Understanding Growth Investing
Growth investing, a widely adopted strategy among investors, targets companies expected to experience above-average growth in earnings and revenues. This strategy typically leads to superior stock performance. Although it can be volatile, investors often seek stability by focusing on companies with positive earnings estimate revisions, strong management, and sound liquidity.
NVIDIA: A Prime Selection for Growth
Investors with an appetite for growth have long favored NVIDIA for its remarkable growth trajectory. Current consensus expectations project nearly 270% earnings growth and a 120% revenue surge for the fiscal year. Looking ahead, subsequent years also forecast substantial growth, with earnings and revenue expected to increase by 63% and 53% in FY25.
Analysts’ upward revisions continue to bolster NVIDIA’s favorable Zacks Rank status, reflecting investor confidence in the company’s performance.
Data Center sales, particularly revenue from AI chips, have been a key focus, demonstrating a remarkable 280% year-over-year increase to reach a quarterly record of $14.5 billion. This impressive growth is mirrored in the company’s stock performance, with shares surging by 240% over the past year, far outpacing the S&P 500’s 25% climb.
FirstCash: Steady Growth and Solid Dividends
FirstCash, a prominent pawn shop operator and technology-driven point-of-sale payment solutions provider, is forecasted to achieve a 13% earnings increase and a 15% rise in revenues for FY23. Expectations for FY24 also indicate a 21% earnings uptick alongside an 8% sales climb. The company not only demonstrates healthy growth but also offers a respectable annual dividend yield of 1.3% and a strong 7.6% five-year annualized dividend growth rate.
FirstCash’s growth is further validated by its expanding store footprint, adding 104 new pawn stores in the latest quarter. The company has consistently surpassed EPS estimates for 17 consecutive quarters, reflecting its sustained growth and operational excellence.
OneSpaWorld: Embracing Growth in Wellness and Transformation
OneSpaWorld, a leading innovator in wellness, beauty, and transformation both on cruise ships and land, is positioned for significant growth. With a Zacks Rank #2 (Buy) and a robust 40% earnings growth trend over the past year, the company’s value is expected to soar with a 140% year-over-year earnings surge and a 45% expansion in the top line.
The latest quarterly report showcased an impressive 33% increase in revenues to a record $216 million, underpinned by a quarterly operating income of $17 million, also setting a new high. With consistent results that have consistently surpassed EPS estimates, OneSpaWorld is primed for sustained growth and market momentum.
Concluding Thoughts
Companies exhibiting above-average sales and earnings growth often deliver outstanding stock performance, a heartening prospect for investors. While growth investing can introduce volatility, selecting companies with effective management and robust liquidity positions can help mitigate concerns.
All three highlighted stocks – FirstCash, OneSpaWorld, and NVIDIA, present promising opportunities for investors seeking growth and stability in their portfolios.