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 and Netflix NFLX to exciting foreign stocks such as Alibaba BABA, 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. Momo Inc. (MOMO)
Momo provides a free social search and instant messaging mobile app in China. The platform is location and interest based, so users can meet and expand their relationships primarily based on these ideas. Users also build profiles and interact with one another on message and topic boards.
Momo competes directly with the much larger WeChat, which is owned by Tencent TCEHY. However, it still has plenty of space to grow its core business, and the company is looking to expand into other areas. Recently, Momo acquired Tantan, China’s top dating application.
The stock is currently sporting a Zacks Rank #1 (Strong Buy). Current estimates are calling for earnings and revenue to grow by 43% and 53%, respectively, in 2018. Momo is also sporting a long-term projected EPS growth rate of 22% right now.
2. Turtle Beach Corporation (HEAR)
Turtle Beach is a leading designer of headsets for video gamers. It has been at the top of this market for many years, but recently, the company has garnered tons of investor attention on the back of fresh demand from gamers playing Fortnite, a “freemium” shooter game which has 125 million players worldwide.
Shares of HEAR have skyrocketed a staggering 1,200% so far this year, but there’s nothing to suggest the stock can’t keep climbing from here. The company is projected to surge into profitability with EPS growth of 625% on revenue growth of 45% this year.
HEAR also has a long-term projected EPS growth rate of 13%. Investors should also note that, even after its massive gains, HEAR is trading at just 21x forward earnings. Plus, its PEG of 1.6 implies that we are still getting a great price for its growth outlook. HEAR is currently holding a Zacks Rank #1 (Strong Buy).
3. Pure Storage, Inc. (PSTG)
Pure Storage is an enterprise data storage company. The firm provides flash-based storage solutions, including hardware offerings like FlashArray—a data center optimization product—and compatible software products.
PSTG was founded in 2009, making it one of the youngest major memory storage players and a rare pure growth opportunity in the industry. PSTG has a Zacks Rank #2 (Buy) and an “A” grade for Growth in our Style Scores system. Earnings are expected to improve by 208% in 2018. Next year, EPS figures are projected to grow an additional 176% from this year’s totals.
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The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Pure Storage, Inc. (PSTG) : Free Stock Analysis Report
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