GROWTH STOCKS.December 22, 2020
Growth stocks are known for generating revenue and cash flow or profits faster than the industry average.
For years, growth stocks have been beneficiaries of outsized gains compared to the averages. The main criteria we look for when betting on upside in a stock are improving fundamentals, great entry points (technicals), and a history of bullish trading activity in the shares.
- YTD outperformance vs. market: +226.02% vs. SPDR S&P 500 ETF Trust (SPY)
- YTD outperformance vs. discretionary ETF: +213% vs. Consumer Discretionary Select Sector SPDR Fund (XLY)
- Recent big money signals
On top of technicals, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Square’s revenue growth has been strong:
- Three-year sales growth rate: +40.48%
- Three-year earnings growth rate: +55.11%
Next up is The Trade Desk, Inc. (TTD), which is a digital advertising firm. The shares have zoomed for years. When we decide on the strongest candidate for long-term growth, we typically want to see an outperformer. The Trade Desk is just that:
- YTD vs. market: +217.59% vs. SPY
- YTD vs. discretionary ETF: +204.86% vs. XLY
- Historical big money signals