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Yahoo
08-05-2025
- Business
- Yahoo
Is argenx SE (ARGX) the Most Profitable Growth Stock to Buy Now?
We recently published a list of . In this article, we are going to take a look at where argenx SE (NASDAQ:ARGX) stands against other most profitable growth stocks to buy now. The growth factor in investing refers to companies that grow their revenue and earnings at rates significantly above the market. These companies are usually small and young, operate in high-growth and less mature industries, and often lack the financial stability and resilience of their more mature counterparts. As a result, the growth factor becomes highly attractive and outperforms during secular bull markets (such as the 2010-2021 period) dominated by macroeconomic stability and low interest rates. On the other hand, the return of growth stocks significantly lags behind during bear markets or periods of heightened uncertainty and volatility. For reference, the growth factor underperformed significantly during the 2022 bear market as well as the 2025 year-to-date. While the growth strategy delivers superior returns most of the time, we believe there are ways to refine it and make it more reliable. One of the weaknesses of most growth stocks is weak profitability (due to aggressive investments in working capital for growth or R&D), which makes them more susceptible to economic downturns. The solution to this is to incorporate a profitability criterion as well – growth stocks with strong profitability will navigate economic slowdowns better and hold up well even during recessions. Our hypothesis is confirmed by modern financial research; the Fama-French 5-Factor Model (2015) introduced a profitability factor which, as the authors claim, can explain stock returns – stocks of companies with high profitability tend to outperform those with low profitability. READ ALSO: As legendary Warren Buffett has advised, to be greedy when others are fearful, we believe the best way to make money in the market is to engage in smart contrarian bets when everyone else is reluctant. The US stock market is still more than 10% below its all-time high as market participants are still digesting the tariffs situation as well as the new economic data, which is quite disappointing. The Philadelphia Fed manufacturing index decreased to -26.4 in April, well below expectations and the lowest reading since April 2023. It is also the second lowest level outside of official recessions, which hints towards the possibility that we are already in a recession that will only be declared at a later date. The employment, shipments, and new orders components all decreased as well, further pointing towards a slowing economy. Business surveys have also been quite grim – Hamilton Lane recently reported that at least 62% of CEOs see a recession on the horizon, while the 6-month Capex expectations fell to the lowest level since the pandemic. It is now clear that pretty much everyone is thinking about a recession now, and that's actually the most bullish indicator out there. The stock market is a forward-looking animal, meaning that its prices reflect the state of the economy 6-12 months from now. Given that the average recession in the US has historically lasted for about 3-4 quarters, and assuming that revised Q1 2025 data will be later recognized as the beginning of the recession, odds are that the US economy will already return to growth in calendar 2026. Also, history shows that the forward-looking stock market tends to disappoint the majority of investors, which means that if the majority expects a recession, then odds are that it is already priced in and that the market bottom is already in the rear-view mirror. To sum up, the fact that the US economy is in a slowdown and a state of uncertainty is pretty much obvious at this point. The key takeaway for readers is that stock prices are forward-looking and reflect the investors' outlook for several quarters ahead. Once it becomes completely clear that calendar 2026 will be past the current tariff turmoil, the US stock market will very likely return to growth. It is therefore an opportune moment to look for the most profitable growth stocks to add in anticipation of a broad market melt-up. A lab setting filled with scientific equipment and researchers in lab coats working together to develop new therapies for autoimmune diseases. To compile our list of most profitable growth stocks, we used a screener to identify stocks with at least 30% revenue CAGR in the last 5 years and a net profit margin of at least 20%. Then we included in the article the top 13 stocks with the highest net profit generated in the most recent fiscal year, ranked in ascending order. We also included the number of hedge funds that own each stock, as per Insider Monkey's Q4 2024 database. