Stocks to buy

The Billionaire’s Bet: 3 Stocks Poised for Parabolic Profits

Billionaires reach high net worths by putting their capital to use. They invest in stocks, real estate and other assets that can achieve higher returns than savings accounts. These investors have more time to research stocks or hire someone to make the decisions for them.

However, you don’t have to be a billionaire to pick stocks with immense profit potential. It’s possible to find captivating picks without the type of team billionaires get to enjoy. Investors looking for stocks posting high-profit growth may want to consider these three picks.

E.l.f. Beauty (ELF)

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E.l.f. Beauty (NYSE:ELF) is a cosmetics company that offers beauty products. These products do not have the unethical ingredients commonly associated with e.l.f. Beauty’s competitors. The focus on ethical sourcing and quality products has turned the company into a main attraction among Gen Z.

The company’s Q3 FY24 results point to 85% year-over-year net sales growth, which helped the company gain an additional 305 basis points in market share. Net income went up by 41% year-over-year.

The third quarter of fiscal 2024 was e.l.f. Beauty’s 20th consecutive quarter of rising sales. A recent push into international markets can lead to further gains in the future. CEO Tarang Amin mentioned that international markets offer a significant runway for the company. 

The stock trades at a 59 forward P/E ratio and has been a top performer in financial markets. Shares have surged by 48% year-to-date, almost tripled over the past year, and gained more than 2,500% over the past five years. 

ServiceNow (NOW)

Source: Sundry Photography / Shutterstock.com

ServiceNow (NYSE:NOW) is a cloud computing company that helps businesses enhance their workflows and productivity. Over 8,100 enterprise customers use the company’s platform. 

ServiceNow generates steady recurring revenue from its platform. The company has approximately 1,900 enterprise customers with annual contract values above $1 million. The number of annual contract values exceeding $1 million grew by 33% year-over-year, so there is growing demand for the company’s most expensive offers. Many of these clients stick around based on ServiceNow’s 99% renewal rate. 

Long-term investors have outperformed the market with this stock. Shares are up by 73% over the past year and have gained 226% over the past five years. Rising revenue and net income growth can lead to further outperformance. The company reported 26% year-over-year revenue growth in the fourth quarter of 2023. Net income almost doubled year-over-year to reach $295 million.

The company’s remaining performance obligations suggest growth will continue. ServiceNow has $8.60 billion in this category, which is almost a year’s-worth of revenue. 

Chipotle (CMG)

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Chipotle (NYSE:CMG) has been riding the tailwinds of health-conscious buyers. More people want to eat healthier food and look for convenient ways to get it done. Chipotle has checked both of those boxes for years and continues to generate high returns for investors.

Shares are up by 78% over the past year and have gained 337% over the past five years. The stock currently trades at a 61 P/E ratio and has rising profit margins. That’s because of improvements in the company’s top and bottom lines.

Revenue increased by 15.4% year-over-year in the fourth quarter of 2023, while net income increased by 26.1% year-over-year. Those increases resulted in an 11.2% net profit margin. Chipotle opened 271 restaurants in 2023 and plans to open 285 to 315 restaurants in 2024. The company has been filling most of its restaurants with Chipotlanes, which are effective revenue growth drivers for the corporation.

Chipotle has room to expand as regular customers continue to buy food from its restaurants. The company also has pricing power based on its ability to raise prices four times in the past two years. It has the makings of a profitable long-term stock. 

On this date of publication, Marc Guberti held long positions in ELF and NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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