Growth stocks can net some of the largest gains in the market. These corporations feature high top-line growth each year. Some of these companies are profitable or are closing in on that milestone.
While growth stocks can generate the highest gains, they are also the most vulnerable during economic downturns and corrections. Some of them rightfully decline due to excessive valuations and declining revenue; other undeservingly go along for the ride.
Investors can miss out on growth opportunities because these investments don’t receive as much attention. Yet these tend to be more volatile than market indices. However, they still have a lot to offer. These three growth stocks can deliver exceptional gains in the years ahead.
Axcelis Technologies (ACLS)
Axcelis Technologies (NASDAQ:ACLS) helps companies create effective semiconductors with its ion implantation technology. Investors loaded up on this stock during the artificial intelligence boom. Shares are up by 68% year to date (YTD) and have gained 647% over the past five years.
Despite these gains, ACLS has suddenly become undervalued. Shares are down by over 30% from their all-time high which they reached earlier this year.
The stock’s recent drop looks unjustified. Axcelis Technologies reported a superb third quarter. Revenue increased by 27.6% year over year (YOY) while net income went up by 63.7% YOY.
Many growth stocks lose value despite good financials because they are overvalued. In other words, they have overstretched themselves. This phenomenon does not apply to Axcelis Technologies.
The stock carries a 19 P/E ratio and a 15 forward P/E ratio. Shares lappear promising at current prices. Axcelis Technologies is a small cap with a market cap under $5 billion.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has recovered from its 2022 woes by posting a 67% YTD gain. The company has cloud computing, e-commerce, streaming, and other verticals that make it a well-diversified pick.
Amazon’s revenue jumped by 13% YOY, especially in advertising revenue. The earnings from this segment reached $12 billion and exceeded expectations of $11.6 billion. Amazon advertising doesn’t get as much talk compared to AWS and Amazon’s e-commerce website. However, it is a promising segment that experienced 26% YOY growth.
Amazon’s advertising platform can challenge Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) in the future. Expanding its advertising market share can help Amazon secure higher year-over-year revenue and earnings growth in the future.
Amazon is a central piece of many funds. The e-commerce giant is a top pick for a reason. Amazon’s forward P/E is currently 42 which offers a better representation of its value. The corporation’s unprofitable Rivian (NASDAQ:RIVN) investment is in the rearview mirror and isn’t inflating Amazon’s valuation like it did in the past.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) has been one of the top winners over the past five years. The sports beverage company has gained 4,400 over the past five years. The YTD gain is an impressive 71%.
Celsius Holdings got shareholders excited with a recently announced 3-for-1 stock split. Stock splits don’t increase a company’s market cap or make it more valuable than it was before the stock split.
However, these splits generate plenty of buzz and can attract more investors. Psychology comes into play here. An investor may feel better about having 300 shares at $60 per share than having 100 shares at $180 per share (even though the final numbers are the same).
Celsius is in hyper-growth mode and has been posting triple-digit YOY gains in net income and revenue. While the sports beverage company has a high P/E ratio, investors are bullish about the company’s long-term prospects. The company’s valuation should look far more promising after a few years of accelerated growth.
On this date of publication, Marc Guberti held long positions in ACLS and CELH. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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