Investors accumulate growth stocks with the hopes of outperforming the stock market. Some of these investments produce substantial returns for patient investors, but the key is sticking with successful corporations over the long run.
Some investors sell their shares too early and miss out on significant gains. While it makes sense to sell shares in some instances, a few bad days during a broader stock market correction is rarely a good reason to sell shares.
Some growth stocks have the potential to double in the next 12 months. It’s hard to predict these stocks, and investors should only buy shares if they believe the corporations can perform at high levels for multiple years.
However, these three growth stocks can potentially generate outsized returns for investors.
SoFi (SOFI)
SoFi (NASDAQ:SOFI) is finally hitting its stride. The stock is down by 26% year-to-date but has reported solid financials that indicate a rebound is due. Q4 2023 net income came in at $48 million compared to a net loss in the same period last year. Revenue grew by 35% year-over-year. Total memberships grew by 44% year-over-year. SoFi now has more than 7.5 million members on its platform.
The fintech company offers bank accounts, investment accounts, loans, credit cards and other financial products. The company can offer more competitive rates and terms than traditional banks since it doesn’t have as much overhead. Profit margins came in at 8% for the quarter, and SoFi can expand its margins quickly.
SoFi’s leadership has established an encouraging multi-year plan that suggests compound revenue growth of 20% to 25% beyond 2026. The fintech company anticipates 20% to 25% EPS growth beyond 2026. SoFi expects EPS to range from $0.55 to $0.80 per share in 2026, which suggests a reasonable price point for current investors.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) is doing everything right from a growth perspective. Revenue increased by 95% year-over-year in the fourth quarter of 2023 as the company’s sports beverages continued to fly off the shelves. Net income came to $39.1 million for the quarter compared to a $28.2 million net loss in the same period last year.
Celsius Holdings’ efforts to expand globally stand to improve the stock. North America generated $332.8 million of the company’s $347.4 million in total Q4 revenue. The company will expand in Australia and New Zealand in Q4 2024. The company’s sports drinks will be available in the United Kingdom and Ireland in Q2 2024.
These developments can keep revenue and earnings growth elevated. The stock will need those two components to keep up with a 62-forward P/E ratio. Celsius Holdings trades at a $16 billion market cap and exhibits impressive revenue and earnings growth. It can double within a few years, if not within the next 12 months.
Elf Beauty (ELF)
The cosmetics firm has attracted plenty of attention thanks to its 1,100% gain over the past five years. Elf Beauty (NYSE:ELF) is still ahead of the market with a 12% year-to-date gain but is in the middle of a correction. The stock has dropped by roughly 30% from its all-time high as concerns from other beauty brands suggest Elf Beauty may disappoint investors in its earnings report.
However, Elf Beauty has a history of outperforming its peers and can repeat that process in its next earnings report. The company’s previous earnings report revealed Q3 FY24 results. Revenue surged by 85% year-over-year, which gave the company its 20th consecutive quarter of sales growth. Net income increased by 41% year-over-year.
Elf Beauty gained 305 basis points of market share during the quarter. Analysts feel confident about the stock and have rated it as a “Moderate Buy.” The average price target suggests a 31% upside from current levels.
On this date of publication, Marc Guberti held long positions in SOFI, CELH and ELF. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.