Growth stocks have the potential to outperform the stock market and help investors reach their long-term financial goals sooner. While higher yields and a desire to keep rates the same can dampen the mood in the short run, some growth stocks can deliver enticing long-term returns.
Investments with the potential to generate explosive returns are volatile in nature. You will have to endure sharp price movements from time to time. However, if these corporations continue to thrive with their growth initiatives, they can become some of the top picks in the stock market. Investors may want to monitor these promising investment opportunities.
Duolingo (DUOL)
Duolingo (NASDAQ:DUOL) is an educational tech stock that delivers impressive financial growth. The stock’s only weakness is its lofty 126-forward P/E ratio. I do not have a position in this stock, but I welcome any short-term pullbacks that would make this stock more enticing.
The stock is in the middle of a correction and has lost roughly 10% of its value since the start of April. It’s a stock worth monitoring, and if it drops low enough, the stock can become a captivating buying opportunity. The business model is solid.
Revenue increased by 45% year-over-year in Q4 2023, while net income came in at $12.1 million. That’s a big switch from the company’s $13.9 million net loss. Duolingo’s net profit margin was above 8% compared to a 2% net profit margin in Q3 2023.
The difference is even more apparent with full-year results. Full-year 2023 net income came in at $16.1 million compared to a net loss of $59.6 million in the same period last year.
User growth rates also came in hot. Daily and monthly active users surged by 65% and 46% year-over-year respectively.
Crowdstrike (CRWD)
Crowdstrike (NASDAQ:CRWD) has comfortably outperformed the stock market with a 21% year-to-date gain. The cybersecurity firm continues to report impressive financial growth while many cybersecurity companies struggle to maintain last year’s growth rates.
The firm generated $845.3 million in Q4 FY24 revenue, a 33% year-over-year increase. Annual recurring revenue reached $3.44 billion, up 34% year-over-year. The company also had its fourth consecutive quarter of record GAAP profitability. GAAP net income came to $53.7 million compared to a $47.5 million GAAP net loss in the same period last year.
The stock has a 78-forward P/E ratio but a more reasonable 1.34 PEG ratio. Value investors won’t like this one, but the growth stock has the potential to outperform the market for a while. The company’s guidance suggests that growth rates remain high, while other cybersecurity firms have reported the opposite. Crowdstrike looks poised to take market share from its competitors.
Chipotle (CMG)
Chipotle (NYSE:CMG) has become a top choice for consumers who want healthier fast-food restaurants. The company reported 15.4% year-over-year revenue growth in Q4 2023 and expanded its profit margins.
The company also expanded by opening 271 new restaurants with 28 locations, including Chipotle. While those numbers are good, Chipotle’s guidance is even better. If everything goes according to plan, the company will have opened 285-315 restaurants in 2024.
Chipotle is still expanding, so it’s not in the position to offer dividends quite yet. However, the company did initiate $589.8 million in stock buybacks with an average price per share of $1,827.46. The recent 50-for-1 stock split announcement is also geared toward strengthening shareholder value.
The stock has outperformed the market with a 31% year-to-date gain and a 334% increase over the past five years. CMG stock is rated as a “Moderate Buy” among 27 analysts and has a bunch of high price targets coming in. The highest price target of $3,366 suggests a 15% upside from the current price.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.