Best growth stocks July 2024 (2024)

Investing

Wayne Duggan

Farran Powell

Verified by an expert

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Hannah Alberstadt

Verified by an expert

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

BLUEPRINT

Updated 9:00 a.m. UTC Sep. 12, 2024

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The best growth stocks generate above-average earnings or revenue growth compared with their industry peers. They also often have higher valuations than other stocks based on fundamental metrics such as price-to-earnings, price-to-sales and price-to-free-cash-flow ratios.

But growth stocks can have tremendous valuation downside if they don’t maintain their business momentum. The best growth stocks have a reasonable fundamental valuation and a path to stable, long-term earnings and revenue growth.

Here are the top growth stocks of 2024 with significant upside potential and bullish ratings from Wall Street analysts.

Best growth stocks

Salesforce (CRM).
Applied Materials (AMAT).
Vertex Pharmaceuticals (VRTX).
KLA (KLAC).
PayPal (PYPL).

Why trust our investing experts

Experienced stock analysts select our best stock selections based on screening for several must-have metrics. These metrics often include but are not limited to forward price-to-earnings, risk, earning stability and Wall Street “buy” consensus. Among all of our stock selections, the average return beats the S&P 500. But investors should note that before purchasing any stocks, it’s important to do plenty of research and ensure their selections align with their financial goals and risk tolerance. You can read more about our methodology below.

5,000+ companies screened.
3 levels of fact-checking.
3-step editorial review.

Salesforce (CRM)

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Via Salesforce’s website

Market cap

YTD performance

Why it made our list

Salesforce is the largest customer relationship management software provider and operates a cloud-based software-as-a-service model. Salesforce’s CRM software includes data visualization, automation, analytics, marketing, enterprise communication and e-commerce tools.

In the fiscal third quarter, Salesforce reported 11% revenue growth and raised its full-year operating cash flow growth guidance to between 30% and 33%. Salesforce has also prioritized profitability, reporting a GAAP operating margin of 17.2% in the third quarter. In addition, Salesforce supported its share price by repurchasing nearly $2 billion in stock in the third quarter.

While Salesforce’s spectacular growth finally seems to be slowing, its pivot to gross margin expansion should maintain impressive earnings growth for years to come. New artificial intelligence-based product offerings could provide further growth opportunities in the future.

Pros and cons

Pros

Leading market share in sales management automation, a market that has significant long-term growth potential.
Several noncore growth opportunities, including customer service, e-commerce and marketing automation.
Focus on margin expansion and profitability could accelerate earnings growth even as sales growth slows.

Cons

It may be difficult for Salesforce to outgrow its primary end markets.
Integration and execution risks associated with past and future acquisitions, including its deal for Slack.
A shift in focus to profitability may suggest the company anticipates further revenue growth slowdowns in the coming years.

More details

Applied Materials (AMAT)

Market cap

YTD performance

Why it made our list

Applied Materials supplies wafer fabrication equipment to the global semiconductor industry. Its shares have benefited from strong lagging-edge chip equipment demand in recent quarters, particularly in China. The company reported just 3% revenue growth in fiscal 2023, but management expects advanced logic and memory chip demand will recover in fiscal 2024.

Applied Materials is exposed to large high-growth technology markets such as the Internet of Things, wireless communications, next-generation automobiles, power management and sensor applications.

The company reported record revenue, earnings and cash flow in fiscal 2023 and has outgrown the overall wafer fabrication equipment market for five consecutive years. Applied also distributed $3.16 billion to investors in fiscal 2023 via buybacks and dividends.

Pros and cons

Pros

Applied Materials’ diversified portfolio of product offerings makes it a one-stop shop for the semiconductor industry.
Research and development cost-cutting and improvements to operations efficiency have increased operating margins.
In the past decade, Applied Materials has raised its dividend by 11% annually and reduced its shares outstanding by nearly 30%.

Cons

AMAT must compete with smaller, more specialized companies.
High exposure to the cyclical semiconductor industry means Applied Materials’ financials can fluctuate significantly.
Risks associated with ongoing U.S. Justice Department criminal investigation tied to Applied Materials’ China exports.

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Vertex Pharmaceuticals (VRTX)

Market cap

YTD performance

Why it made our list

Vertex Pharmaceuticals is a biotech company focused on developing treatments for cystic fibrosis. The company’s approved CF drugs include Kalydeco, Orkambi, Symdeko and Trikafta. In December, the Food and Drug Administration approved Vertex’s sickle cell disease treatment Casgevy, the world’s first approved therapy using CRISPR gene editing technology. Vertex’s pipeline also includes non-CF treatment candidates such as exa-cel for beta-thalassemia, VX-147 for APOL1-mediated kidney disease and nonopioid drugs for pain treatment.

