Top Growth Stocks for June 2022

Investing

Growth investing is one of two main fundamental investment strategies, the other being value investing. Investors employing a growth investing strategy will typically place the majority of their portfolio in growth stocks, which are shares of companies with earnings or sales expected to grow at a significantly faster rate than the rest of the market. These companies generally don’t pay dividends at this stage of their industry life cycle, since all earnings are usually reinvested back into the business to generate even more earnings or revenue in the future.

The primary way that investors expect to earn profits from growth investing is through capital gains. Classic examples of growth stocks in recent years have included Apple Inc., Amazon.com Inc., and Netflix Inc.

Growth stocks, as represented by the Russell 1000 Growth Index, have underperformed the broader market over the past year. The Growth Index has provided a total return of -8.9% over the past 12 months, below the benchmark Russell 1000 index’s -4.2% total return. These market performance numbers and all statistics in the tables below are as of May 27, 2022.

Here are the top three stocks with the fastest earnings per share (EPS) growth, the top three stocks with the fastest sales growth, and the top three stocks ranked according to a 50/50 weighting of their combined EPS and sales growth.

Top Growth Stocks by EPS Growth

These are the stocks with the highest year-over-year (YOY) EPS growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Companies with quarterly EPS of more than 2,500% were excluded as outliers.

Top Growth Stocks by EPS Growth
  Price ($) Market Cap ($B) EPS Growth (%)
Cleveland-Cliffs Inc. (CLF) 23.46 12.3 2,040
Marathon Oil Corp. (MRO) 29.75 21.1 1,380
United States Steel Corp. (X) 25.69 6.7 762.9

Source: YCharts

  • Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. The company also supplies stainless steel tubing and other products. On April 22, Cleveland-Cliffs reported Q1 FY 2022 results. Net income grew more than 14-fold as revenue surged year-over-year (YOY). These results were driven by a major boost in average net selling price per net ton of steel products.
  • Marathon Oil Corp.: Marathon Oil is an independent energy company focused on the exploration and production of oil and gas. The company’s operations are primarily located in Texas, North Dakota, Oklahoma, New Mexico, and Equatorial Guinea.
  • United States Steel Corp.: United States Steel makes high value-added steel products. It serves the automotive, construction, appliance, energy, containers, and packaging industries and has operations in the U.S. and Central Europe. On April 28, the company declared a dividend of $0.05 per share of common stock. The dividend is payable on June 8 to shareholders of record as of May 9, 2022.

Top Growth Stocks by Sales Growth

These are the stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, EPS can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability. Companies with quarterly revenue growth of more than 2,500% were excluded as outliers.

Top Growth Stocks by Revenue Growth
   Price ($) Market Cap ($B)  Revenue Growth (%) 
Coterra Energy Inc. (CTRA 34.65 27.9 265.0
Zillow Group Inc. (ZG) 38.35 9.4 249.5
TD Synnex Corp. (SNX) 100.13 9.6 213.2

Source: YCharts

  • Coterra Energy Inc.: Coterra Energy is an oil and gas exploration and production company with operations focused in the Permian Basin, Marcellus Shale, and Anadarko Basin. On May 2, Coterra declared a quarterly base plus variable dividend of $0.60 per common share. The dividend includes a $0.15 per share base component and a variable component of $0.45 per share. The combined dividend was payable on May 25 to shareholders of record as of May 13, 2022.
  • Zillow Group Inc.: Zillow Group offers an online real estate platform. The platform enables users to buy, sell, and rent homes as well as search financing options. The company also offers a suite of marketing software and technology for the real estate industry. On May 5, Zillow reported earnings for Q1 2022. Net income fell by 69.2% YOY partly due in part to $38 million in restructuring costs. Revenue more than tripled and Zillow received 2.6 billion.
  • TD Synnex Corp.: TD Synnex sells information technology (IT) services and products. It distributes a broad range of IT products, including PC systems, consumer electronics, storage, networking, and servers. On May 19, the company announced that it was expanding its cloud portfolio to include Google Cloud services. Synnex said the new services will enable the company to access more of Google’s services in areas such as artificial intelligence (AI), data analytics, and infrastructure.

Top Growth Stocks by EPS and Revenue

These are the top growth stocks in the Russell 1000 Index as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY EPS growth. Both sales and earnings are critical factors in the success of a company. Moreover, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Top Growth Stocks by EPS and Revenue
   Price ($) Market Cap ($B)  Revenue Growth (%)  EPS Growth (%)
Cleveland-Cliffs Inc. (CLF) 23.46 12.3 47.1 2,040
Coterra Energy Inc. (CTRA) 34.65 27.9 265.0 138.7
Marathon Oil Corp. (MRO) 29.75 21.1 49.6 1,380

Source: YCharts

  • Cleveland-Cliffs Inc.: See company description above.
  • Coterra Energy Inc.: See company description above.
  • Marathon Oil Corp.: See company description above.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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