Growth stocks are an essential component of any investment portfolio as they can help to increase your wealth to better prepare you for retirement.
A good place to search for growth stocks in the US market as there are many global companies with sturdy business models.
As a growth investor, you need to look for companies with proven business models and a great track record of growing their revenue and earnings.
These stocks usually do not pay any dividends as they reinvest their profits to grow the business further.
Hence, a growth investor will usually invest in such stocks for capital gains as the share price rises in tandem with business growth.
Here are four US stocks that demonstrate healthy growth and could deliver impressive returns on your investment portfolio.
Salesforce (NYSE: CRM)
Salesforce is a software-as-a-service (SaaS) company that offers a platform for its clients to gain insights and information on their customers.
The company offers a comprehensive customer relationship management (CRM) software package for clients to get a 360-degree view of their customers.
Salesforce announced a strong set of earnings for its fiscal 2023 (FY2023) ending 31 January 2023.
Revenue rose 18% year on year to US$31.4 billion with subscription and support revenue coming in at US$29 billion, making up 92.4% of total revenue.
The SaaS company also saw its free cash flow climb 19.5% year on year to US$6.3 billion for FY2023.
Remaining performance obligations were up 12% year on year to US$24.6 billion and Salesforce has increased its share repurchase authorisation to US$20 billion.
Management projects that FY2024’s revenue can increase by around 10% year on year to between US$34.5 billion to US$34.7 billion.
At its Investor Day in September last year, Salesforce estimated that it has a total addressable market (TAM) of around US$290 billion and that its CRM industry is growing at a 13% compound annual growth rate between 2022 and 2026.
Okta (NASDAQ: OKTA)
Okta is also a SaaS company that offers identity management services on its platform.
The company offers secure access, authentication, and automation with its services and relies on the cloud to deliver its Okta Workforce Identity and Customer Identity Cloud solutions.
Okta has reported strong growth for FY2023 with its revenue jumping 43% year on year to US$1.86 billion.
Subscription services made up the bulk (96%) of revenue and climbed 44% year on year to US$1.79 billion.
Like Salesforce, Okta also generated a free cash flow of US$65 million, though this was lower than FY2022’s US$87 million.
Okta has identified multiple growth avenues as it can use a “land and expand” strategy (i.e. increase its use cases within the same organisation) or pursue international expansion.
Okta has identified a sizable opportunity with a TAM of US$80 billion that it can tap into.
The SaaS company also enjoys a good dollar-based net retention rate of 120% across the last 12 quarters and saw its customer base increase by 17% year on year to 17,600.
Adobe (NASDAQ: ADBE)
Adobe offers clients a wealth of different functions including digital experiences, digital signatures, design ideas, and customer relationship management.
The company operates a SaaS model through various cloud offerings such as Document Cloud, Creative Cloud, and Experience Cloud.
Revenue for its first quarter of fiscal 2023 ending 3 March rose from US$4.26 billion to US$4.66 billion.
Document Cloud saw 16% year on year revenue growth to US$634 million while Experience Cloud saw revenue rise 14% year on year to US$1.18 billion.
The digital media division saw revenue rise by 9% year on year to US$3.4 billion.
Adobe also generated a free cash flow of US$1.59 billion for the quarter.
The company looks poised to grow further with its recent US$20 billion of Figma, a design platform for teams to build products collaboratively.
Last month, Adobe also released Firefly, a family of new creative generative artificial intelligence (AI) that can generate high-quality images and text effects.
This new service will be embedded in all of Adobe’s cloud products and is part of a new series of generative AI services that the company plans to roll out.
Monster Beverage (NASDAQ: MNST)
Monster Beverage is a manufacturer and seller of energy drinks under popular brands such as Monster, Java, Rehab, and Reign.
For 2022, Monster reported that net sales rose 13.9% year on year to US$6.3 billion.
However, net profit declined by 13.5% year on year to US$1.19 billion because of higher costs arising from supply chain bottlenecks.
The company’s financial numbers also took a hit from the acquisition of CANarchy Craft Brewery.
The purchase was a way for Monster to enter the alcoholic beverage sector but resulted in margin pressures, integration expenses and preparation expenses for the launch of new products.
Despite the dip in profit, Monster continued to churn out a healthy free cash flow of US$675.5 million for 2022.
The company has also declared a two-for-one stock split to increase the affordability of its shares and has instituted price increases in certain international markets in the fourth quarter of last year.
The effects of this price increase should be seen this year and will positively impact gross margins.
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Disclosure: Royston Yang owns shares of Adobe.
