When investors want maximum returns, they go for growth stocks. With stronger momentum than value stocks, these stocks can produce generational wealth. Granted, this level of potential also comes with significant risk, as growth stocks usually carry frothy valuations and must produce excellent earnings to maintain their valuations.
While you can buy and hold growth stocks, some investors believe in a short-term approach, which can also yield good results. If you want to ride on some momentum, here are some companies to consider.
Perion (PERI)
Perion (NASDAQ:PERI) is an undervalued advertising technology (adtech) stock that combines double-digit profit margins with high-growth revenue and earnings. It’s a hidden gem in the industry with tremendous long-term potential, but the company’s recent announcement makes it a compelling choice for short-term gains.
The company recently announced that it expects 20% year-over-year revenue growth and 40% year-over-year adjusted EBITDA growth in the second quarter. Shares immediately jumped, rewarding investors with a 12% gain from the market close price on July 5th to the market close price on July 7th.
The preliminary results come as the company holds a P/E ratio under 16 and a 0.55 PEG ratio. Both of those numbers are significant bargains. Perion has been resilient while big advertisers experience earnings declines. The stock’s 52-week high is $42.75, and the company can get back to that level soon with its consistent revenue and earnings growth.
Zscaler (ZS)
Zscaler (NASDAQ:ZS) is a cloud security company that is down by more than 60% from its all-time high. While the stock’s price has taken a fall, investors rallied and helped the stock appreciate by roughly 60% since the start of May.
The company’s main weakness is that it is unprofitable, but the profit margins have moved in the company’s favor in recent quarters. In the company’s latest earnings report, GAAP operating margin improved from -30% to -13%. The GAAP for the nine months ended April 30th went from -32% to -16%.
Scalar has rewarded investors with a 5-year return that exceeds 250%. Short-term momentum can reward investors, but profitable quarters can send the stock soaring. Zscaler’s top-line numbers continue to impress, as the company reported year-over-year revenue growth of 46% in the most recent quarter.
Crowdstrike (CRWD)
Crowdstrike (NASDAQ:CRWD) stock has enjoyed a 39% year-to-date return but still remains well below its 52-week high of $205.73. Just like Zscaler, Crowdstrike enjoys high revenue growth. In the most recent earnings report, Crowdstrike enjoyed 42% year-over-year revenue growth.
However, the company’s net income was a surprise. Crowdstrike reported a profitable quarter, bringing in a GAAP net income of $0.5 million. While that number looks unimpressive, it breaks a streak of unprofitable quarters for the cybersecurity company. A streak of profitable quarters can support a higher stock price and move it closer to 52-week highs.
The company views artificial intelligence as an opportunity to expand market share and increase earnings moving forward. In the most recent press release, George Kurtz, the CEO, said the following about AI, “Our demonstrated leadership in leveraging AI to drive better security outcomes and consolidate security spend strategically positions CrowdStrike to win in our markets.” The company has initiated or strengthened several partnerships with Abnormal Security, AWS, the Department of Defense, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and others.
Crowdstrike is a high-growth stock that recently discovered profitability. If the trend continues, Crowdstrike can gain a lot of ground from here.
On this date of publication, Marc Guberti held a long position in PERI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