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().argenx SE (NASDAQ:ARGX) is a biotechnology company based in the Netherlands that specializes in antibody-based therapies for severe autoimmune diseases. Its lead product is marketed as VYVGART and is approved in multiple countries for treating generalized myasthenia gravis and chronic inflammatory demyelinating polyneuropathy. The company's growth story relies on the successful advancement of a pipeline of therapies targeting various autoimmune conditions. The year 2024 was successful for argenx SE (NASDAQ:ARGX), with the company expanding its reach to over 10,000 patients globally across 3 approved indications. The company achieved several clinical milestones, including 'empasiprubart' advancing to Phase III, following impressive preclinical data, and successfully moving 'efgartigimod' into larger registrational studies in Sjogren's disease and 3 subsets of myositis. The company's commercial success was evident with product net sales reaching $737 million for Q4 and $2.2 billion for the full year, representing 29% QoQ growth and 98% growth YoY. Looking ahead to 2025, argenx SE (NASDAQ:ARGX) will mark its first year as a profitable company, reflecting its commercial success and disciplined execution. The company is advancing an ambitious clinical program with 10 Phase III studies and 10 proof-of-concept studies across 'efgartigimod', 'empasiprubart,' and ARGX-119. The anticipated launch of the prefilled syringe, which opens the door for self-administration in the US, is expected to be a key growth driver in 2025. ARGX maintains a strong financial position with a cash balance of $3.4 billion at year-end, further reinforcing its position as one of the most profitable stocks on our list. Overall, ARGX ranks 13th on our list of most profitable blue chip stocks to buy now. While we acknowledge the potential of ARGX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ARGX but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
02-05-2025
- Business
- Yahoo
Is Genmab A/S (GMAB) the Most Profitable Growth Stock to Buy Now?
We recently published a list of . In this article, we are going to take a look at where Genmab A/S (NASDAQ:GMAB) stands against other most profitable growth stocks to buy now. The growth factor in investing refers to companies that grow their revenue and earnings at rates significantly above the market. These companies are usually small and young, operate in high-growth and less mature industries, and often lack the financial stability and resilience of their more mature counterparts. As a result, the growth factor becomes highly attractive and outperforms during secular bull markets (such as the 2010-2021 period) dominated by macroeconomic stability and low interest rates. On the other hand, the return of growth stocks significantly lags behind during bear markets or periods of heightened uncertainty and volatility. For reference, the growth factor underperformed significantly during the 2022 bear market as well as the 2025 year-to-date. While the growth strategy delivers superior returns most of the time, we believe there are ways to refine it and make it more reliable. One of the weaknesses of most growth stocks is weak profitability (due to aggressive investments in working capital for growth or R&D), which makes them more susceptible to economic downturns. The solution to this is to incorporate a profitability criterion as well – growth stocks with strong profitability will navigate economic slowdowns better and hold up well even during recessions. Our hypothesis is confirmed by modern financial research; the Fama-French 5-Factor Model (2015) introduced a profitability factor which, as the authors claim, can explain stock returns – stocks of companies with high profitability tend to outperform those with low profitability. READ ALSO: As legendary Warren Buffett has advised, to be greedy when others are fearful, we believe the best way to make money in the market is to engage in smart contrarian bets when everyone else is reluctant. The US stock market is still more than 10% below its all-time high as market participants are still digesting the tariffs situation as well as the new economic data, which is quite disappointing. The Philadelphia Fed manufacturing index decreased to -26.4 in April, well below expectations and the lowest reading since