Growth stocks can help to supercharge your investment portfolio and boost your retirement fund. The key, however, is to carefully select the right stocks to own for the long term. Ideally, you will want to own stocks that are displaying consistent increases in revenue and profits and are on the path to continue doing so. They should also have long-term strategies in place to grow the business along with a large total addressable market to allow for a long growth runway.
These attributes are important when filtering out which stocks you wish to buy, but there is another factor at play that will help to nail the decision. Some stocks could see their share prices languish even as their business continues to grow. This phenomenon results from inflated expectations set by investors who were subsequently disappointed. In my opinion, such stocks are prime candidates for accumulation as the share price should eventually follow the upward trajectory of the business.
Here are three growth stocks whose share prices could start to soar either this year or in the years ahead.
Image source: Getty images.
Wingstop
Wingstop (WING 4.84%) is a food and beverage chain that specializes in chicken wings and chicken tenders. The restaurant chain boasts more than 1,700 restaurants across the U.S., Europe, Asia, and the Middle East. The chicken wing specialist has grown both its revenue and net profit impressively over the years, as shown below.
| Metric | 2021 | 2022 | 2023 |
|---|---|---|---|
| Revenue (in millions) | $282.5 | $357.5 | $460.1 |
| Operating income (in millions) | $73.8 | $91.9 | $112.6 |
| Net income (in millions) | $42.7 | $52.9 | $70.2 |
Data source: Wingstop. Fiscal years end Dec. 31.
Net income was not the only metric that grew steadily. The business also generated increasing amounts of free cash flow. From 2021 to 2023, free cash flow nearly quadrupled from $20.9 million to $80.8 million. Over this period, Wingstop also grew its systemwide store count from 1,731 to 2,214. The restaurant chain managed to grow its quarterly dividend from just $0.14 at the beginning of 2021 to $0.22 by 2023, and raised its dividend further to $0.27 last year. Despite this solid performance track record, shares of the company have declined by almost 18% in the past year (as of Feb. 19, 2025).
NASDAQ: WING
Key Data Points
Wingstop's strong performance has continued into 2024. Revenue jumped 36% year over year to $625.8 million while operating income climbed 47.1% year over year to $165.6 million. Net income surged by nearly 55% year over year to $108.7 million. A total of 349 new restaurants were opened in 2024. Domestic same-store-sales growth registered a 19.9% year-over-year increase, doing better than the 18.3% the previous year.
Management sees good potential for further growth this year. Domestic same-store-sales growth is projected to be in the low-to-mid-single digits and the company intends to increase its number of stores by between 14% to 15%. Back during Wingstop's Investor Day in 2022, management outlined the business's long-term potential to open more than 7,000 restaurants worldwide, with 4,000+ in the U.S. and the remainder in international locations. With such ambitious plans, investors can expect Wingstop to post steady long-term growth in both revenue and profits, as well as increase its dividends along the way.
Deckers Outdoor
Deckers Outdoor (DECK 1.05%) designs, markets, and sells footwear and apparel under its portfolio of brands such as UGG, Hoka, Teva, and Ahnu. The business has enjoyed success in growing its top and bottom lines over the years, as illustrated in the table below.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue (in billions) | $3.2 | $3.6 | $4.3 |
| Operating income (in millions) | $564.7 | $652.8 | $927.5 |
| Net income (in millions) | $443.7 | $502.7 | $747.9 |
Data source: Deckers Outdoor. Fiscal years end March 31.
Like Wingstop, Deckers Outdoor's business is also a solid, cash-flow-generating machine. From fiscal 2022 to 2024, free cash flow improved from $121.3 million to $943.8 million, a massive jump of more than eightfold. Despite this consistent performance, shares of Deckers have risen by a mere 9% in the past 12 months.
The footwear and apparel manufacturer continued to report encouraging financial results for the first nine months of fiscal 2025 (ended Dec 31, 2024). Revenue rose 19% year over year to $3.96 billion while operating income climbed 28.3% to $1 billion. Net income came in at $814.7 million, up nearly 29%. Free cash flow for the period also rose 6% to $1.05 billion.
NYSE: DECK
Key Data Points
In particular, the third quarter of the fiscal year also saw record revenue and margins, with the gross margin improving by 1.6 percentage points from 58.7% to 60.3%. The company's UGG and Hoka brands are selling well internationally across many regions and are attracting more customers through their innovative products.
Management provided an upbeat outlook for the full fiscal 2025, with sales expected to rise by around 15% year over year to $4.9 billion. Diluted earnings per share is expected to be in the range of $5.75 to $5.80, with the midpoint representing year-over-year growth of 18.8% compared with Decker's fiscal 2024 earnings per share of $4.86 (adjusted for the 6-for-1 share split in September 2024).
Just last month, Hoka launched its newest running shoe, Bondi 9, which offers both cushioning and support. This latest addition to Deckers performance footwear line should help drive sales for the company and allow it to continue its streak of solid financial performance.
Braze
Braze (BRZE 0.19%) operates a cloud-based customer engagement platform that allows marketers to collect data from any source to engage with their target customers. The business has enjoyed strong revenue and gross profit momentum, as shown in the table below.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue (in millions) | $238.0 | $355.4 | $471.8 |
| Gross profit (in millions) | $159.5 | $239.6 | $324.3 |
| Gross margin | 67% | 67.4% | 68.7% |
| Free cash flow (in millions) | ($39.7) | ($39.0) | ($6.5) |
Data source: Braze. Fiscal years end Jan. 31.
Gross margin is also improving every year, growing from 67% in fiscal 2022 to 68.7% in fiscal 2024. Braze also generated positive operating cash flow for fiscal 2024, reversing the previous two years of negative operating cash flow. Although free cash flow remained negative for fiscal 2024, the $6.5 million outflow was a sharp improvement compared with the prior fiscal year's $39 million outflow.
Braze continued to demonstrate strong growth for the first nine months of fiscal 2025. Revenue increased by 27% year over year to $433 million with gross profit improving by 26.6% year over year to $299.1 million. Gross margin, however, dipped slightly from 69.3% to 69.1% but was still higher than fiscal 2024's 68.7%. The good news is that Braze generated its first positive free cash flow of $4.4 million, reversing the free cash outflow of $2.9 million in the previous corresponding period.
During the quarter, the business also saw a healthy 24% year-over-year growth in large customers with annual recurring revenue of more than $500,000. In addition, the business boasted a high dollar-based net retention rate of 113%.
NASDAQ: BRZE
Key Data Points
Since Braze incorporated artificial intelligence (AI) into its cloud offering with its BrazeAI launch in June 2023, the company has been innovating with new offerings for its customers. For 2025, the business will introduce an AI agent to enable optimization and personalization. With real-time processing capabilities, BrazeAI can help customers to make better and quicker decisions.
Management estimates that its total addressable market will grow to $30 billion by 2028. This large market implies that there are ample opportunities for Braze to further grow its domestic and international footprint to post higher revenue and free cash flow.
