Table of Contents
Table of Contents
Best Growth Stocks for Value
Fastest-Growing Growth Stocks
Growth Stocks With the Most Momentum
Risks of Investing in Growth Stocks
Benefits of Investing in Growth Stocks
- Markets News
NCMI, SAP, and CABA lead the pack for value, growth, and momentum, respectively
By
Nathan Reiff
:max_bytes(150000):strip_icc()/reiff_headshot-5bfc2a60c9e77c00519a70bd.jpg "Top Growth Stocks for September 2023 (1)")
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Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
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Published September 01, 2023
02:00 PM EDT
:max_bytes(150000):strip_icc()/INV_GrowthStocksSept2023_GettyImages-1331910686-418e848c9a41485581da4b702c8ad0b9.jpg "Top Growth Stocks for September 2023 (2)")
Top growth stocks in September include Cabaletta Bio Inc., Reata Pharmaceuticals Inc., and MoonLake Immunotherapeutics AG. Each of their share prices have climbed about 700% or more in the last year.
A benchmark for growth stocks as a group is the SPDR Portfolio S&P 500 Growth ETF (SPYG), which rose 5.9% in the last year while the Russell 1000 Index of highest-ranking large-capitalization stocks increased by 8.0%.
Below we look at the top three growth stocks based on best value, fastest growth, and the most momentum. Benchmark data above is as of Aug. 25, while all other data is as of Aug. 16.
Best Growth Stocks for Value
Value investing is a factor-based strategy in which investors target companies that they believe are trading for less than they are fundamentally worth. To determine whether a stock is a good value, investors usually use fundamental business metrics such as the price-to-earnings (P/E) ratio.
For value investors, if the stock price for a company is below that company's intrinsic value, they believe the stock price may be more likely than others to rise to bring the price to a level comparable to its intrinsic value. The growth stocks below have the lowest 12-month trailing P/E ratio of the ones we looked at.
| Best Value Growth Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| National CineMedia Inc. (NCMI) | 3.55 | 0.3 | 0.1 |
| Banco Macro SA (BMA) | 23.30 | 1.5 | 0.2 |
| Cemex SAB de CV (CX) | 8.00 | 11.6 | 0.5 |
Source:YCharts
- National CineMedia Inc.: This is a cinema advertising platform known for its Noovie trivia show presented at almost 20,000 screens nationwide. In early August 2023, the company completed a 1-for-10 reverse stock split and other financial restructuring steps to emerge from Chapter 11.
- Banco Macro SA: It is a private local bank based in Argentina. It has the largest branch network of any bank in the country. Net income for the most recent quarter was almost four times higher than the prior-year quarter.
- Cemex SAB de CV: A Mexican building materials company providing ready-mix concrete, roofing tiles, asphalt, concrete pipes, and related products.
Fastest-Growing Growth Stocks
Our growth model ranks companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings per share (EPS) growth.
Together, sales and earnings provide a balanced view of a company's financial health. Looking at only one or the other can leave rankings open to anomalies like restructuring costs or one-time benefits. We've excluded companies with either a quarterly EPS or revenue growth figure of 1,000% or more as outliers.
| Fastest-Growing Growth Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| SAP SE (SAP) | 137.69 | 161.1 | 971.2 | 7.3 |
| Emerson Electric Co. (EMR) | 95.47 | 54.6 | 957.1 | 13.9 |
| Alamos Gold Inc. (AGI) | 11.41 | 4.5 | 850.0 | 36.5 |
Source:YCharts
- SAP SE: A German enterprise software company that builds tools to manage customer relations and other business operations. SAP posted substantial cloud revenue growth in the most recent quarter. Its EPS growth was impacted by the completion of the sale of the company's stake in Qualtrics.
- Emerson Electric Co.: This is a technology company that manufactures products and offers services for the industrial, commercial, and consumer markets.
