As their names suggest, growth stocks offer investors the best hope of outperforming the market. While larger companies are in the market, companies experiencing high growth have products and services people want, which translates to growing revenue, earnings and/or cash flow.
Of course — like everything in life — it’s not always positive. The potential for massive capital appreciation comes with risks like increased sensitivity to volatility, market fluctuations, economic conditions and the occasional bad news or missed guidance.
Still, growth stocks with strong prospects and financial growth are great additions to anyone’s portfolio. For this article, we’ll look for growth stocks that have high potential upsides. To get this list, I considered the following criteria:
- Minimum of 10% EPS growth in the last three years
- Minimum of 10% revenue growth in the last three years
- Buy rating from analysts
- Stock trades above $10.00
- YTD price return of at least 10%
- Has a potential upside of more than 15% based on analysts’ high target estimates.
Then, I arranged the top three stocks based on their potential upside, from highest to lowest. So, let’s take a look at the top growth stocks today.
United Airlines (UAL)
United Airlines (NASDAQ:UAL) is one of the biggest airlines in the U.S. The company’s operations consist of flights to various destinations globally. United Airlines has previously announced the expansion of its flight destinations and new route offerings that help expand its operations reach.
Like many companies today, United is adopting AI for business operations. The company aims to optimize flight support, operational management and automated communications.
The company started its year strong, with revenue growing 9.7% year over year, reaching $12.5 billion and exceeding guidance. Earnings came in at a loss of 38 cents per share, which was also higher than company expectations. United is on track to meet full-year expectations, continuing its three-year revenue and earnings growth streak.
Wall Street analysts rate it a “strong buy” with a potential upside of 85%, meaning UAL stock could be flying higher within 12 months.
DXP Enterprises (DXPE)
Not all growth companies have exciting products. Some, like DXP Enterprises (NASDAQ:DXPE), cater to massive demands for what some might call “boring” products — but that doesn’t change the fact that it’s an extremely profitable venture.
DXP Enterprise specializes in pump solutions, rotating equipment products and industrial supplies. The company recently announced its acquisition of Pro-Seal, which complements DXP’s rotating equipment division and adds scale, new geography and enhanced capabilities to its business.
Based on the company’s Q1 2024 report, revenue ended at $412.6 million, a slight decrease of 2.7% YOY. Diluted earnings are also down to 67 cents from last year’s 95 cents.
While this may sound alarming, a closer look at its filing tells another story. According to Chairman and CEO David R. Little, the company is optimistic about the recent acquisition and its impact on strong free cash flow supporting its growth initiatives.
Additionally, the company has recorded double-digit growth for the last three fiscal years, and despite the last quarter’s blunder, it likely won’t break the streak. DXPE stock was rated a “strong buy” with a high target price of $65, translating to a 30.84% upside potential.
International General Insurance (IGIC)
While the finance sector hasn’t been a stellar performer recently, International General Insurance (NASDAQ:IGIC) is going in the opposite direction. The company has been growing consistently these past few years.
International General Insurance is a Jordan-based commercial insurance reinsurance firm that holds global assets in ports and terminals, general aviation, construction and other businesses, including reinsurance, specialty long-tail and specialty short-tail segments.
The company’s Q1 2024 report highlighted a 4.4% YOY improvement in gross written premiums and a 30.7% increase in underwriting income, which led to an 11.8% increase in overall net income. This shows that International General can perform well despite interest rate challenges and a difficult macroeconomic environment.
Strong revenue and EPS growth over the past three years further highlight its performance. Analysts rate it a “strong buy” with an 18.47% potential upside. As such, IGIC stock is a worthy addition to your growth stocks list.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.