Published in 1996, The Millionaire Next Door remains an insightful book that offers a glimpse into the lives of people with net worth exceeding $1 million. They didn’t drive fancy cars or live in big homes. Further, they had modest lifestyles, saved money, and frequently invested their extra cash.

In fact, many of these individuals didn’t make high-risk investments. Instead, they incurred risk strategically by diversifying their portfolios and understanding their risk tolerances. Growth stocks can deliver enticing returns for long-term investors, especially if you have a 10-20 year time horizon. 

Therefore, investors eager to embrace The Millionaire Next Door mentality may want to consider these top growth stocks.

Perion (PERI)

Perion (NASDAQ:PERI) is a small advertising company with a $1.5 billion market cap and a 13 P/E ratio. Clearly a hidden gem, it capitalizes on new advertising platforms like Connect TV and Digital Out-of-Home advertising. 

The company regularly posts high revenue and earnings growth, even gaining market share in 2022. That was the year when Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) were reported year-over-year (YOY) revenue and earnings decline in some quarters.

Also, Perion thrives when advertising faces considerable headwinds and should continue on its path as tailwinds start to emerge. And, the company achieved 17% YOY revenue growth in the third quarter and expanded its profit margins. Recently, PERI launched a generative AI-powered dynamic audio advertising solution known as WAVE that gives businesses more advertising flexibility. 

While a partnership with Microsoft (NASDAQ:MSFT) influences roughly one third of Perion’s ad revenue, the company has diversified its advertising solutions. Also, it appears Perion and Microsoft won’t go their separate ways. The two companies have been working together since 2010 to deliver innovative search solutions. And just last year, Perion received the Global Supply Partner of the Year Award from Microsoft. That honor is one of many indicators that suggest the partnership will remain intact.

Elf Beauty (ELF)

Elf Beauty (NYSE:ELF) is a cosmetics company that offers affordable skincare and makeup products. It animal cruelty-free and vegan stance distinguishes it from the competition.

Impressively, the beauty company has carved out a niche for itself and has been growing at an astounding pace. ELF reported 76% YOY revenue growth in Q2 fiscal 2024. Net income reached $33 million, which is almost triple the net income YOY.

Further, Elf Beauty has a 47 forward P/E ratio and has generated incredible returns for investors. Shares are up by 162% year to date (YTD), surging by 1,453% over the past five years! ELF has an $8 billion market cap which means the company has plenty of untapped opportunities.

Truly, many of the best growth stocks revolve around tech. However, finding stocks outside of that sector can lead to portfolio diversification that doesn’t sacrifice growth.

Palo Alto Networks (PANW)

Palo Alto Networks (NASDAQ:PANW) is a cybersecurity firm that offers top-tier software. It can secure any cloud, automate security operations, and respond to threats faster. 

Just like the other stocks on this list, Palo Alto Networks has delivered exceptional gains for long-term investors. Shares have gained 113% YTD and are up by 381% over the past five years. High net income growth is making the valuation easier to justify. Although shares trade at a 167 P/E ratio, the forward P/E is a more generous 56. 

Net income increased by 871% YOY in Q1 of fiscal 2024. Revenue jumped by 20% YOY, and 16% YOY growth in total billings suggests more of the same. 

Indeed, cyber attacks continue to increase each year which heightens the demand for Palo Alto Networks’ products and services. Annually, hackers steal millions of dollars by infiltrating databases and accessing sensitive information. The lucrative nature of hacking and the significant costs incurred during and after a cyber attack are enough to draw companies to cybersecurity software.

Palo Alto Networks is one of the biggest names in cybersecurity and many clients stick around for years. Since 83% of the company’s revenue is recurring, the stock can continue to reward long-term investors. 

On this date of publication, Marc Guberti held long positions in PERI and ELF. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.