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Growth investing has made a big comeback this year among investors, with many high-flying names enjoying positive price action throughout the period. Still, it’s critical to note that growth investing is commonly volatile by nature, perhaps steering away those with a more conservative approach.
The style is centered around targeting companies expected to grow their earnings and revenues at an above-average level, a development that commonly follows through to share outperformance.
For those interested in the growth investing style, three stocks – Datadog (DDOG - Free Report) , American Eagle Outfitters (AEO - Free Report) , and Duolingo (DUOL - Free Report) – could all be considered.
On top of strong projected growth, all three sport a favorable Zacks Rank. Let’s take a closer look at each.
Datadog
Datadog is a monitoring and analytics platform for developers, IT operations teams, and business users in the cloud age. Analysts have taken their earnings expectations higher across the board, landing the stock into a favorable Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
The company’s latest quarterly results came in well above expectations, exceeding the Zacks Consensus EPS Estimate by more than 30% and posting a 4% revenue beat. Investors took the results in stride, with DDOG shares melting higher post-earnings.
Image Source: Zacks Investment Research
Concerning comparisons, revenue improved an impressive 25% from the year-ago quarter, continuing the company’s explosive growth characteristics. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Datadog’s earnings are forecasted to climb 54% in its current year (FY23) on 25% higher sales, with FY24 consensus expectations alluding to 12% earnings growth paired with a 21% sales increase.
Image Source: Zacks Investment Research
American Eagle Outfitters
American Eagle Outfitters is a specialty retailer of casual apparel, accessories, and footwear for men and women. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations increasing across the board.
Image Source: Zacks Investment Research
AEO’s growth profile has shifted positively amid a more favorable operating environment, with the Zacks Consensus Estimates for its current fiscal year suggesting 37% earnings growth on 2.5% higher sales. AEO recently posted strong quarterly results, exceeding earnings expectations by more than 60% and posting a 1.1% sales surprise.
In addition, investors stand to reap a passive income, with AEO shares presently yielding a solid 2.0% annually paired with a sustainable payout ratio sitting at 33% of its earnings. The current yield is above the respective average of the Zacks Retail – Apparel and Shoes industry.
Keep an eye out for the company’s upcoming release expected on November 21st. Currently, the Zacks Consensus EPS Estimate of $0.48 suggests 15% growth from the year-ago period, with analysts bullishly revising their expectations higher.
Image Source: Zacks Investment Research
Duolingo
Duolingo, a current Zacks Rank #1 (Strong Buy), provides a mobile language learning platform. The company’s earnings outlook has shot higher across the board.
Image Source: Zacks Investment Research
Duolingo’s latest quarterly print came in well above expectations, exceeding the Zacks Consensus EPS Estimate by a sizable 200% and revenue coming in 4.7% ahead of the consensus. Both items were well above year-ago figures, with shares also moving notably higher post-earnings.
The company's revenue growth has been impressive, further illustrated below.
Image Source: Zacks Investment Research
And the company boasts the most impressive growth trajectory of the bunch, with current Zacks Consensus Estimates suggesting 150% earnings growth in its current year paired with a 42% sales increase. Peeking ahead of FY24, estimates call for 220% earnings growth paired with a 30% sales bump.
Bottom Line
Growth investors have every reason to be happy in 2023, with a much-needed shift in sentiment helping drive many growth-related stocks higher. The Fed dampened the mood in 2022 amid its historic tightening campaign, particularly as the cost of capital increased.
Nonetheless, they’ve jumped back into favor this year, with several, including Datadog (DDOG - Free Report) , American Eagle Outfitters (AEO - Free Report) , and Duolingo (DUOL - Free Report) all seeing positive price action year-to-date.
In addition, all three sport a favorable Zacks Rank, reflecting optimism among analysts.
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3 Top-Ranked Stocks to Buy for High Growth
Growth investing has made a big comeback this year among investors, with many high-flying names enjoying positive price action throughout the period. Still, it’s critical to note that growth investing is commonly volatile by nature, perhaps steering away those with a more conservative approach.
The style is centered around targeting companies expected to grow their earnings and revenues at an above-average level, a development that commonly follows through to share outperformance.
For those interested in the growth investing style, three stocks – Datadog (DDOG - Free Report) , American Eagle Outfitters (AEO - Free Report) , and Duolingo (DUOL - Free Report) – could all be considered.
On top of strong projected growth, all three sport a favorable Zacks Rank. Let’s take a closer look at each.
Datadog
Datadog is a monitoring and analytics platform for developers, IT operations teams, and business users in the cloud age. Analysts have taken their earnings expectations higher across the board, landing the stock into a favorable Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
The company’s latest quarterly results came in well above expectations, exceeding the Zacks Consensus EPS Estimate by more than 30% and posting a 4% revenue beat. Investors took the results in stride, with DDOG shares melting higher post-earnings.
Image Source: Zacks Investment Research
Concerning comparisons, revenue improved an impressive 25% from the year-ago quarter, continuing the company’s explosive growth characteristics. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Datadog’s earnings are forecasted to climb 54% in its current year (FY23) on 25% higher sales, with FY24 consensus expectations alluding to 12% earnings growth paired with a 21% sales increase.
Image Source: Zacks Investment Research
American Eagle Outfitters
American Eagle Outfitters is a specialty retailer of casual apparel, accessories, and footwear for men and women. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations increasing across the board.
Image Source: Zacks Investment Research
AEO’s growth profile has shifted positively amid a more favorable operating environment, with the Zacks Consensus Estimates for its current fiscal year suggesting 37% earnings growth on 2.5% higher sales. AEO recently posted strong quarterly results, exceeding earnings expectations by more than 60% and posting a 1.1% sales surprise.
In addition, investors stand to reap a passive income, with AEO shares presently yielding a solid 2.0% annually paired with a sustainable payout ratio sitting at 33% of its earnings. The current yield is above the respective average of the Zacks Retail – Apparel and Shoes industry.
Keep an eye out for the company’s upcoming release expected on November 21st. Currently, the Zacks Consensus EPS Estimate of $0.48 suggests 15% growth from the year-ago period, with analysts bullishly revising their expectations higher.
Image Source: Zacks Investment Research
Duolingo
Duolingo, a current Zacks Rank #1 (Strong Buy), provides a mobile language learning platform. The company’s earnings outlook has shot higher across the board.
Image Source: Zacks Investment Research
Duolingo’s latest quarterly print came in well above expectations, exceeding the Zacks Consensus EPS Estimate by a sizable 200% and revenue coming in 4.7% ahead of the consensus. Both items were well above year-ago figures, with shares also moving notably higher post-earnings.
The company's revenue growth has been impressive, further illustrated below.
Image Source: Zacks Investment Research
And the company boasts the most impressive growth trajectory of the bunch, with current Zacks Consensus Estimates suggesting 150% earnings growth in its current year paired with a 42% sales increase. Peeking ahead of FY24, estimates call for 220% earnings growth paired with a 30% sales bump.
Bottom Line
Growth investors have every reason to be happy in 2023, with a much-needed shift in sentiment helping drive many growth-related stocks higher. The Fed dampened the mood in 2022 amid its historic tightening campaign, particularly as the cost of capital increased.
Nonetheless, they’ve jumped back into favor this year, with several, including Datadog (DDOG - Free Report) , American Eagle Outfitters (AEO - Free Report) , and Duolingo (DUOL - Free Report) all seeing positive price action year-to-date.
In addition, all three sport a favorable Zacks Rank, reflecting optimism among analysts.