- Alamos Gold Inc.: A Canadian gold mining company that operates three mines in Canada and Mexico, with additional development projects in Canada, Mexico, Turkey, and the U.S. In the most recent quarter the company posted record-high production.
Growth Stocks With the Most Momentum
Momentum investors believe that stocks whose prices have risen faster than the broader market are more likely to continue to outperform, barring a sudden change in the underlying factors that have prompted their sudden increase in price. Other investors may inadvertently help to push the price of momentum stocks higher by buying as the price rises. The growth stocks below are those with the highest total return in the last year. Stocks with total returns of more than 1,000% were excluded as outliers.
| Growth Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Cabaletta Bio (CABA) | 13.67 | 0.5 | 793.5 |
| Reata Pharmaceuticals (RETA) | 169.13 | 6.5 | 720.6 |
| MoonLake Immunotherapeutics (MLTX) | 56.28 | 3.0 | 689.3 |
| Russell 1000 Index | N/A | N/A | 8.0 |
| SPDR Portfolio S&P 500 Growth ETF (SPYG) | N/A | N/A | 5.9 |
Source:YCharts
- Cabaletta Bio: A clinical-stage biotechnology company that discovers and develops engineered T cell therapies for patients with autoimmune diseases. During the most recent quarter the company closed a $100-million public offering that extends its cash runway through late 2025.
- Reata Pharmaceuticals: It is a biotechnology company that develops drug treatments involved in the regulation of cellular metabolism and inflammation. The company announced in late July that it would be acquired by Biogen Inc. (BIIB) in a deal valuing Reata at $7.3 billion.
- MoonLake Immunotherapeutics: MoonLake is a clinical-stage biopharmaceutical company developing treatments for inflammatory diseases.
Risks of Investing in Growth Stocks
Two major risks of investing in growth stocks are a lack of dividends and the potential for price volatility.
No dividends: It is uncommon for growth stocks to pay a dividend, or a share of company profits distributed back to investors. The reason for this is that growth companies are typically most focused on reinvesting profits into the business to continue to grow and scale. This means that investors in growth stocks miss out on the opportunity for the regular passive income that dividend stocks provide.
Price fluctuations: Growth stocks are known for their volatility. They may see rapid price swings, including significant sell-offs during market downturns. This can add a measure of risk to an investment portfolio that should be carefully managed.
Benefits of Investing in Growth Stocks
Two possible benefits of growth stocks in a portfolio include the opportunity for diversification and the potential for capital growth.
Diversification: One of the best ways to diversify a portfolio is to include growth stocks, which tend to be found across a wide variety of sectors. A growth stock in, for example, the technology sector that posts significant gains potentially can help offset losses from an investment in another sector. Many investors choose a portfolio approach that includes a balance of growth and value stocks. Value stocks tend to provide more consistent income, for example, while growth stocks offer exposure to companies that may experience rapid growth and capital appreciation.
Capital growth potential: Growth stocks in high-growth industries or that undergo restructuring to target new markets may experience sizable capital gains. Their rapid growth can lead to increased earnings, rising stock prices, and higher capital gains for investors over a short time period.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read ourwarranty and liability disclaimerfor more info.
As of the date this article was written, the author does not own any of the above stocks.
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Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
YCharts. "Russell 1000 Total Return (RUITR)."
YCharts. "SPDR Portfolio S&P 500 Growth ETF (SPYG)."
National CineMedia Inc. "National CineMedia Successfully Completes Financial Restructuring and Announces New Board of Directors."
Banco Macro SA. "Banco Macro announces Results for the 2Q 2023."
SAP SE. "Q2 2023 Results."
Alamos Gold Inc. "Alamos Gold Reports Second-Quarter 2023 Results."
Cabaletta Bio Inc. "Cabaletta Bio Reports Second-Quarter 2023 Financial Results and Provides Business Update."
Reata Pharmaceuticals Inc. "Reata Pharmaceuticals Announces Biogen to Acquire Reata Pharmaceuticals."
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