Best Growth Stocks of April 2024: Expand Your Portfolio (2024)

Best Growth Stocks of 2024

Best Artificial Intelligence Stock

Nvidia

Nvidia

Learn More

Symbol

NVDA

Sector

Technology

Market Cap

$2.36 trillion

Why we chose it

Nvidia has a comfortable lead in the artificial intelligence industry and recently unveiled a new AI chip that should drive more sales. Nvidia’s revenue and net income growth have outpaced its stock gains over the past year.

Pros

• Leading AI chipmaker
• Substantial revenue and earnings growth over the past year
• Nvidia’s customers have deep pockets

Cons

• Any AI slowdowns can bring the valuation into question
• Competitors are starting to catch up
• Shares have already almost doubled this year

Best Tech Stock

Microsoft

Microsoft

Learn More

Symbol

MSFT

Sector

Technology

Market Cap

$3.19 trillion

Why we chose it

Microsoft is also an AI leader thanks to Copilot and its ability to apply AI at scale into its core products. But the company also dominates in verticals like cloud computing, advertising, gaming, business software and more.

Pros

• Exposure to several industries
• Copilot is paying off and is helping the company expand further into cybersecurity
• Microsoft Cloud revenue growth remains high

Cons

• Competitors are determined to release their own AI products
• The 2023 rally leaves less room for errors
• Amazon has a bigger market share in cloud computing than Microsoft

Best e-Commerce Stock

Amazon

Amazon

Learn More

Symbol

AMZN

Sector

Consumer Discretionary

Market Cap

$1.86 trillion

Why we chose it

Amazon has the most recognizable online marketplace that still delivers a double-digit growth rate for investors. Amazon Web Services continues to dominate the cloud computing industry. Advertising and Prime Video are two promising revenue streams for long-term investors.

Pros

See Also

Build a Strong Investment Mix: Diversify Your Portfolio for Success!Best of 2016: A Bad Year for Armchair InvestorsWhy the 60/40 is still alive and how investors can benefit from a balanced fund in their portfolioWhat implications does Bitcoin have for portfolio diversification? | 4 Answers from Research papers

• The online marketplace and cloud computing continue to thrive
• Prime Video and advertising revenue are promising growth opportunities
• Exposure to numerous industries

Cons

• Low profit margins
• e-Commerce competitors are gaining market share
• Most of the stock’s 5-year gains happened within the past year

Best Consumer Staples Stock

Celsius Holdings

Celsius Holdings

Learn More

Symbol

CELH

Sector

Consumer Staples

Market Cap

$21.5 billion

Why we chose it

Celsius Holdings offers a healthy sports beverage that is flying off the shelves. Impressive revenue and net income growth combined with recent expansion into international markets make the stock look promising.

Pros

• High revenue and earnings growth
• International expansion is in the early innings and can lead to additional sales
• The sports drink is a big draw among health-conscious consumers

Cons

• High valuation
• The company must successfully expand internationally to generate significant long-term gains
• The stock is already up by 56% year-to-date

Best Consumer Discretionary Stock

e.l.f. Beauty

e.l.f. Beauty

Learn More

Symbol

ELF

Sector

Consumer Discretionary

Market Cap

$11.4 billion

Why we chose it

e.l.f. Beauty is an in-demand beauty brand that continues to gain market share in the cosmetics industry. The company has increased its sales for 20 consecutive quarters while delivering double-digit profit margins. Shares are up by more than 1,800% over the past five years.

Pros

• The stock is on the verge of becoming eligible for S&P 500 inclusion
• Multiple consecutive quarters of 75% to 85% year-over-year revenue growth
• The company uses cruelty-free ingredients, which helps it stand out in the beauty industry

Cons

• High valuation
• The stock has already rallied by 47% year-to-date
• Net income only grew by 41% year-over-year, which is a notable deceleration from the previous quarter’s 184% year-over-year growth rate

Best Cybersecurity Stock

CrowdStrike

CrowdStrike

Learn More

Symbol

CRWD

Sector

Technology

Market Cap

$79.2 billion

Why we chose it

Crowdstrike offers a valuable cybersecurity platform that keeps businesses and individuals safe from cyber attacks. The firm exhibited strong revenue growth and gave encouraging guidance, while many cybersecurity corporations decelerated and offered discouraging guidance.

