Top 3 Growth Stocks Likely to Surround the Market in 2024

One of the best ways to accumulate lasting wealth is to invest in growth companies and hold these stocks for many years. While it's difficult to know how a stock will perform in any given year, identifying companies with strong long-term prospects and improving financial performance in the near term can increase your chances of buying in a timely manner.

Recently, three contributors to the Motley Fool were asked to pick three stocks that they thought might outperform major indices this year. Here are their choicese.l.f. Beauty (NYSE: ELF),Revolve Group (New York Stock Exchange: RVLV)(math.) andSweetgreen (NYSE: SG)The reason.

e.l.f. could one day become the world's top beauty brand.

John Ballard (e.l.f. Beauty):Shares of the cosmetics brand have soared 500% in the past three years. last year, E.l.f. Beauty was the first company in theTarget The company's sales growth has accelerated on the back of a successful distribution strategy by major retailers such as the U.S. Department of Commerce. But the company's shares have fallen recently, which makes it a good time to buy as the company is in the early stages of global expansion.

In its recently released quarterly report, sales increased by an impressive 85% year-over-year. It is now the #3 brand in the cosmetics category in the US.

Importantly, e.l.f. Beauty's successful expansion in areas such as skin care shows that the brand is gaining significant consumer recognition. These results are the result of a focus on providing great products at great prices, complemented by excellent marketing.

The company has also demonstrated tremendous international growth potential. Over the past five years, its international sales have grown at an annualized rate of 371 TP3T, with last year's growth rate reaching 1,131 TP3T.

With a P/E ratio of 74.5, the stock is expensive, but I think it's worth paying for. In fact, based on Wall Street's long-term earnings growth forecast of 35% per year, its forward P/E of 48 looks reasonable. Investors should expect e.l.f. Beauty stock to outperform major indices in 2024 and beyond.

The Future of Fashion

Jennifer Seibel (Revolve Group):Like almost every industry, the apparel industry is moving toward greater use of digital channels and artificial intelligence (AI), and Revolve Group is leading the charge, operating two luxury women's apparel sites, Revolve and FWRD, whose differentiated model (powered by AI) is resonating with its loyal and growing customer base.

Revolve uses artificial intelligence for product selection throughout its business, but it's much more than that. It's been in the fashion business for 20 years and has a deep pool of data that it uses to design and produce the styles its customers want. Because it does it all online, it doesn't have to worry about the cost or time of getting the clothes into a store - it can put the designs online and get them into the hands of shoppers as soon as they're produced. Last year, it created the first-ever AI billboard campaign, using AI in marketing, events and operations.

In addition to its efforts in artificial intelligence, it has an innovative marketing model. It does affiliate marketing through celebrities and influencers, and works with celebrity partners to design carpet and launch capsule collections. It reaches out to its target audience of millennials and Generation Z online, and organizes events and parties to deepen relationships.

In total, Revolve's strategy of offering luxury goods to mass market consumers has resulted in high sales growth. However, these core customers are now cutting back on discretionary spending, and Revolve's fourth quarter revenues declined 11TB3T year-over-year, with net income down 561TB3T.

However, customer metrics tell a different story. Active customers grew 91 TP3T year-over-year, the total number of orders grew 51 TP3T, and the average order value declined 21 TP3T, indicating that shoppers still like Revolve, but they are spending less.

This demonstrates Revolve's potential as the economy improves. Its marketing strategy is working, and Revolve is well-positioned to climb the ladder by providing customers with products they love.

Fast food stars with a twist

Jeremy Bowman (Sweetgreen): Sweetgreen has had a rough time since its initial public offering, but investors finally seem to recognize the opportunity for the fast-food subversive.

The company reported a strong fourth quarter, with revenues up 29% to $153 million and average unit volume of $2.9 million, in line with fast-food leadersChipotle Mexican Grill) does not compare.

Based on its business philosophy alone, Sweetgreen has a bright future ahead of it. As a fast food salad chain, it has created a new category, and its high average unit volume is a clear indication of the demand for its products.

However, Sweetgreen may continue to climb this year, and there's another reason why it's circling the stock market.

The company has begun rolling out a technology it calls the "Infinite Kitchen"-essentially a robotic salad assembly platform that speeds up order preparation and throughput while reducing labor expenses.

After opening two pre-restaurants with robotic kitchens, Sweetgreen plans to open seven to nine locations and remodel two to four this year. This has greatly accelerated the platform's growth.

If it achieves the results the company expects, it will change Sweetgreen's game rules. If it can improve profitability in addition to revenue growth and high average unit volume, Sweetgreen could become a more valuable company.

It may take a couple of quarters, but investors seem to be ready to return the good news, judging by the surge in the stock price after the fourth-quarter earnings announcement, while Sweetgreen's stock is still down 57% from its post-IPO high.

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Jennifer Saibil has no position in any of the stocks mentioned above. jeremy Bowman has positions in Chipotle Mexican Grill, Revolve Group and Target. john Ballard has a position in e.l.f. Beauty. the Motley Fool recommends Sweetgreen. the Motley Fool has a disclosure policy. the Motley Fool recommends Sweetgreen. Chipotle Mexican Grill, Revolve Group, Target and e.l.f. Beauty. The Motley Fool recommends Sweetgreen. The Motley Fool has a disclosure policy.

Top 3 Growth Stocks That Could Be Driving the Market in Circles by 2024 was originally published by The Motley Fool.