2 growth beasts that generated around 500% returns for investors in 5 years

Buying top growth stocks can be a great way to increase the value of your portfolio over time. Investors often gravitate toward businesses that generate strong and impressive financial results. Dividend stocks might offer more stability and lots of recurring income, but the biggest gains often come from companies that focus on long-term growth.

Two of the best growth stocks you could have owned in the last five years are elf Beauty (ELF 1.35%) and Broadcom (AVGO 2.89%). These businesses have had exceptional results, racking up some incredible earnings in a fairly short time. But I will look at why they can still grow in the years to come.

elf Beauty

A growing brand in the cosmetics industry in recent years has been elf, which has been popular on social media for its more attractively priced products. According to one Piper Sandler Last year’s report, elf was the top rated cosmetics brand among US teenagers.

And that popularity has propelled the stock to some incredible returns of 487% over the past five years. Those gains would be even higher right now if it weren’t for the stock’s recent selloff; Elf shares have fallen 27% this year as investors worry about the economy and whether discretionary purchases such as cosmetics will remain strong.

But elf is doing well, with the company generating $122.2 million in profit over the past 12 months. In previous years, the company would not generate even half of this amount. Meanwhile, the business remains in tears.

Revenue for its most recent quarter (which ended June 30) totaled $324.5 million and grew by an impressive 50% year-over-year. And this was the company’s 22nd consecutive quarter of net sales growth.

This company still has a lot left in the tank, and even if growth slows due to a tougher economy, it could have a resurgence thanks to its popularity with younger consumers. At 32 times forward earnings, this might not seem like a terribly cheap stock right now. But if you are willing to wait for the long term, you may be able to generate some great returns from elf as it still has a lot of potential.

Broadcom

Another hot stock to own in recent years has been Broadcom. The semiconductor company has been riding the artificial intelligence (AI) wave of late, and its five-year returns have reached 528% at the time of writing.

Given its important role in AI, there are reasons to remain optimistic about the business. Companies need the right infrastructure to support the development of next-generation technologies, including chatbots.

Broadcom CEO Hock Tan expects revenue from AI chips and components to total $12 billion for the current fiscal year, which ends this month. That would be about a quarter of its top value, as the company’s quarterly revenue for the most recent period, which ended Aug. 4, was $13.1 billion.

Sales were up 47% last quarter, and with the AI ​​race still in its early stages and Broadcom proving to be a key player in it, this is a stock that still has plenty of upside.

What’s attractive about Broadcom is that the stock might still be a bit modest, as it trades at a forward price-earnings multiple of 29 (based on analyst estimates), which might not be all that expensive for an intelligence stock artificial. with so much growth potential; AI shares often trade at higher valuations. Given the promising business opportunities, it’s hard not to like Broadcom over the long term.