With a new month underway, investors may want to take a fresh look at various sectors. In the growth sector, a range of growth stocks continue to inspire confidence, despite what appears to be an environment of tapering in the coming months.
With macroeconomic conditions outside of investors’ control, looking at top growth stocks with long-term upside potential is where most investors appear to be focusing their time. In that regard, there are quite a few great companies. However, valuations have skyrocketed to levels that make investing on a fundamental basis difficult.
Additionally, there are many concerns growth investors face right now. Aforementioned issues around inflation, and the potential for rate increases, water down the thesis for growth stocks substantially. Concerns about pandemic-related flare ups and global supply chain concerns are also top of mind for those with significant growth-oriented holdings.
That said, finding growth stocks with rock-solid business models and strong long-term secular tailwinds is the way to go. In this article, I’m going to discuss seven such stocks that fit this profile. These are all companies that not only have the ability to continue growing their revenue at an impressive clip. These are also companies that have some sort of durable competitive advantage, or moat, that can help the company maintain margins over time, protecting investors.
Let’s dive into why investors may want to consider these seven top growth stocks as we head into November:
- Shopify (NYSE:SHOP)
- Square (NYSE:SQ)
- Chipotle (NYSE:CMG)
- Ross (NASDAQ:ROST)
- Crocs (NASDAQ:CROX)
- Amazon (NASDAQ:AMZN)
- BioCryst Pharma (NASDAQ:BCRX)
Top Growth Stocks: Shopify (SHOP)
Canada-based Shopify is a company that has been an incredible out-performer during the pandemic. As companies were forced to take their businesses online, companies offering an easy one-stop-shop for small and medium-sized businesses to do so were rewarded. Shopify was one such company.
Despite dipping slightly at the onset of the pandemic, SHOP stock has since roared to record highs of late. This is a company with a growth profile unlike many other stocks on the market right now. Much of this is to do with the fact that Shopify is so tightly tethered to the strong secular growth underpinning the e-commerce revolution.
As more and more businesses shift their focus to generating online sales, Shopify is a key beneficiary of this movement. Of course, supply chain issues may slow this growth in the near-term. However, as the global economy reopens, there’s a lot to like about where Shopify stands right now.
The company reported impressive numbers this past quarter, though the company did miss analyst estimates for the first time since the company went public. Indeed, a miss was bound to happen at some point (the bar kept getting set higher and higher). However, Shopify has continued to churn out impressive growth, validating its current valuation on a growth basis for now.
Another high-flying tech company, Square’s payments platform provides investors with many of the same catalysts as Shopify. Like Shopify, Square benefits from the broader shift to e-commerce and a global recovery from the pandemic.
However, this former hardware-focused company has made a big shift into the digital payments space. This company is making the transition toward a full-fledged online financial platform. Some of the moves the company have made into the crypto space have raised some eyebrows. However, it’s clear this company isn’t short of growth catalysts right now.
In Q2, Square reported bottom line growth of 85% on a year-over-year basis. That’s bottom line. This growth was driven by the company’s Cash App, which is a key growth driver investors are focusing on. As digital wallets become a more central part of consumers’ lives, Square hopes to be the go-to choice. This strategy looks to be paying dividends right now.
Top Growth Stocks: Chipotle Mexican Grill (CMG)
Chipotle is certainly an intriguing growth pick to consider. That’s because unlike many of the tech names on this list, Chipotle’s quick service restaurant locations provide a different kind of growth. Indeed, many investors view Chipotle as a relatively defensive growth pick. That’s because folks simply need to eat.
This company’s leverage to the economic reopening provides investors with strong near-term catalysts. However, Chipotle has made waves in reimagining the company’s business model of late. These moves have provided long-term investors with reasons to hold onto this stock.
Among the key differentiators many investors point to is the company’s move toward increasing its digital presence. As per Chipotle’s Q2 earnings report, the company saw a decent 10.5% increase in digital revenue, which represented around 48.5% of total sales for the said quarter. For any quick service chain, those are some good numbers.
