This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
One way to identify potentially winning stocks is to look for companies that are growing their revenue and earnings fast. If you invest at the right time, this strategy could generate handsome returns in the long run. Here are five such growth stocks.
Tesla
Tesla (NASDAQ: TSLA) revolutionized the auto sector with its electric cars. The company made electric vehicles mainstream and forced major automakers to shift toward electrification.
Quality electric cars that can go long distances on a single recharge, along with a sufficient network of charging stations, have helped to relieve buyers' concerns of getting stuck with no place to charge a dead battery.
These factors, coupled with a reasonable pricing structure, drove the demand for Tesla's cars higher. In five years, Tesla grew its revenue at an average rate of more than 50%.
TSLA Revenue (Annual YoY Growth) data by YCharts
Moreover, analysts expect Tesla to grow its per-share earnings at an average rate of nearly 50% over the next three to five years. Tesla also guides for 50% average annual growth in vehicle deliveries in the coming years. The company expects to start vehicle deliveries from its new factories in Berlin and Texas soon.
In addition to its existing models, Tesla's planned vehicles -- the Cybertruck and Semi -- are already receiving strong interest from potential buyers. The timetable for the launch of these two vehicles is less certain, though, as their respective launch dates have been pushed back several times.
Enphase Energy
Solar technology company Enphase Energy (NASDAQ: ENPH) continues to enjoy robust demand for its products. The company grew its annual sales at an average rate of 40% over the last five years. In 2021, Enphase's revenue grew by 78%.
The company's microinverters clearly look to be the preferred choice among homeowners. That's because, in addition to converting direct current to alternating current at the module level, Enphase's easy-to-use platform integrates solar generation, storage, and energy management on a single system.
Analysts expect Enphase Energy's per-share earnings to grow at an average rate of 40% in the next three to five years. Innovative offerings, good control on costs, and a long growth runway are some factors that will drive Enphase's long-term growth.
Amazon
In five years, Amazon.com Inc (NASDAQ: AMZN) grew its revenue at an average rate of 28%. That's also the average rate at which analysts expect per-share earnings of the e-commerce giant to grow in the coming three to five years. Though Amazon is famous for its online retail business, it is the company's cloud computing business that's boosting its bottom-line growth lately.
In 2021, Amazon's cloud computing business, Amazon Web Services (AWS), contributed 74% of the company's operating income. Interestingly, this business accounted for just 13% of the company's sales. What's more, AWS revenue grew 37% in 2021.
Solid e-commerce operations combined with growing high-margin cloud computing business bodes well for Amazon's long-term growth. In short, Amazon is a no-brainer growth stock to add to your portfolio. The stock split and $10 billion buyback program are just icing on the cake.
Nvidia
Nvidia Corporation (NASDAQ: NVDA) grew its annual revenue at an average rate of 34% in five years. In 2021, the company's revenue grew a whopping 61% to nearly $27 billion. Analysts expect Nvidia's per-share earnings growth rate to be around 24% over the next three to five years.
Nvidia's high-performance graphics cards are in huge demand in the gaming markets. Further, the company's graphic processing units (GPUs), coupled with its software and services, find applications in artificial intelligence, robotics, augmented and virtual reality, autonomous vehicles, and the metaverse. Given that each of these areas continues to see heightened growth, demand for Nvidia's products should remain strong.
Nvidia partners with major computer makers, including Cisco, Dell, HP, and Lenovo, and cloud service providers, such as Alicloud, AWS, Baidu Cloud, Google Cloud, IBM Cloud, and Microsoft Azure. Nvidia's leadership position in the GPU market means that the company may remain on its hypergrowth trajectory for many more years.
Netflix
In five years, Netflix Inc (NASDAQ: NFLX) grew its annual revenue at an average rate of 28%. Netflix's high revenue growth showed signs of slowing down in the last couple of years. In 2021, Netflix's revenue grew by 19%, which was lower than its five-year average rate.
Netflix's slowing growth concerned investors and the stock has fallen around 48% off its 52-week high price, offering an attractive entry point for long-term investors. That's because Netflix's continued growth, albeit at a slightly lower rate, indicates the exceptional demand for its services. The company has a strong content catalog, and it is also exploring other growth avenues such as gaming, which could potentially be a significant growth driver.
Analysts expect the company to grow its per-share earnings at an average rate of 30% over the next three to five years. In short, Netflix is one beaten-down stock that you should consider buying right now.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
