By their very nature, growth investors are primarily focused on finding companies whose earnings and revenue are expected grow at a rate that outpaces the market. This investment strategy comes with its fair share of risks, but it also brings the exciting possibility of outsized returns—an end goal that every investor desires.
Over the past several years, Wall Street’s most exciting growth stocks have emerged from the technology sector. From industry innovators like Amazon (AMZN - Free Report) and Netflix (NFLX - Free Report) to exciting foreign stocks such as Alibaba (BABA - Free Report) , tech-focused growth investors have been rewarded with massive profits recently.
Strong earnings and impressive sales imply that the technology sector’s hot streak could continue throughout 2018—despite recent market-wide volatility. That means that growth investors searching for the next great market-beating stock might want to keep their focus on tech companies.
Luckily, we can pair the proven Zacks Rank with our innovative Style Scores system, which includes a “Growth” category, to find strong growth tech stocks. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements—including strong cash flows and great return on equity.
With all of this said, check out these three tech stocks for growth investors to consider now:
1. AppFolio, Inc. (APPF - Free Report)
AppFolio offers cloud-based software solutions for the property management and legal industries. The company’s AppFolio Property Manager is a leading solution for property management, while its MyCase application is ideal for practitioners and small law firms. Currently, the stock is a Zacks Rank #2 (Buy).
AppFolio recently surged into profitability, which is something that investors tend to reward. This fiscal year, current estimates are calling for earnings growth of 66% and net sales growth of 27%. The company is also improving its cash position, generating quadruple-digit cash flow growth and operating with a net margin of nearly 9%.
The firm has also proven to be an efficient one, with Return on Equity of 16% crushing its industry average. AppFolio should be able to use this, and its solid margins, to capitalize on its new business opportunities. APPF has also displayed the strength of small caps recently, adding about 32% over the past two months.
2. Twitter, Inc. (TWTR - Free Report)
Twitter operates one of the world’s most popular social media websites, but thanks to a number of new initiatives—including a shift to live, original content and a renewed focus on profitability—the stock is now popping up on our growth screens. What’s more, TWTR is currently sporting a Zacks Rank #1 (Strong Buy).
Analysts expect Twitter to witness EPS growth of 71% and sales growth of 20% this year, according to our latest Zacks Consensus Estimates. The company is also witnessing cash flow growth of more than 95% currently.
Meanwhile, Twitter has a number of new partnerships—with many notable media companies and sports organizations—that it should be able to leverage in an internet industry that has increasingly rewarded original content.
3. eGain Corporation (EGAN - Free Report)
eGain provides web customer interaction, social customer interaction, and contact center applications. It is a growing name within the expanding customer engagement cloud solutions space. EGAN is holding a Zacks Rank #1 (Strong Buy) and looks like another top growth pick right now.
Based on our Zacks Consensus Estimates, eGain appears to be on track to report earnings growth of 127% for its full fiscal year, which ends in June. Earnings growth for the upcoming year is projected to be 117% from this year’s estimated total.
This is also another stock benefitting from the strength in small caps. EGAN has skyrocketed more than 700% over the past year, including a 60% gain in just the past three months. That should continue if the firm can continue proving its growth possibilities.
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