April 2023. It is also the second lowest level outside of official recessions, which hints towards the possibility that we are already in a recession that will only be declared at a later date. The employment, shipments, and new orders components all decreased as well, further pointing towards a slowing economy. Business surveys have also been quite grim – Hamilton Lane recently reported that at least 62% of CEOs see a recession on the horizon, while the 6-month Capex expectations fell to the lowest level since the pandemic. It is now clear that pretty much everyone is thinking about a recession now, and that's actually the most bullish indicator out there. The stock market is a forward-looking animal, meaning that its prices reflect the state of the economy 6-12 months from now. Given that the average recession in the US has historically lasted for about 3-4 quarters, and assuming that revised Q1 2025 data will be later recognized as the beginning of the recession, odds are that the US economy will already return to growth in calendar 2026. Also, history shows that the forward-looking stock market tends to disappoint the majority of investors, which means that if the majority expects a recession, then odds are that it is already priced in and that the market bottom is already in the rear-view mirror. To sum up, the fact that the US economy is in a slowdown and a state of uncertainty is pretty much obvious at this point. The key takeaway for readers is that stock prices are forward-looking and reflect the investors' outlook for several quarters ahead. Once it becomes completely clear that calendar 2026 will be past the current tariff turmoil, the US stock market will very likely return to growth. It is therefore an opportune moment to look for the most profitable growth stocks to add in anticipation of a broad market melt-up. A scientist in a lab using a microscope to develop new treatments for Multiple Myeloma. To compile our list of most profitable growth stocks, we used a screener to identify stocks with at least 30% revenue CAGR in the last 5 years and a net profit margin of at least 20%. Then we included in the article the top 13 stocks with the highest net profit generated in the most recent fiscal year, ranked in ascending order. We also included the number of hedge funds that own each stock, as per Insider Monkey's Q4 2024 database. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().Genmab A/S (NASDAQ:GMAB) is a Danish company that develops advanced antibody-based medicines, mainly for cancer and serious diseases. It has helped create some approved treatments like DARZALEX for multiple myeloma, Kesimpta for multiple sclerosis, and Tivdak for cervical cancer, often working with large pharma partners. GMAB ranked third on our recent list of 8 Most Undervalued Healthcare Stocks to Buy According to Analysts. Genmab A/S (NASDAQ:GMAB) delivered exceptionally strong financial performance in 2024, achieving 31% total revenue growth and 26% operating profit growth, driven by the success of their commercialized medicines, including EPKINLY and Tivdak. The company made significant strategic investments, including the $1.8 billion acquisition of ProfoundBio and a $500 million share buyback, while maintaining a strong cash position of nearly $3 billion. Its recurring revenues grew by 35%, representing 91% of total revenue in 2024, up from 88% in 2023, demonstrating an improving quality in their revenue profile. Looking ahead to 2025, Genmab A/S (NASDAQ:GMAB) is focusing on executing its late-stage pipeline development, particularly with EPKINLY, Rina-S, and 'acasunlimab'. The company anticipates three potentially significant pivotal readouts for EPKINLY by the end of 2026, including trials in frontline diffuse large B-cell lymphoma and second-line follicular lymphoma, which could support regulatory filings and drive meaningful revenue growth. For 2025, management projects revenue growth of 12% at the midpoint, with operating profit expected to grow by 16% to more than $1.1 billion, while maintaining disciplined investments in their priority programs. The optimistic guidance goes in line with the strong historical revenue growth momentum, which makes GMAB one of the most profitable stocks to buy now. Overall, GMAB ranks 12th on our list of most profitable blue chip stocks to buy now. While we acknowledge the potential of GMAB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than GMAB but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
02-05-2025
- Business
- Yahoo
Is Brookfield Asset Management Ltd. (BAM) the Most Profitable Growth Stock to Buy Now?
