Actionable news
All posts from Actionable news
Actionable news in PAYC: PAYCOM SOFTWARE Inc,

3 High-Growth Stocks in the Market Today

Image source: Getty Images.

Buying into stocks that offer huge growth potential can be a smart way to invest, but companies that offer explosive growth tend to be quite risky. While the ones that succeed can go on to produce multibagger returns, many high-growth stocks are destined to wipe out in spectacular fashion. For that reason, it's especially important for potential investors to be quite picky when choosing which high-growth stocks are deserving of their money.

With that in mind, I searched for stocks that promise fast growth by screening for the following qualities: sales growth of at least 25% over the past five years, earnings growth of at least 25% over the past five years, and a market cap of at least $2 billion. From there, I cherry-picked three companies that are projected to grow EPS at very high rates over the next five years, which produced the following three stocks: Paycom Software (NYSE:PAYC), Abiomed (NASDAQ:ABMD), and Groupon (NASDAQ:GRPN).

Let's take a closer look at each of these to see if any are worthy of an investment.

A payroll processing disrupter

First up is Paycom Software, a company focused on cloud-based human capital management software.

Image source: Paycom.

Paycom started out with a focus on payroll processing for small and medium-sized companies, but it has since layered on a slew of new services that appear to be a hit with its customers. The company's software-as-a-service package can help these companies with mission-critical tasks as well as mundane tasks like background checks, employee reviews, scheduling, and more.

It's as clear as day that the company's software is in demand as Paycom is rapidly expanding. Sales grew by a strong 51% last quarter to $73.9 million, and EPS jumped by an even more impressive 80%. Better yet, 98% of the company's revenue is recurring, which provides it with predictable future revenue and a strong base to grow from.

Looking ahead, the company's scalable business model and large market opportunity have convinced investors that Paycom's fast growth is here to stay. Analysts are projecting that earnings will grow by more than 50% annually over the next five years, and they have priced shares accordingly. Right now, Paycom is...