to the company’s annual report, revenues increased 30.6% year over year during the fourth quarter of 2022, due to higher air travel demand.1 In February, load factors were 85.9%, up from pre-COVID levels of 83.6%.
- NexTier Oilfield Solutions Inc: NexTier provides a multitude of well solutions to oil companies in the United States, including logistics, fracturing equipment, well sealing as well as digital and ESG solutions. Thanks to last year’s oil price rally, NexTier increased revenue to $3.24 billion, up 128% year over year. Net income was $215 million compared with a loss of $119 million in 2021. The company repurchased 11.5 million shares in the fourth quarter and still ended the year with liquidity of $634 million.
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 experienced a 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 13% over the past 10 years.
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 1.76, meaning that if the S&P 500 falls by 1%, NVIDIA will likely decline by 1.76%. Similarly, if the S&P 500 gains 1%, NVIDIA stock would be expected to rise by 1.76%.