We recently published a list of . In this article, we are going to take a look at where Brookfield Asset Management Ltd. (NYSE:BAM) stands against other most profitable growth stocks to buy now. The growth factor in investing refers to companies that grow their revenue and earnings at rates significantly above the market. These companies are usually small and young, operate in high-growth and less mature industries, and often lack the financial stability and resilience of their more mature counterparts. As a result, the growth factor becomes highly attractive and outperforms during secular bull markets (such as the 2010-2021 period) dominated by macroeconomic stability and low interest rates. On the other hand, the return of growth stocks significantly lags behind during bear markets or periods of heightened uncertainty and volatility. For reference, the growth factor underperformed significantly during the 2022 bear market as well as the 2025 year-to-date. While the growth strategy delivers superior returns most of the time, we believe there are ways to refine it and make it more reliable. One of the weaknesses of most growth stocks is weak profitability (due to aggressive investments in working capital for growth or R&D), which makes them more susceptible to economic downturns. The solution to this is to incorporate a profitability criterion as well – growth stocks with strong profitability will navigate economic slowdowns better and hold up well even during recessions. Our hypothesis is confirmed by modern financial research; the Fama-French 5-Factor Model (2015) introduced a profitability factor which, as the authors claim, can explain stock returns – stocks of companies with high profitability tend to outperform those with low profitability. READ ALSO: As legendary Warren Buffett has advised, to be greedy when others are fearful, we believe the best way to make money in the market is to engage in smart contrarian bets when everyone else is reluctant. The US stock market is still more than 10% below its all-time high as market participants are still digesting the tariffs situation as well as the new economic data, which is quite disappointing. The Philadelphia Fed manufacturing index decreased to -26.4 in April, well below expectations and the lowest reading since April 2023. It is also the second lowest level outside of official recessions, which hints towards the possibility that we are already in a recession that will only be declared at a later date. The employment, shipments, and new orders components all decreased as well, further pointing towards a slowing economy. Business surveys have also been quite grim – Hamilton Lane recently reported that at least 62% of CEOs see a recession on the horizon, while the 6-month Capex expectations fell to the lowest level since the pandemic. It is now clear that pretty much everyone is thinking about a recession now, and that's actually the most bullish indicator out there. The stock market is a forward-looking animal, meaning that its prices reflect the state of the economy 6-12 months from now. Given that the average recession in the US has historically lasted for about 3-4 quarters, and assuming that revised Q1 2025 data will be later recognized as the beginning of the recession, odds are that the US economy will already return to growth in calendar 2026. Also, history shows that the forward-looking stock market tends to disappoint the majority of investors, which means that if the majority expects a recession, then odds are that it is already priced in and that the market bottom is already in the rear-view mirror. To sum up, the fact that the US economy is in a slowdown and a state of uncertainty is pretty much obvious at this point. The key takeaway for readers is that stock prices are forward-looking and reflect the investors' outlook for several quarters ahead. Once it becomes completely clear that calendar 2026 will be past the current tariff turmoil, the US stock market will very likely return to growth. It is therefore an opportune moment to look for the most profitable growth stocks to add in anticipation of a broad market melt-up. A skyline of modern office towers built with investments from the alternative asset manager. To compile our list of most profitable growth stocks, we used a screener to identify stocks with at least 30% revenue CAGR in the last 5 years and a net profit margin of at least 20%. Then we included in the article the top 13 stocks with the highest net profit generated in the most recent fiscal year, ranked in ascending order. We also included the number of hedge funds that own each stock, as per Insider Monkey's Q4 2024 database. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().Brookfield Asset Management Ltd. (NYSE:BAM) is a global alternative asset manager overseeing approximately $1 trillion in assets across sectors including renewable energy, infrastructure, real estate, private equity, and credit. The company generates revenue by offering financial products such as pension plans to institutional clients. It is one of the most profitable stocks to invest in. Brookfield Asset Management Ltd. (NYSE:BAM) had a strong 2024, with over $135 billion in capital raised, including a record $29 billion of organic fundraising in Q4, $48 billion deployed, and $30 billion of investments monetized. The company's fee-bearing capital grew by 18% annually to $539 billion, generating $2.5 billion in fee-related earnings and $2.4 billion in distributable earnings for the year. The credit group emerged as its largest business with nearly $250 billion of fee-bearing capital, contributing 60% of the year's organic capital raise. Looking ahead, Brookfield Asset Management Ltd. (NYSE:BAM) is well-positioned to capitalize on major secular trends, including the alternative asset industry's expected doubling in size, ongoing consolidation of managers, and strategic alignment with key themes like digitalization, clean energy, and private credit. The company expects its latest flagship rounds to be over 15% larger than previous vintages, with strong momentum across complementary strategies and new products. In recognition of its strong performance and growth prospects, we include BAM on our list of the most profitable stocks to buy now. Overall, BAM ranks 5th on our list of most profitable blue chip stocks to buy now. While we acknowledge the potential of BAM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BAM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
02-05-2025
- Business
- Yahoo
Is Shopify Inc. Class A Subordinate Voting Shares (SHOP) the Most Profitable Growth Stock to Buy Now?