Vertex reported $2.48 billion in product revenue in the third quarter, up 6% year over year. Vertex’s Trikafta-Kaftrio triple combination therapy for CF accounted for about 92% of the company’s total sales in the third quarter.

Looking ahead, Vertex anticipates several new product commercial launches, including Casgevy, exa-cel for treating transfusion-dependent beta-thalassemia, VX-548 for treating acute pain, and a combination of vanzacaftor, tezacaftor and deutivacaftor for treating CF.

Pros and cons

Pros

Combination therapies have lengthy patent exclusivity periods, protecting the CF portfolio from generic competition.
Vertex has a track record of developing drugs in-house, a testament to its research and development prowess.
Cystic fibrosis therapies require long-term use by patients, creating financial visibility for Vertex.

Cons

Heavily reliant on Trikafta-Kaftrio triple combination cystic fibrosis therapy sales.
The high price of Vertex’s therapies could limit growth.
Gene editing could eventually disrupt the CF treatment market.

More details

KLA (KLAC)

Market cap

YTD performance

Why it made our list

KLA is a leading producer of process control systems for the semiconductor industry. The company specializes in equipment that inspects semiconductor wafers during research, development and manufacturing to verify performance and detect defects.

After reporting 13.9% revenue growth in fiscal year 2023, KLA’s growth dipped into negative territory in the most recent quarter. The company blamed the weakness on a challenging environment, including soft demand for wafer fabrication equipment. However, even during a cyclical trough in the market, KLA has maintained impressive gross margins of around 60%.

The semiconductor industry is likely a secular growth market, and process control system demand will likely grow right along with it, especially as chip design gets increasingly complex over time, Morningstar reports. A cyclical rebound in the memory markets in 2024 and 2025 could easily help KLA regain its positive momentum.

Pros and cons

Pros

Dominant market share of the wafer fabrication equipment process control market.
Rising chip complexity drives process control equipment demand.
Long track record of dividend hikes.

Cons

Applied Materials and other larger competitors have bigger research and development budgets.
KLA’s revenue growth and margins are closely tied to the cyclical semiconductor market, creating financial inconsistency.
KLA faces risks tied to elevated geopolitical tensions between the U.S. and China.

More details

PayPal Holdings (PYPL)

Market cap

YTD performance

Why it made our list

PayPal is a leading digital and mobile payment platform for consumers and merchants and is the owner of the Venmo app. It offers payment services for individuals and businesses. PayPal’s services include digital wallets, money management and crypto payment options. It lets individuals and businesses send and receive money and offers credit cards.

In the fourth quarter of 2023, PayPal posted revenue of $8 billion, growing by 9% year over year. The company’s earnings have grown significantly year over year, allowing it to generate double-digit profits in the past four quarters. Analysts are bullish on the stock overall, expecting the stock to grow 10.7% over the next year.

Pros and cons

Pros

The electronic payments market has a long, global growth runway.
The scalability of PayPal’s business should improve margins over time.
Attractive forward earnings multiple.

Cons

User growth and total payment growth have slowed significantly.
Stiff competition from well-established competitors, including Visa (V) and Mastercard (MA).
Limited monetization opportunities for Venmo.

More details

Compare the best growth companies

Methodology

The best growth stocks included above all trade on a major U.S. stock exchange and meet the following criteria:

Consensus analyst recommendation of “buy” or better. A high number of analyst “buy” ratings indicates an expectation that the stock will outperform the overall market.
Market capitalization of at least $10 billion. If a company has a leading market share and competitive advantages in a sizable industry, it will have a market cap greater than $10 billion. The general thinking is that small- and mid-cap growth stocks tend to have a higher degree of uncertainty and risk associated with their business outlook.
An Altimeter risk level of A or B. The Altimeter risk grade is calculated based on a company’s credit rating, management sentiment and a fundamental forensic assessment of its financial health. Screening for stocks with the lowest financial risk helps reduce the chances of significant downside.
CRSP US Large Cap Growth Index constituent. The CRSP US Large Cap Growth Index is an index of large-cap growth stocks. Membership in the index is determined by several factors, including future long-term growth in earnings per share, future short-term growth in EPS, three-year historical growth in EPS, three-year historical growth in sales per share, current investment-to-assets ratio and return on assets.
Forward earnings multiple of 30 or less. Growth stocks generally have higher valuations than the overall market because of their growth profiles. While it’s OK for investors to pay more for growth, stocks with forward earnings multiples of over 30 are at risk of significant downside in the event of a cyclical economic downturn or a slowdown in revenue growth.

