The strong performance of the US market indices surprised many investors.
Growth stocks have staged a robust performance year-to-date, with the technology-heavy NASDAQ Composite Index climbing nearly 29%.
The bellwether S&P 500 Index did well, posting a 24.6% year-to-date gain and lagging just slightly behind the NASDAQ.
Investors can find stocks that perform significantly better than these indices if they look hard enough.
We highlight four growth stocks and determine if they can lift your investment portfolio to much higher levels.
Toast (NYSE: TOST)
Toast provides a cloud-based, all-in-one digital technology platform catered to the restaurant and food & beverage community.
The company operates a software-as-a-service that provides restaurants with aspects such as point of sale, payments, digital ordering, and more, to enable them to operate efficiently.
Shares of Toast shot up 135% year-to-date and have hit their 52-week high of US$42.50.
The company reported strong growth for the first nine months of 2024 (9M 2024).
Revenue jumped 28% year on year to US$3.6 billion while gross profit shot up 41% year on year to US$857 million.
The business’s gross margin improved from 21.5% in 9M 2023 to 23.7% in 9M 2024.
Toast also generated a positive free cash flow of US$172 million, up sharply from just US$12 million in the previous corresponding period.
Third quarter 2024 (3Q 2024) highlights were impressive.
Gross payments volume through Toast’s platform increased by 24% year on year to US$41.7 billion.
The company has expanded its presence to nearly 127,000 locations for a 28% year-on-year increase.
During its Investor Day held in May this year, management believed the company had just a 13% market share of the total US restaurant’s total addressable market (TAM).
The idea was for Toast to expand its presence globally, which would significantly expand its TAM.
There are 875,000 restaurants in the US but around 1.15 million restaurants globally make up Toast’s TAM.
In the future, global restaurant ex-China TAM looks set to grow to 15 million.
The introduction of food and beverage retail as an additional vertical will open up new revenue streams for the company while expanding its TAM further.
Lemonade (NYSE: LMND)
Lemonade is an insurance provider that utilises artificial intelligence (AI) and behavioural economics that uses bots and machine learning to aim for zero paperwork and faster processing.
The company offers renters, homeowners, pets, car, and life insurance.
Lemonade’s share price shot up to its 52-week high of US$40.50 and has more than doubled year-to-date.
The insurance company continued to see revenue grow in 9M 2024, rising by 20.2% year on year to US$377.7 million.
Although the business was still loss-making and free cash flow negative, it made good progress on its operating metrics.
The number of customers at the end of 30 September 2024 stood at 2.31 million, up from 1.98 million a year ago.
Premium per customer also rose 6.1% year on year to US$384.
Lemonade’s gross loss ratio also trended down, going from 88% in the third quarter of 2023 (3Q 2023) to 77% in 3Q 2024.
This represented the sixth consecutive quarter where the gross loss ratio declined.
Royal Caribbean Cruises (NYSE: RCL)
Royal Caribbean Cruises, or RCL, is a cruise company that owns a global fleet of 68 ships across five brands that sail to approximately 1,000 destinations.
Shares of Royal Caribbean have shot up 95% year-to-date and hit their 52-week high of US$238.
The company saw strong demand for cruises that allowed it to report a robust set of financial results for 9M 2024.
Revenue climbed 20.4% year on year to US$12.7 billion while operating profit surged 50.9% year on year to US$3.5 billion.
Net profit soared 63.7% year on year to US$2.3 billion and Royal Caribbean also generated a positive free cash flow of US$1.1 billion for 9M 2024.
The good results prompted management to restore the cruise company’s quarterly dividend, with a dividend of US$0.40 per share that was paid in October 2024.
Management remarked that demand remained strong for 2025 with load factors similar to prior years but at higher overall rates, which means investors can look forward to higher revenue as bookings ramp up.
Royal Caribbean also increased its full-year earnings per share guidance because of strong revenue momentum and an increase in prices for the fourth quarter.
The company will expand its private destinations portfolio with Perfect Day Mexico expected to open in 2027 along with Silversea’s new 150-room hotel in Puerto Williams, Chile.
Spotify Technology (NYSE: SPOT)
Spotify is the world’s most popular streaming service boasting 640 million users across 184 markets.
Shares of the music streaming company soared 146% year-to-date and hit their all-time high of US$489 recently.
Revenue for 9M 2024 climbed 19.4% year on year to US$11.4 billion.
Operating profit stood at US$888 million, reversing the operating loss of US$371 million a year ago.
Net profit came in at US$771 million for 9M 2024, and Spotify also generated a positive free cash flow of US$1.4 billion for the period.
As of 30 September, Spotify had 252 million premium subscribers which saw a 12% year-on-year increase.
The business continued to make strides in improving its services.
Spotify launched AI DJ to Spanish-speaking fans in 18 markets and also expanded its AI playlist in Beta to six markets.
Meanwhile, comments were also rolled out for podcasts, allowing more interactivity between users.
Spotify also increased music video availability to 85 additional markets for a total of 97 markets.
Dive into the future of technology with our newest FREE report, “The Rise of Titans.” Discover how the big 7 US tech stocks can be your ticket to huge long-term gains. Download your copy today and see how easy it is to supercharge your portfolio.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang does not own shares in any of the companies mentioned.