We recently published a list of . In this article, we are going to take a look at where Shopify Inc. Class A Subordinate Voting Shares (NASDAQ:SHOP) stands against other most profitable growth stocks to buy now. The growth factor in investing refers to companies that grow their revenue and earnings at rates significantly above the market. These companies are usually small and young, operate in high-growth and less mature industries, and often lack the financial stability and resilience of their more mature counterparts. As a result, the growth factor becomes highly attractive and outperforms during secular bull markets (such as the 2010-2021 period) dominated by macroeconomic stability and low interest rates. On the other hand, the return of growth stocks significantly lags behind during bear markets or periods of heightened uncertainty and volatility. For reference, the growth factor underperformed significantly during the 2022 bear market as well as the 2025 year-to-date. While the growth strategy delivers superior returns most of the time, we believe there are ways to refine it and make it more reliable. One of the weaknesses of most growth stocks is weak profitability (due to aggressive investments in working capital for growth or R&D), which makes them more susceptible to economic downturns. The solution to this is to incorporate a profitability criterion as well – growth stocks with strong profitability will navigate economic slowdowns better and hold up well even during recessions. Our hypothesis is confirmed by modern financial research; the Fama-French 5-Factor Model (2015) introduced a profitability factor which, as the authors claim, can explain stock returns – stocks of companies with high profitability tend to outperform those with low profitability. READ ALSO: As legendary Warren Buffett has advised, to be greedy when others are fearful, we believe the best way to make money in the market is to engage in smart contrarian bets when everyone else is reluctant. The US stock market is still more than 10% below its all-time high as market participants are still digesting the tariffs situation as well as the new economic data, which is quite disappointing. The Philadelphia Fed manufacturing index decreased to -26.4 in April, well below expectations and the lowest reading since April 2023. It is also the second lowest level outside of official recessions, which hints towards the possibility that we are already in a recession that will only be declared at a later date. The employment, shipments, and new orders components all decreased as well, further pointing towards a slowing economy. Business surveys have also been quite grim – Hamilton Lane recently reported that at least 62% of CEOs see a recession on the horizon, while the 6-month Capex expectations fell to the lowest level since the pandemic. It is now clear that pretty much everyone is thinking about a recession now, and that's actually the most bullish indicator out there. The stock market is a forward-looking animal, meaning that its prices reflect the state of the economy 6-12 months from now. Given that the average recession in the US has historically lasted for about 3-4 quarters, and assuming that revised Q1 2025 data will be later recognized as the beginning of the recession, odds are that the US economy will already return to growth in calendar 2026. Also, history shows that the forward-looking stock market tends to disappoint the majority of investors, which means that if the majority expects a recession, then odds are that it is already priced in and that the market bottom is already in the rear-view mirror. To sum up, the fact that the US economy is in a slowdown and a state of uncertainty is pretty much obvious at this point. The key takeaway for readers is that stock prices are forward-looking and reflect the investors' outlook for several quarters ahead. Once it becomes completely clear that calendar 2026 will be past the current tariff turmoil, the US stock market will very likely return to growth. It is therefore an opportune moment to look for the most profitable growth stocks to add in anticipation of a broad market melt-up. An enthusiastic customer completing a purchase and receiving an order confirmation via one of the companies online sales channels. To compile our list of most profitable growth stocks, we used a screener to identify stocks with at least 30% revenue CAGR in the last 5 years and a net profit margin of at least 20%. Then we included in the article the top 13 stocks with the highest net profit generated in the most recent fiscal year, ranked in ascending order. We also included the number of hedge funds that own each stock, as per Insider Monkey's Q4 2024 database. