Yuka’s WW 4/5/25: Growth stocks: Can they sustain their growth?
When investing in growth stocks, one persistent question lingers in investors’ minds: these companies have grown rapidly so far, but how long can they sustain it? Since we don’t have a crystal ball to foresee the future, we must forecast by analyzing the historical performance and financial growth of companies, particularly their sales and profits.
Toyo Keizai identified companies with a sales growth rate exceeding 20% for five consecutive years, including forecasts for the next fiscal year by analysts. To exclude companies struggling with chronic deficits due to significant upfront investments, the list was further refined to include only those maintaining operating profits over five consecutive periods. After screening through Shikiho Online, 27 companies met these criteria. Does the number seem too low?
The ranking below is based on the highest revenue growth rates from five fiscal years ago to four fiscal years ago. For instance, the top-ranking company, Kasumigaseki, achieved a remarkable 66.2% growth from five fiscal years ago (FY 8/2020) to four fiscal years ago (FY 8/2021). Additionally, I included the recent growth expectations for the top 10 companies, spanning from the last fiscal year to the upcoming fiscal year.
The data highlights that IoT, cloud computing, and data-related companies, as well as consultancies, have demonstrated robust growth over the last five years. Notably, many companies on the list are small-cap firms. Although some of them trade at high multiples, the recent market sell-off could present attractive entry points for investors.
Would you like to:
- Access the list of 27 companies?
- Me to work on any of these 10 companies
Please become my clients!