Why other stocks didn’t make the cut

Plenty of public companies in the market are generating extremely impressive revenue growth numbers far beyond the growth rates of the stocks included in this list.

But many of those growth stocks have not yet demonstrated they can generate consistent profits and are funding expansion by taking on debt or conducting dilutive stock offerings. Other growth stocks may face funding problems in an environment of elevated interest rates, tight credit markets or slowing U.S. economic growth.

High-growth stocks also inspire great enthusiasm among growth investors, and exuberance can sometimes produce irrationally high valuations.

Growth stocks can maintain these nosebleed valuations temporarily, but a slowdown in their growth numbers or a macroeconomic downturn could trigger a painful sell-off. The best growth stocks have a reasonable valuation and a path to stable, long-term earnings and revenue growth.

Final verdict

Growth stocks are expected to grow faster than the market average due to factors like fast-growing net income or revenue. These stocks can outperform blue-chip stocks but can also be more volatile.

Generally, buy-and-hold investors who can wait out short-term volatility may fare better with growth stocks. Conversely, those who need access to their investments for purchases like a house or a car may prefer less volatility. Finding the right balance between stability and performance can help you achieve your long-term goals.

And because each investor has different needs based on their financial goals and time horizons, here are other stock lists you might want to review and consider:

Best stock to buy right now.

Best long-term stocks to buy.

What is growth investing?

Growth investing is a strategy that involves choosing stocks and other investments that have significant earnings and revenue growth potential.

Growth investors prioritize stocks that have the potential to outgrow their competitors and the market at large over value stocks that have an attractive share price based on fundamental valuation metrics such as the price-to-earnings ratio. They assume a company's share price will rise as its business expands over time.

Many of the highest-growth companies in the stock market are newer companies, but plenty of well-established companies that have been around for decades regularly report impressive earnings and revenue growth.

Frequently asked questions (FAQs)

Most growth stocks performed extremely well in the past year as investors anticipate a Federal Reserve pivot from interest rate hikes to interest rate cuts as soon as the first half of 2024. Higher interest rates increase costs for companies that borrow money to invest in expanding their businesses.

The best growth stocks may differ from those with the highest growth rates in any given quarter or year. Instead, the best growth stocks often maintain consistent growth and add new growth sources via innovation or acquisition over years or decades.

To identify stocks with the highest growth rates, screen for stocks that have the highest year-over-year revenue growth in recent quarters and years. However, remember that many of the highest-growth stocks are extremely risky investments.

Growth stocks have performed extremely well in the past year, and the possibility of interest rate cuts in 2024 suggests conditions are good for another year of outperformance. However, it’s very difficult to predict how the stock market will perform on a short- or medium-term basis, so growth stocks may take a temporary halt in early 2024 after a strong year in 2023.

Common metrics for valuing unprofitable growth stocks include price-to-sales ratio, price-to-free-cash-flow ratio and price-to-book ratio. If a growth stock is profitable, investors can value it using the price-to-earnings ratio, forward P/E ratio and price-to-earnings-growth ratio.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Wayne Duggan

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Wayne Duggan is a regular contributor for Forbes Advisor and U.S. News and World Report and has been a staff writer for Benzinga since 2014. He is an expert in the psychological challenges of investing and frequently reports on breaking market news and analyst commentary related to popular stocks. Some of his prior work includes contributing news and analysis to Seeking Alpha, InvestorPlace.com, Motley Fool, and the Lightspeed Active Trading blog. He’s the author of the book "Beating Wall Street With Common Sense," which focuses on practical investing strategies to outperform the stock market. He resides in Biloxi, Mississippi

Farran Powell

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Farran Powell is the lead editor of investing at USA TODAY Blueprint. She was previously the assistant managing editor of investing at U.S. News and World Report. Her work has appeared in numerous publications including TheStreet, Mansion Global, CNN, CNN Money, DNAInfo, Yahoo! Finance, MSN Money and the New York Daily News. She holds a BSc from the London School of Economics and an MA from the University of Texas at Austin. You can follow her on Twitter at @farranpowell.

Hannah Alberstadt

BLUEPRINT

Hannah Alberstadt is the deputy editor of investing and retirement at USA TODAY Blueprint. She was most recently a copy editor at The Hill and previously worked in the online legal and financial content spaces, including at Student Loan Hero and LendingTree. She holds bachelor's and master's degrees in English literature, as well as a J.D. Hannah devotes most of her free time to cat rescue.