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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 – Celestica CLS, Booking Holdings BKNG, and Arista Networks ANET – 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.
Arista Networks
Arista Networks shares have benefited nicely from the AI frenzy in 2023, up more than 70% year-to-date and widely outperforming relative to the S&P 500. The company provides network switches to hyperscalers that speed up communication between computer servers.
The stock is a Zacks Rank #2 (Buy), with expectations moving higher across all timeframes.
Image Source: Zacks Investment Research
In its latest print, ANET posted a 15% EPS surprise and reported revenue 2% ahead of expectations, with both items improving notably from the same period last year. As shown below, ANET’s revenue growth has been remarkable over the recent years, picking up considerable steam post-pandemic lows.
Image Source: Zacks Investment Research
Investors will have to fork up a premium for ANET shares, with the current 32.6X forward earnings multiple residing on the higher end. Still, investors have had little issue forking up the premium given ANET’s forecasted growth, with earnings forecasted to climb 35% in its current year paired with a 33% revenue boost.
Celestica
Celestica is one of the world's largest electronics manufacturing services companies, serving the computer and communications sectors. Analysts have taken their earnings expectations higher across the board, landing the stock into a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
The company boasts an inspiring growth profile, with earnings forecasted to climb 24% in its current year (FY23) on 9% higher revenues. And looking ahead to FY24, estimates allude to a 13% boost in earnings paired with a 6.5% sales increase.
In addition, it’s worth noting that shares aren’t overly expensive given the company’s forecasted growth, with the current 0.4X forward price-to-sales ratio (F1) sitting on the lower end of the spectrum.