Accordingly, there’s reason to believe Chipotle could be on the cutting edge (if there is such a thing) of the fast food space. Longer-term, this looks like a stock with some real growth potential. That is, for investors with a lower risk tolerance.
Another retailer to make the list of top growth stocks on my radar right now is Ross.
Like other department store retailers, Ross took quite the hit during the pandemic. This came with the rise of the e-commerce sector (which we’ve covered already). However, there’s certainly a bounce-back growth argument to be made for the in-person shopping trend resuming.
Ross reported relatively strong numbers during the pandemic relative to its peers. And in Ross’ most recent earnings report, the company showed impressive 22% revenue growth on a year-over-year basis. As consumers go out en masse to find bargains, Ross appears to be an intriguing place to start.
For investors, this is perhaps one of the higher-risk picks on the list. That’s because e-commerce is increasingly taking more of the retail pie away from traditional retailers. However, for investors bullish on the Ross brand, perhaps there’s something to this rally. I think it’s a stock worth keeping on the watch list right now.
Top Growth Stocks: Crocs (CROX)
Sticking in the retail space, Crocs has become a go-to name among footwear stocks right now. This isn’t something I saw coming.
With a rather “niche” design, Crocs don’t necessarily appeal to everyone. However, the search for comfortable footwear at home has absolutely juiced sales for this brand. The company’s projections are that sales of Croc-branded shoes should hit $5 billion annually by 2025. That’s no small feat.
The company’s recent earnings results showed just how strong demand is for Crocs’ core brand. The company reported earnings of $319 million for the quarter, compared to just $56.6 million during the same quarter the year prior. Revenues nearly doubled, and digital sales also grew at a 25% clip.
Thus, there’s a real argument to be made that the Crocs brand is one with legs. As the company shifts toward digital sales as a greater percentage of its offerings, margins could expand. Accordingly, there’s a real thesis to owning this stock. It’s a brand that’s gained traction, whether investors like it or not. And this stock is flying for a reason.
Okay, back to the e-commerce space for a second. The main juggernaut that’s eating retailers’ lunch (or will continue to nibble away over the long-term) is Amazon.
This company is a no-brainer to include on any list of top growth stocks. Indeed, Amazon has become the manifestation of what has proven to be one of the greatest economic shifts we’ve seen in some time. As a seller of nearly anything, Amazon’s e-commerce network is massive. The network effects Amazon creates for both merchants and consumers is impressive.
More of a logistics company than a retailer, Amazon has found a way to solve a big concern consumers have had with the e-commerce space; that is — shipping times. By investing heavily in the technology and manpower on the ground to handle a ridiculous volume of orders, Amazon has transformed the way we as consumers shop.
This company’s recent growth is impressive, given Amazon’s size. The e-commerce juggernaut continues to grow at a double-digit clip annually, and is likely to do so for some time. Accordingly, this mega-cap stock has garnered one of the highest valuations of its peers at this size.
I think as a long-term investment, there are few better options than Amazon.
Top Growth Stocks: BioCryst Pharma (BCRX)
Last but not least, we have BioCyst. This biotech company’s stock price has been on quite the run of late. Looking at the longer-term stock chart of BCRX stock, we see a rather volatile ebbing and flowing of this stock over time.
However, some investors believe this time, the run could last. That’s because this biotech company recently launched an oral hereditary angioedema drug named Orladeyo. HAE or oral hereditary angioedema is a rare medical condition that causes abnormal swelling in the face, abdomen, respiratory pathways and more.
This drug received FDA approval in late 2020 and has surpassed sales estimates this past year. Many analysts believe BioCyst has been able to carve out a very nice (and large) niche for itself. As per Wall Street estimates, Orladeyo could generate around $300 million in sales by 2023.
The company’s recent quarter was strong, as is the company’s outlook from here. Accordingly, BCRX stock appears to be one growth investors may want to keep on their radar right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.