When done right, growth investing is a strategy that can be quite lucrative over the long haul. The strategy is to pick quality businesses with significant catalysts that will power the top and bottom lines higher over time. For less mature businesses not yet turning a profit in newer industries, revenue growth is a great measure of whether a business is properly executing and is a good candidate for growth investors. If the business is firing on all cylinders with strong growth figures and progressing toward profitability, investors are likely to reward it with a higher valuation as the years unfold.

Pet insurer Trupanion (TRUP -3.09%) could fit this requirement. The stock has soared 26% year to date but is 40% below its 52-week high. Does the company have what growth investors are looking for? 

Trupanion extended its impressive revenue growth streak

If you are an American who thinks the world of your pet, you aren't alone. According to a YouGov survey conducted a few years ago, a whopping 88% of American pet owners viewed their pets as family members. These findings also appear to apply to much of the world.

Given that the global pet population is growing and veterinary costs are increasing, the global pet insurance market is set to do well in the years ahead. Grand View Research expects the global pet insurance market to compound nearly 17% each year from $9.5 billion in 2022 to $32.7 billion by 2030.

Trupanion generated $246 million in revenue during the fourth quarter of 2022, which was up 26.6% over the year-ago period. That marked the 61st consecutive quarter that the company delivered 20%-plus revenue growth.

Considering the favorable industry trends, Trupanion's total pets enrolled number rocketed 30.7% higher year over year to top 1.5 million in the fourth quarter. The value proposition remained compelling enough that the average monthly retention of the company's customers remained stable at 98.7% for the quarter.

Although Trupanion again lost money during the quarter -- recording a net loss per share of $0.23 -- the company is operating in a not-yet-mature industry, so this isn't surprising. Gaining market share in a developing industry requires aggressive capital expenditures, which is resulting in losses.

The company believes that adjusted operating income is a more appropriate measure of profitability than net loss per share because of its aforementioned heavy investments aimed at gaining more enrolled pets. Trupanion's adjusted operating income grew 11% over the year-ago period in the quarter to $24.8 million. This metric only considers the company's enrolled pets from the year prior and doesn't include acquisition costs of new pets added.  

And Trupanion is making moves like partnering with Aflac to market pet insurance in Japan to millions of customers later this year. This puts significant weight behind the argument that the company's growth story is just beginning. It is likely that Trupanion will continue to diligently invest in acquiring more enrolled pets until it is a more mature business. The company probably won't turn a profit over the next few years, but analysts anticipate that its net loss per share will narrow from $0.98 in 2023 to $0.51 in 2026. This shows a positive trend toward becoming profitable,  possibly by the end of the decade.

A veterinarian with a stethoscope examines a cat.

Image source: Getty Images.

The balance sheet is healthy

Trupanion stands a good chance of realizing its tremendous growth potential because the company has the financial resources to continue making the right moves to grow. Its  net cash and short-term investments balance was $153 million as of Dec. 31. Putting this into perspective, the company has the capital to add nearly 530,000 pets to its existing pet base at the $289 average pet acquisition cost for 2022.

A good value for growth investors

Trupanion is a fundamentally robust company. However, this doesn't seem to be priced into the stock's current valuation.

Trupanion's trailing-12-month price-to-sales ratio of 2.6 is noticeably lower than its 10-year median of 3. With fundamentals that are arguably as strong now as they have been at any point in the past, the company deserves a higher valuation multiple. That's what makes it a savvy buy for growth investors at the current share price around $58.