All investors are ultimately hungry for growth. You might be on the prowl for rapidly rising revenues, enthusiastically expanding earnings, or even delightfully doubling dividends. Either way, an investment only makes sense if you expect it to do better than a savings account in the end.
Extreme growth in any one of these areas might be a sign of great things ahead -- or simply a one-time freak data reading with no real meaning for the long term. That's why I don't like to zero in on absolute winners in any particular growth metric, but prefer to add a layer of human analysis and then grab the best of the best in several different lights.
The names listed here may not be the top performers in any particular category -- the Fool has already covered that approach recently, once or twice. But they will represent a balanced view of the best high-growth stocks in the markets today.
Facebook, the analyst favorite
First, let's lean on Wall Street's analysts.
The average analyst firm expects Facebook (NASDAQ:FB) to grow its earnings by 35% a year over the next 5 years.
Backing up that lofty expectation, the social network has grown earnings by an average of 69% a year over the last five years, while sales have increased by 55% annually. That's an impressive growth history.
Moreover, Facebook shares have been incredibly profitable for early investors. Share prices have more than tripled since the initial public offering in May, 2012. The stock fell at first, but bounced back with a lasting vengeance. If you happened to grab Facebook shares near the very bottom, some three months after the IPO, you could be looking at returns of more than 550% by now.
Of course, I was an early skeptic and would not have recommended buying into Facebook in 2012. But the company has managed to strike a reasonable balance between online traffic and monetization, despite early signs of an excessive focus on the cash-generating side of that equation.
Today, Facebook has evolved into a truly progressive innovator, with plans to provide internet service to everyone and everywhere, fantastic platforms for live and panoramic videos, and deep research into artificial intelligence. I'm still not a shareholder here, but I have lost that firm conviction of Facebook being doomed to utter failure.
The social network is growing up, and poised to become a true force of long-term innovation. Yes, the stock is expensive at 62 times trailing earnings. But that kind of comes with the territory when every financial metric is growing by leaps and bounds. For now, even the pessimists have thrown up their hands and given up -- less than 1% of Facebook's shares are being sold short right now.
Centene, the proven performer
Health insurance specialist Centene (NYSE:CNC) can look back at tremendous results over the last five years. In that period, earnings doubled while revenue increased sixfold. Share prices followed suit, rising more than 360%.
The company benefits greatly from Obamacare policies such as the expansion of Medicaid and government-subsidized coverage for low-income consumers. Centene also keeps a close eye on its expenses, leaving room for a small but significant profit margin under that comfortable government-backed revenue umbrella.
The upcoming elections could either boost Centene's chosen business model even further or dismantle its revenue completely depending on whether Hillary Clinton or Donald Trump wins. So Centene is far from a risk-free investment today, and you might want to hold off until November's election results are in.
MeetMe, flying under the radar
Online dating service operator MeetMe (NASDAQ:MEET) has grown in fits and starts. Sales soared in 2012 thanks to two smart acquisitions. Earnings and cash flows stayed flattish for a couple of years, then came roaring back in 2016.
The company seems to have figured out the mobile app markets now, driving user activity and revenues to all-time highs. Mobile sales now account for 92% of MeetMe's total revenue. In the recently reported second quarter, that mobile strength helped MeetMe nearly double Wall Street's earnings expectations.
Share prices have now quadrupled over the last 52 weeks, but MeetMe still trades at a bargain-basement 9 times trailing earnings and 5.3 times annual sales.
This microcap ticker is going places fast, but still remains largely undiscovered by the market at large. MeetMe's small size and lumpy growth do present significant risks, however -- and reflecting that difficult risk/reward balance, more than 15% of all shares are sold short.
This is not a stock to invest your life savings in, but perhaps an interesting turnaround play with a large potential upside. Date MeetMe but don't marry it.