Compounded growth can have a significant impact on your portfolio and progress toward retirement goals. The difference between an 8% annualized return and a 10% annualized return over 20 years is staggering.
If you start with a $10,000 portfolio, you will end up with $46,609.57 after 20 years of an 8% annualized return. Raising your annualized return to 10% will result in a $67,275.00 portfolio within the same amount of time.
Many investors gravitate toward growth stocks to outperform the market. These assets tend to deliver elevated returns due to rapidly rising revenue and promising potential. Investors may want to consider these growth stocks for 2024.
BILL Holdings (BILL)
Businesses need to stay on top of their finances to ensure everyone gets paid on time, and they are prepared for the tax season. Many businesses turn to companies like BILL Holdings (NASDAQ:BILL) to help with their cash flow.
The financial software prioritizes the large market of small and medium-sized businesses. The software makes it easy to automate financial operations, manage budgets and cash flow, and perform other vital tasks. Over 470,000 businesses currently use BILL, which means it has a large addressable market.
The company highlights various reports in its November 2023 Investor Deck that indicate there are over 34 million small and medium-sized businesses in the U.S. Also, over 70 million small and medium-sized businesses exist globally.
BILL continues to achieve high revenue growth and recently reported 33% year-over-year (YOY) growth in the Q1 2024. Net losses are shrinking and can soon pave the way for profitability. Although BILL Holdings declined by 25% in 2023, it’s more than doubled over the past five years.
Wingstop (WING)
Wingstop (NASDAQ:WING) is a richly valued fast food restaurant that nearly doubled in 2023. Shares of the mid-cap company have gained more than 300% over the past five years, offering a 0.35% dividend yield. That doesn’t include Wingstop’s special dividends, which can add an additional $3-$5 per share each year.
The fast food chain uses a throwback theme for its locations. The company aims for a 1930s and 1940s pre-jet aviation theme that has been around since 1994. In the Q3 2023, Wingstop opened 53 new locations and increased revenue by 26.4% YOY. Digital sales was a strong spot for the company, which experienced 66.9% YOY growth.
Also, WING’s rapidly growing net income can make the valuation easier to justify in the future. Wingstop reported 46.0% YOY net income growth in the most recent quarter. The main criticism around the company is its valuation. But that was also a strong criticism for Chipotle (NASDAQ:CMG) for several years. That stock has gone up by roughly 400% over the past five years.
While Wingstop isn’t guaranteed to be the next Chipotle, investors should be encouraged by high growth in revenue and earnings. Therefore, investors with sights on a 10-year horizon have extra time for the valuation to become more reasonable.
ExlService (EXLS)
ExlService (NASDAQ:EXLS) is a global analytics and digital solutions company. Many clients turn to the company to interpret data and use key insights to improve their businesses.
EXLS stock is a good candidate for “growth at a reasonable price.” The stock fell by 10% in 2023 but has almost tripled over the past five years. Also, the company has steadily achieved double-digit YOY revenue and earnings growth.
ExlService continued that trend with 13.7% YOY revenue growth in Q3 2023, with revenue reaching $411.0 million in said quarter. Additionally, net income jumped by 12.2% YOY. The stock has a $5 billion market cap and trades at a 30 P/E ratio.
And, despite economic uncertainties, leadership felt confident about raising revenue and EPS guidance for the full year 2023. In fact, the company is expecting revenue to fall between $1.620 billion and $1.628 billion. Further, the midpoint represents 15.2% YOY growth for the entire year. For the sake of comparison, ExlService closed out fiscal 2022 with $1.41 billion in revenue.
Indeed, a lackluster 2023 can set the stage for a more promising 2024. But, this growth stock has rewarded long-term investors and offers more insulation than most growth-oriented investments.
On the date of publication, Marc Guberti 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.
