3 Cream-of-the-Crop Growth Stocks to Own This Year
Growth stocks enjoyed a resurgent 2023 that has carried into 2024. The recovery has been more pronounced for some growth stocks than others. Industrial tailwinds, financial growth, and valuations have all played a role in growth stocks that have outperformed the market.
Despite strong rallies, some growth stocks are poised to extend their gains. Rising revenue and earnings will help these companies fit into their valuations and reward long-term investors. And so, these are the cream-of-the-crop growth stocks you may want to consider.
Celsius Holdings (CELH)
Drinks continue to fly off the shelves for this corporation. Celsius Holdings (NASDAQ:CELH) produces sports drinks that are a top choice for Gen Z. The company enjoys net profit margins above 20% and is experiencing robust growth.
Celsius Holdings more than doubled its revenue and earnings year over year (YOY) in the third quarter of 2023. This growth explains the reason CELH is up by 106% over the past year, gaining over 5,000% during the past five years.
And, almost all of the company’s sales come from North America. Revenue in the continent reached $371 million. That’s compared to $385 million in total Q3 revenue. Celsius Holdings has a high-demand drink that is bound to gain more traction as the international push continues.
Now, CELH is tapping into some European markets even though it’s in the very early innings. The company doesn’t even have a presence in Asia yet. Yet, that leaves many addressable markets for a drink that generates steady and rapidly growing business from North America.
Chipotle (CMG)
Not all cream-of-the-crop growth stocks are tech companies. Chipotle (NYSE:CMG) has expanded its fast-food restaurant chain. Known for healthy food choices and a sprawling global presence, Chipotle has been a treat for long-term investors. Shares are up by 73% over the past year and have gained 331% over the past five years.
An excellent earnings report wowed investors as it closed out 2023. During the fourth quarter, Chipotle grew revenue by 15.4% YOY while net income reached $282.1 million, a 26.1% YOY improvement.
In fact, the fast food chain has double-digit net profit margins and is going to expand at a faster rate this year than it did last year. Chipotle opened 271 restaurants in 2023 and is aiming to open 285-315 new restaurants in 2024.
Notably, Chipotle has achieved all of this growth without franchising. Currently, all of the restaurants are company-owned. However, the CMG made an exception in 2023 and took on an international franchise partner. Indeed, franchises can be a long-term growth driver. But, this is speculative and is not a part of the current investment thesis. Chipotle continues to perform well anyway while reporting strong sales growth.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) produces the chips that go into various devices and resources. As long as people use computers, smartphones, refrigerators, and other essentials, Broadcom will always experience high demand for its semiconductor solutions.
Also, Broadcom doubles as a software company that recently acquired VMware. The stock has been a long-term winner with a 1-year gain of 120% and a 5-year gain of 373%. In addition, AVGO offers a generous 1.65% dividend yield, given its rising stock price. The company regularly raises this dividend by at least 10% per year.
Further, revenue and net income inched higher in the fourth quarter of fiscal 2023. These metrics were up by 4% and 5% YOY, respectively. Broadcom sits on more than $14 billion in cash. Wisely, it has put its cash into use with dividends, stock buybacks, and acquisitions.
Finally, AVGO offered good revenue guidance for fiscal 2024, suggesting growth will accelerate. The firm anticipates generating $50.0 billion in revenue compared to $35.8 billion in fiscal 2023 revenue. Broadcom’s guidance suggests revenue will increase by 39.7% YOY in fiscal 2024. This guidance includes contributions from VMware.
On this date of publication, Marc Guberti held long positions in CELH and AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
