Growth stocks have enjoyed a 2-year comeback after posting disappointing results in 2022. The S&P 500 and Nasdaq Composite continue to charge toward all-time highs as big tech and artificial intelligence (AI) propel the indices.
However, stocks outside of those sectors continue to perform well. Investors can find plenty of thriving growth stocks if they look at finance, athletic apparel and other industries that don’t receive as much attention from investors.
Less attention isn’t a big thing. In fact, it can be a great thing for investors who want to accumulate shares before more people notice. Some high-flying stocks in the Russell 2000 eventually make it to the S&P 500. Getting into those companies before they become massive gainers can move you closer to your financial goals.
Some growth stocks on this list are relatively smaller companies, while others are giants in their industries. These are some of the top growth stocks to consider as summer winds down.
Deckers Outdoor (DECK)
Deckers Outdoor (NYSE:DECK) is gaining market share in the athletic apparel industry. It’s also delivered significant gains for patient investors. The stock is up by 37% year-to-date (YTD) and has soared by 530% over the past five years.
Recent results from Q1 of fiscal year 2025 suggest that the gains will continue. Revenue increased by 22% year-over-year (YOY) to reach $825 million while diluted EPS was up by 87% YOY. Deckers Outdoor continues to improve its profit margins while providing solid revenue growth. The company produces sneakers, athletic apparel, among other products. Its two most notable brands are HOKA and UGG. Both brands delivered double-digit revenue growth, but HOKA was a standout. That part of Deckers Outdoor’s business generated a 29.7% YOY increase in sales.
HOKA’s parent company currently has $1.438 billion in cash and cash equivalents. It also trades at a 29.5 P/E ratio which is reasonable given the company’s growth prospects. Deckers Outdoor is currently rated as a strong buy and has a projected 17% upside from current levels.
Texas Roadhouse (TXRH)
Texas Roadhouse (NASDAQ:TXRH) is an expanding steakhouse restaurant chain that has an attractive P/E ratio compared to other high-growth peers. It’s not the largest restaurant stock available with its $11.5 billion market cap.
However, it’s gains are exceptional. Shares are up by 44% YTD and have tripled over the past five years. The stock trades at a 1.42% yield, and Texas Roadhouse has maintained a double-digit dividend growth rate for a few years.
The restaurant chain reported encouraging results in the second quarter. Revenue increased by 14.5% YOY in the quarter, which is an acceleration compared to the first 26 weeks of the year. Comparable sales increased by 9.3% YOY across Texas Roadhouse’s company-owned restaurants. Domestic franchise restaurants saw 8.3% YOY growth in comparable sales. The company opened six of its own restaurants and three franchise restaurants. Texas Roadhouse now has a total of 762 restaurants. High revenue growth and soaring profit margins make the stock worth considering.
American Express (AXP)
American Express (NYSE:AXP) has outperformed the S&P 500 with a 31% YTD gain. The stock has also nearly doubled over the past five years, but it remains affordable despite the recent gains. AXP stock trades at an 18.5 P/E ratio and comes with a 1.13% yield. The company has maintained a double-digit dividend growth rate for several years, and that’s not the only thing growing at American Express.
Revenue jumped by 8% YOY in the second quarter while net income soared by 39% YOY. American Express’ profit margins have been picking up momentum in recent quarters and barely crept to 20% in the second quarter. The fintech firm has previously reported profit margins in the teens. This positive development can result in higher margins in the future that compete with other credit card issuers like Visa (NYSE:V) and Mastercard (NYSE:MA). That development should result in a significant boost to the stock’s price.
Crowdstrike (CRWD)
Crowdstrike (NASDAQ:CRWD) has received plenty of press in recent weeks for all of the wrong reasons. The company was responsible for a global IT outage. A few bad lines of code brought entire industries to a standstill. Historically, massive flops and scandals have presented long-term buying opportunities for investors who can think a few years ahead. And on Thursday, CRWD was hit with a class-action lawsuit by disgruntled shareholders.
While American Express has delivered robust gains for long-term investors, it’s easy to forget about the Salad Oil Scandal. It’s a fascinating read, but the main summary is that American Express got duped by one of its customers and owed a substantial amount of debt. Shares plunged as investors didn’t want anything to do with the scandal. Surely, Warren Buffett scooped up shares during that time, and everyone’s forgotten about it now.
You can also look at Meta Platforms (NASDAQ:META), which you’ll hear about soon. Cambridge Analytica was a big deal in 2018, but everyone’s forgotten about it now. Many investors fled Facebook stock during that time and have come to regret it.
Crowdstrike finds itself in a similar position. The business model is robust and built on annual recurring revenue. This dip presents a tremendous buying opportunity.
ServiceNow (NOW)
ServiceNow (NYSE:NOW) is a high-growth cloud platform that boasts a 98% renewal rate among its 8,100 customers. The company’s customer base includes approximately 85% of Fortune 500 companies. Investors have noticed the company’s successful business model, elevating shares by 17% YTD. Also, the stock is up by 204% over the past five years.
The tech firm raised its 2024 guidance after reporting stellar results in the second quarter. Revenue increased by 22% YOY to reach $2.6 billion. The company also initiated 88 transactions with customers who will now pay at least $1 million per year to use ServiceNow’s platform. The number of new contracts with $1 million in annual recurring revenue increased by 26% YOY. Current remaining performance obligations increased by 22% YOY to reach $8.78 billion. The high performance obligations indicate there’s still plenty in the pipeline. It accounts for more than three quarters of revenue.
ServiceNow is currently rated as a strong buy among 29 analysts. The average price target suggests an 8% upside.
Meta Platforms (META)
Meta Platforms isn’t exactly a hidden secret. Its been powering the S&P 500 to new highs for several years and has a market cap above $1 trillion. The stock also trades at a 27 P/E ratio which is low considering recent financial results.
The social media giant once again reported significant profit margin expansion in the second quarter. Net income more than doubled YOY at 117% to reach $12.4 billion. However, rising profits didn’t come at the cost of slower growth. Revenue increased by 27% YOY to reach $36.5 billion. Daily active users grew by 7% YOY across Meta Platforms’ family of apps to reach 3.24 billion individuals.
A growing user base and Meta Platforms’ ability to capture attention has resulted in significant growth for its advertising business. However, the tech firm hopes to generate revenue from multiple sources. Meta Platforms has made big pushes into virtual reality (VR) and AI in a bid to access new revenue streams.
Duolingo (DUOL)
Duolingo (NASDAQ:DUOL) looks like the type of stock that will soon have its monumental year. Nothing like that has happened so far, with the educational tech company down by 20% YTD and only a 22% gain since its IPO in 2021. Duolingo recently received an upgrade with a price target of $245. That price point implies a potential 41% gain for investors.
Recent earnings warrant the upgrade. Duolingo reported 45% YOY revenue growth in the first quarter and net income continues to come in positive. The company’s $27.0 million profit in the quarter stands in sharp contrast to a $2.6 million net loss in the same quarter last year. DUOL has quickly transitioned from an unprofitable growth company to having net profit margins approaching 20%. The company’s ability to make this turnaround with a few quarters should attract more attention to the stock.
Daily active users grew by 54% YOY to reach 31.4 million. Meanwhile, the company has 97.6 million monthly active users, which is a 35% YOY increase.
On this date of publication, Marc Guberti held long positions in DECK, TXRH, CRWD, and NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
