Best Growth Stocks of May 2024
Investing in the best growth stocks can position you perfectly to outperform the market. Analysts predict an 8.5% median earnings per share (EPS) growth rate per year for S&P 500 stocks over the next five years. However, the best growth stocks are outperforming this benchmark twofold and threefold.
Growth Stocks Explained
Growth stocks are shares of companies expected to generate revenue above the average forecast compared to industry peers. As a result, growth stocks are a great way to build wealth. However, while they have the potential to generate high revenue, they also carry high risks. For instance, high inflation and supply chain constraints can affect the future prices of growth stocks, as evidenced in the 2022 market.
One of the ways growth stock companies guarantee their growth trajectory is by reinvesting profits to fuel research and expansion instead of paying dividends to investors. This strategy allows these companies to focus on rapidly increasing the share price, which is why people choose to invest in growth stocks. Additionally, this reinvestment strategy gives growth stock companies a unique selling proposition not available to average stock companies.
How We Choose the Best Growth Stocks
Choosing the best growth stocks can be difficult. Luckily, various platforms help you filter out the best stocks to invest in based on factors such as sales growth, profitability, and P/E ratio, among others. Better yet, they let you filter these stocks with drop-down menus, similar to how Casino Meter allows you to filter top online casinos or how NFT marketplaces list NFT prices.
To make it into our best growth stocks of May, we looked at the highest 30-day percentage return, ensured that the companies had grown their revenue by at least 20% over the last year, had a current EPS growth prediction of over 5% over the next year, and at least 20% over the next five years. In addition to these criteria, we ensured that the companies that made it to our top 4 had a buyback yield equal to 0% or greater in the last year, guaranteeing that the company had not issued shares to finance its growth.
The 4 Best Growth Stocks of May 2024
Investing in growth stocks may feel like a gamble, but you can make more informed decisions armed with in-depth research. Here is our list of the four best growth stocks of May 2024 that you should consider.
1. Nvidia Corp. (NVDA)
Nvidia, the industry leader in developing computer graphics processors, has recorded remarkable growth over the past 15 years. The company’s revenue grew by 265% between Q4 2022 and Q4 2023, and its net income increased by an unbelievable 768%. In 2024, Nvidia continues to lead in the artificial intelligence industry, introducing a new AI chip that is expected to drive sales even higher. Nvidia’s success is expected to continue this year with a predicted 56.6% increase in sales and a 66.3% growth in EPS.
2. Meta Platforms Inc. (META)
Meta Platforms, who already dominate the social media and online marketing industry, are gunning to take over the virtual reality technology space. Meta Platforms own Facebook, Instagram, and WhatsApp, among other social media platforms. Their stock has been volatile recently, with a 75% share price drop between mid-2021 and late 2022, followed by a 300% increase to bounce back in 2023. Since then, the growth trajectory has continued, and as of Q1 2024, the company reported 27% growth in year-over-year revenue. Sales growth for this year is projected at 13.2%, while EPS growth stands at 22.1%. With the social media and virtual reality spaces offering numerous growth opportunities, Meta’s success is not expected to slow down anytime soon.
3. Intuit Inc. (INTU)
Intuit is home to some of the world’s most popular accounting and management software and tax preparation software, such as QuickBooks and TurboTax. The massive need for these products has allowed the company to gain market share and expand its profit margins significantly. Intuit reported 11% revenue growth and 110% net income growth in the fiscal second quarter, and its revenue growth for the 2024 fiscal year is projected at 11.8%. The high demand for Intuit products, combined with the company’s introduction of new AI features, guarantees continual double-digit sales growth.
4. Alphabet Inc. (GOOG, GOOGL)
Alphabet, the parent company of Google and YouTube, generates the most revenue compared to other publicly traded advertising corporations. It is among the largest online search and advertising companies in the world. Alphabet has grown significantly in revenue generation from its cloud computing platform and is also considering entering the AI technology space. Alphabet’s revenue growth in 2024 was projected at 12%, but the company already reported a 15% revenue growth in Q1 2024 compared to the same period last year. Google and YouTube’s popularity as the go-to platforms for finding information guarantees growth in Alphabet’s ad sales.
Investing in these growth stocks requires thorough research and understanding of market dynamics. While the potential rewards are high, it’s essential to remain aware of the associated risks. Diversifying your investment portfolio and staying updated with market trends can help mitigate some of these risks and capitalize on the growth opportunities presented by these top-performing companies.
Conclusion
Investing in growth stocks offers the potential to outperform the market significantly, as evidenced by the impressive performance of top companies like Nvidia, Meta Platforms, Intuit, and Alphabet. Nvidia continues to lead the artificial intelligence industry with substantial revenue and net income growth. Meta Platforms, despite past volatility, maintains a strong growth trajectory in the social media and virtual reality sectors. Intuit benefits from the high demand for its accounting and tax software, ensuring steady revenue increases through new AI features. Alphabet, leveraging its dominance in online search and advertising, also shows consistent revenue growth, further bolstered by its cloud computing platform.
Each of these companies exemplifies the characteristics of successful growth stocks: reinvestment in innovation and expansion, significant revenue and earnings growth, and the ability to adapt to market changes. While the rewards are promising, investors should remain mindful of the inherent risks and the importance of diversification. By staying informed and strategically investing in high-performing growth stocks, investors can position themselves for long-term financial success.
