Investors in the market tend to have varying preferences, with some targeting income or value, while others prefer a growth-styled approach. This article is aimed towards the latter, focusing on companies with a bright future outlook. It’s worth noting that many growth stocks carry high valuations as a premium for future growth that investors must pay.
If you are a growth investor, there are three stocks to consider for your watchlist – Meta Platforms (META), Celsius Holdings (CELH), and Chipotle Mexican Group (CMG). All three have a favorable Zacks Rank with solid growth trajectories, making them a strong trio indeed. Let’s dive into each one of them in more detail.
Celsius Holdings
Celsius Holdings is a current Zacks Rank #1 (Strong Buy) that operates within the functional energy drinks and liquid supplement categories in the United States and other parts of the world. Analysts have upped their earnings expectations in all timeframes. The company recorded especially robust financial metrics in its last earnings release, exceeding the Zacks Consensus EPS estimate by more than 80%. It also recorded a 95% increase in quarterly revenue, i.e., $260 million, which was 15% ahead of expectations.
The chart below illustrates how CELH’s revenue growth has been rapid:
Image Source: Zacks Investment Research
The outlook points towards continued growth, with estimates indicating a 150% earnings growth and a 70% increase in revenues in the current fiscal year (FY23), followed by an additional 65% growth in earnings and 35% growth in revenue in FY24.
Meta Platforms
Meta Platforms is a stock that many investors love, and it has made a significant rebound in 2023, with its shares jumping over 100%, outpacing the S&P 500. The revision trend has been particularly positive, with analysts becoming more bullish on the company’s outlook, leading up to the upcoming quarterly report on July 26th.
The chart below reveals that both the top and bottom lines are expected to recover nicely:
Image Source: Zacks Investment Research
META’s revenue is estimated to improve by 9% in the current fiscal year (FY23) and 11% in FY24, while it’s also projected to achieve a 22.5% earnings growth rate in FY23 and 23% in FY24. META shares reclaimed the 50-day moving average late last year, a level that it had consistently struggled to break through in the prior two years. The chart below illustrates this.
Image Source: Zacks Investment Research
Chipotle Mexican Group
Chipotle Mexican Group has received a lot of attention after posting better-than-expected results, with shares soaring by more than 12% in the next trading session. CMG’s quarterly earnings exceeded estimates by about 18%, while its revenue hit $2.4 billion, improving 17% YoY.
This stock’s growth prospects are impressive, with earnings expected to surge by 34% in FY23 and 14% higher revenues. In FY24, the annual EPS and sales are expected to improve by 20% and 12%, respectively. Furthermore, CMG’s 45% trailing twelve-month ROE highlights its ability to generate profits from existing assets more efficiently than its peers.
The chart below shows that revenue growth has been quite consistent for CMG:
Image Source: Zacks Investment Research
Bottom Line
Growth investors had a difficult time in 2022 due to a hawkish Federal Reserve that dampened the mood. However, the three stocks mentioned above – Meta Platforms (META), Celsius Holdings (CELH), and Chipotle Mexican Group (CMG), – have regained favor in 2023, with analysts revising their earnings expectations positively. All three firms are projected to experience solid earnings and revenue growth in the current and coming fiscal year.
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