There's nothing wrong with the last generation of growth stocks, but that's not where you will find the explosive top-line growth that generates wealth-altering returns. When the next bull market run happens -- and it's a matter of when, not if -- risk-tolerant investors will want to be where high-octane performance is happening.
Who is delivering the kind of revenue gains that I see leading the way the next time growth stocks are trending higher? Let's go with Celsius Holdings (CELH 2.12%) and Brazil's Nu Holdings (NU 1.66%). They saw revenue surge 112% and 60% in their latest quarters, respectively. These are heady year-over-year gains, and that's just the start of their impressive growth stories.
Celsius Holdings
The market doesn't see beverage stocks as a hotbed for growth opportunities, but take a sip of Celsius Holdings. The company behind a fast-growing line of canned functional energy drinks is growing its reach at next-level speed. Revenue growth has accelerated in back-to-back quarters, and it's not as if its latest blowout quarterly performance is being stacked against easy comparable results.
Revenue has risen a bubbly 104% through the first half of this year, and that follows back-to-back years of top-line results more than doubling. It's easy to dismiss Celsius as trendy, but revenue growth is topping 40% for the seventh consecutive year. This isn't a pet rock. It just rocks, pet.
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In an investing environment where monster gains have been rare, Celsius stock has more than doubled over the past year. It's a 42-bagger over the last five years.
The appeal is easy to figure out. These cans of fruit-flavored sparkling beverages help consumers burn fat and calories by temporarily ramping up the body's metabolism. The liquid refreshment tastes good, too. The kicker here is that this story is just getting started. PepsiCo (PEP -0.62%) became a minority shareholder in Celsius last year, and in the process struck a partnership to be its new distribution partner. PepsiCo is a globetrotter, and with international sales currently accounting for less than 5% of Celsius revenue, the rest of the world is now within reach.
The bottom line is growing even faster than the top line at Celsius, but the stock isn't cheap. Celsius is trading at a stiff 64 times next year's earnings. It's not for the timid, but many of the market's biggest growth stock winners seem expensive ahead of their monster runs.
Nu Holdings
Celsius may be emerging as a household name, but the same can't be said about Nu -- unless you happen to live in Brazil. The parent company of Latin American digital financial services provider Nubank is gaining market share in its home country. An impressive 49% of adults in Brazil now have a Nubank account, making it the country's fourth-largest financial institution. In a banking industry where market leadership usually takes several generations to build out, Nu has gotten here in less than a decade.
Revenue rose 60% on a foreign-exchange-neutral basis in its latest quarter, well ahead of the 50% growth that analysts were targeting. Many slower growing fintech stocks are struggling on the bottom line, but Nu has now been profitable for four straight quarters.
Nu serves 83.7 million customer accounts, a respectable 28% increase. Revenue is climbing more than twice as fast because average revenue per user keeps climbing as Brazilians get more comfortable and active on the platform. Engagement is the key to keep monster growth coming when it already has nearly half of the country on its platform, but -- like Celsius -- the real opportunity awaits outside of its home turf.
Nu expanded into Mexico and then Colombia in recent years. It's not at the point where international expansion is moving the needle, but customer accounts are growing faster than Brazil in both new markets on a percentage basis. Despite the monster growth and percolating near-term prospects, Nu is trading at a reasonable 23 times next year's projected earnings. Sleepy banks may be cheaper, but growth investors like their stocks to be wide awake. Nu is wide awake, and it didn't need to crack open a can of Celsius to get there.
