Chasing the Gains: These Are Some of the Best Growth Stocks to Buy Now

Key takeaways

• High-growth stocks are a more volatile investment, but with big potential for gains if the company delivers on expectations
• Some signs of high-growth stocks are increased revenue and earnings and high price-to-earnings ratios
• Ferrari, Chipotle and Shopify have all the hallmarks of high-growth stocks in 2023

High-growth stocks are a riskier part of the market, but the payoff can be great. Market conditions shift all the time, but there are some companies which have impressed Wall Street and have left investors with high hopes for their future. Let’s take a look at some of them.

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What defines a high-growth stock?

A high-growth stock has no single defining feature, but a few classic hallmarks shift stocks into this category. Decent revenue and earnings growth are a given, usually in the high single or double digits; high price-to-earnings ratios, which reflect investors’ expectations of future earnings growth, are another good indicator.

Some less common features of a high-growth stock can include the company’s unique or dominant position in its market, brand value and innovation in the space. If a stock has a few of these hallmarks and the figures are looking good, then chances are it’s a high-growth stock.

High-growth stocks are riskier than other market parts because they’re trading at a premium, and the growth is never guaranteed.

Some of the top growth stocks in 2023

Ferrari

Consumer demand for luxury goods has increased after the pandemic, even in an economic downturn, and luxury car manufacturer Ferrari has benefited. It’s seen earnings grow roughly 13% annually, and its earnings estimates are also increasing; Ferrari’s latest gross profit margin report is 50%.

With such a recognizable brand name and consumers saying ‘treat yourself’, it’s no wonder the stock has left its competitors on the start line. It’s risen nearly 50% in the last six months to trade at $314.09 on the market.

Chipotle

Mexican fast food chain Chipotle’s CEO, Brian Niccol, has supercharged growth at the company since he took the reins in 2018. Chipotle’s revenue is approaching $10 billion this year compared to less than $5 billion five years ago, while the business deftly handled the pandemic with rapid growth in online and app orders.

The hard work has paid off. Chipotle stock has grown 50% in 2023 to hit $2,066.73, with earnings expected to increase by a huge 79% in the next few years. The future is bright for Chipotle and its investors.

Shopify

On the cheaper end of the scale, we have the e-commerce platform Shopify, whose stock price has soared nearly 82% this year to hit $64.42. The company turned its fortunes around in 2023 as Q1 revenue soared by 25% to $1.5 billion, an increase from the 22% growth seen last year.

What investors love about the stock is that Shopify sold its logistics business to Flexport, which is a good sign for its future profitability as it looks to realign to its core business: e-commerce software.

The bottom line

Plenty of other companies signal potential high growth — just keep an eye out for the classic hallmarks. High-growth stocks are a fun addition to any portfolio, but doing your homework is crucial to determining which stocks best fit your investment strategy. Or better yet, let AI investing handle the heavy lifting for you.

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