Growth stocks should be a part of every investor’s portfolio.
These stocks can help to increase the value of your portfolio over time to build up that nest egg you can use for retirement.
Of course, it is important to select the right growth companies to include within your portfolio.
You should watch for attributes such as sustainable tailwinds, catalysts to grow the business, and a long track record of operational performance.
These characteristics will allow you to confidently own the stock and enjoy the ride as it continues to deliver healthy capital gains.
Here are five US growth stocks that may fit the bill and become part of your buy watchlist.
Zscaler (NASDAQ: ZS)
Zscaler operates a platform that protects customers from cyberattacks and data loss.
Its Zero Trust Exchange is the world’s largest in-line cloud security platform that is distributed across 150 data centres globally.
For its fiscal 2024’s first quarter (1Q FY2024) ending 31 October 2023, revenue shot up close to 40% year on year to US$496.7 million.
This strong performance followed a 48% year-on-year jump in revenue to US$1.6 billion for FY2023.
1Q FY2024’s free cash flow also more than doubled year on year from US$95.6 million to US$224.7 million.
The business also saw healthy customer momentum.
Customers with more than US$1 million in annual recurring revenue (ARR) climbed 34% year on year to 468.
Zscaler also upgraded its FY2024 guidance for revenue to grow between 29% to 30% year on year, up from the previous range of 27% to 28% year on year.
Chipotle Mexican Grill (NYSE: CMG)
Chipotle Mexican Grill serves Mexican food and has more than 3,300 restaurants across the US, Canada, the UK, Germany and France as of 30 September 2023.
The restaurant chain reported a strong set of earnings for the first nine months of 2023 (9M 2023).
Revenue rose 14% year on year to US$7.4 billion while operating income jumped 38.2% year on year to US$1.2 billion.
Net profit came in at US$946.7 million, up 40.2% year on year.
Chipotle also generated a positive free cash flow of US$1.1 billion for 9M 2023, nearly double the US$586 million it churned out a year ago.
For the quarter, comparable restaurant sales increased by 5% and 62 new restaurants were opened.
2024 should see the company opening between 285 to 315 new restaurants to increase its presence and garner more sales.
Starbucks (NASDAQ: SBUX)
Starbucks is a global coffee chain with more than 38,000 stores worldwide serving high-quality arabica coffee.
For its fiscal 2023 (FY2023) ending 30 September 2023, Starbucks saw total revenue rise 11.6% year on year to US$36 billion.
Operating profit climbed 27.1% year on year to US$5.9 billion while net profit rose 25.7% year on year to US$4.1 billion.
A total of US$2.16 per share in cash dividends were declared for FY2023.
The coffee chain also generated positive free cash flow of US$3.7 billion for the fiscal year, up 43.8% year on year.
In the US, active Starbucks rewards membership reached 32.6 million, up 14% year on year.
New global store growth of around 7% is expected for FY2024 with three-quarters of this growth coming from outside the US.
Starbucks plans to hit 41,000 stores globally by the end of FY2024.
Freshworks (NASDAQ: FRSH)
Freshworks builds business software augmented with artificial intelligence in the areas of IT, customer support, sales, and marketing.
The company reported an encouraging set of earnings for 9M 2023 with revenue rising by 19.6% year on year to US$436.3 million.
Operating cash flow also turned positive for 9M 2023 and a free cash flow of US$49.2 million was generated, reversing the negative free cash flow of US$18.8 million a year ago.
Customer metrics were also encouraging.
Customers with more than US$5,000 ARR increased 17% year on year to 19,551 while those with more than US$50,000 ARR jumped 32% year on year to 2,268.
Just this week, Freshworks announced a strategic collaboration with Amazon (NASDAQ: AMZN) Web Services to develop and expand Freshworks’s software capabilities on the latter’s platform.
This move will increase the visibility and reach of Freshwork’s products and enable Amazon Web Services customers to find new ways to purchase and use Freshwork’s software.
The Trade Desk (NASDAQ: TTD)
The Trade Desk, or TTD, is a technology company with a cloud-based platform to help advertisement buyers create, manage, and optimise their digital advertising campaigns.
The company put up a robust performance for 9M 2023 with revenue jumping 23.3% year on year to US$1.3 billion.
Operating profit more than quadrupled year on year to US$56 million.
TTD also generated a positive free cash flow of US$479.5 million for 9M 2023, 43.6% higher than the US$334 million generated in the prior year.
Management believes that the company has a long runway for growth as all advertising will eventually be transacted digitally.
It estimates that it has a total addressable market of around US$830 billion which represents total global advertisement spending.
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Disclosure: Royston Yang owns shares of Starbucks.