Pros

• More than $3 billion in annual recurring revenue and solid top-line growth
• Recent profitability suggests profit margins can expand rapidly
• The cost of getting hacked can be far more expensive than the cost of cybersecurity software

Cons

• High valuation
• Other cybersecurity companies have been slowing down, which may impact Crowdstrike
• Potential clients have more choices

Best Fast Food Restaurant Stock

Chipotle

Chipotle

Learn More

Symbol

CMG

Sector

Consumer Discretionary

Market Cap

$79 billion

Why we chose it

A recent 50-for-1 stock split announcement has attracted more attention to a company with a solid business model. Chipotle continues to grow its revenue and profit margins as customers regularly eat at its 3,000+ locations.

Pros

• The stock split will make it easier to trade CMG options, which can increase the asset’s demand
• The company plans to open 285 to 315 restaurants in 2024, which is more than the 271 restaurants it opened in 2023
• Chipotlanes (digital pickup lanes) have helped the company increase earnings while serving more customers

Cons

• The stock split can lead to short-term speculation
• The valuation is higher than many restaurant companies
• Competing fast food restaurants can take a bite out of Chipotle’s market share

Best Athletic Apparel Stock

Deckers Outdoor Corp

Deckers Outdoor Corp

Learn More

Symbol

DECK

Sector

Consumer Discretionary

Market Cap

$23.69 billion

Why we chose it

The newest member of the S&P 500 delivers double-digit revenue growth rates and has profit margins above 20%. The stock trades at a reasonable valuation based on its opportunities and has an impressive 528% gain over the past five years.

Pros

• Good valuation considering the stock’s growth, earnings, and catalysts
• Several growing brands like Hoka and Ugg are in the Deckers Outdoor corporate umbrella
• S&P 500 inclusion should bring more attention to the stock

Cons

• Other athletic apparel competitors are bigger, and smaller companies are also gaining market share
• Excitement about S&P 500 inclusion has already resulted in a 37% year-to-date gain
• Higher valuation than its peers

Best Fintech Stock

Intuit

Intuit

Learn More

Symbol

INTU

Sector

Technology

Market Cap

$180.2 billion

Why we chose it

Intuit owns several business software products like QuickBooks and TurboTax. These products help Intuit gain market share while expanding profit margins.

Pros

• Intuit has a solid line-up of software products
• Net profit margins have been expanding significantly
• Intuit’s fastest-growing segment is also its largest segment based on a percentage of total revenue

Cons

• Low dividend yield
• High valuation
• The stock has not outperformed the S&P 500 or Nasdaq 100 year-to-date

Best Advertising Stock

Alphabet

Alphabet

Learn More

Symbol

GOOG, GOOGL

Sector

Technology

Market Cap

$1.89 trillion

Why we chose it

Alphabet generates more revenue than any other publicly-traded advertising corporation. Google and YouTube remain popular websites for finding information, and the company’s cloud computing platform is also driving revenue growth.

Pros

• Low valuation relative to its growth and peers
• The cloud segment is growing at a fast pace
• Alphabet has established Google and YouTube as top choices for advertisers

Cons

• Artificial intelligence blunders capture headlines and put them behind companies like Microsoft in the AI race
• Most of the company’s revenue comes from advertisem*nts
• Leadership issues

What Are Growth Stocks?

Growth stocks are shares of corporations that investors believe will outperform the stock market. Many investors use the S&P 500 or the Nasdaq 100 as a benchmark for market performance.

These stocks often have high revenue growth and various catalysts that can drive future growth. Some of these corporations are also extremely profitable, while others are burning through cash but can become profitable in the future.

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.

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 hand, you will have to save up for a significant down payment for an investment property.