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().Shopify Inc. Class A Subordinate Voting Shares (NASDAQ:SHOP) is a multinational e-commerce company that provides a cloud-based platform on which businesses can create and manage online stores. The platform also offers complementary services like payment processing, marketing, shipping, and customer engagement tools. The company has managed to establish an almost complete e-commerce solution for businesses of all sizes and has managed to attract even giants like Mattel and Nestle. SHOP ranked fourth on our recent list of 10 Best Economic Recovery Stocks to Buy. Shopify Inc. Class A Subordinate Voting Shares (NASDAQ:SHOP) delivered exceptional results in the latest reported Q4 2024, with 31% revenue growth and 22% free cash flow margins, achieving the 'rule of 50' at a remarkable scale. The company's annual performance was equally impressive, with 26% revenue growth and an 18% free cash flow margin for the year, while gross merchandise value (GMV) approached $300 billion and revenue reached $9 billion. Notably, SHOP's operating income surpassed $1 billion for the year, four times higher than its previous peak of $269 million in 2021, demonstrating significant operational efficiency. The company also achieved significant milestones, including serving over 875 million consumers, crossing $1 trillion in cumulative GMV, and increasing Shop Pay adoption to 38% of gross payment volume. These metrics reflect SHOP's potential as one of the most profitable stocks on our list. Looking ahead to 2025, Shopify Inc. Class A Subordinate Voting Shares (NASDAQ:SHOP) is focusing on several key strategic initiatives, including simplification of its platform, deeper investment in AI capabilities, and continued international expansion, particularly in Europe and Japan. The company has demonstrated strong momentum in enterprise adoption, with major brands like Reebok, Champion, and FC Barcelona joining the platform. Importantly, SHOP maintains a strong financial position while keeping headcount stable, indicating improved operational efficiency. Management expressed confidence in the company's position as a growth company operating with operational discipline, consistently delivering some of the strongest results in the software industry. Overall, SHOP ranks 9th on our list of most profitable blue chip stocks to buy now. While we acknowledge the potential of SHOP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SHOP but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
02-05-2025
- Business
- Yahoo
Is Zoom Communications Inc. (ZM) the Most Profitable Growth Stock to Buy Now?
We recently published a list of . In this article, we are going to take a look at where Zoom Communications Inc. (NASDAQ:ZM) stands against other most profitable growth stocks to buy now. The growth factor in investing refers to companies that grow their revenue and earnings at rates significantly above the market. These companies are usually small and young, operate in high-growth and less mature industries, and often lack the financial stability and resilience of their more mature counterparts. As a result, the growth factor becomes highly attractive and outperforms during secular bull markets (such as the 2010-2021 period) dominated by macroeconomic stability and low interest rates. On the other hand, the return of growth stocks significantly lags behind during bear markets or periods of heightened uncertainty and volatility. For reference, the growth factor underperformed significantly during the 2022 bear market as well as the 2025 year-to-date. While the growth strategy delivers superior returns most of the time, we believe there are ways to refine it and make it more reliable. One of the weaknesses of most growth stocks is weak profitability (due to aggressive investments in working capital for growth or R&D), which makes them more susceptible to economic downturns. The solution to this is to incorporate a profitability criterion as well – growth stocks with strong profitability will navigate economic slowdowns better and hold up well even during recessions. Our hypothesis is confirmed by modern financial research; the Fama-French 5-Factor Model (2015) introduced a profitability factor which, as the authors claim, can explain stock returns – stocks of companies with high profitability tend to outperform those with low profitability. READ ALSO: As legendary Warren Buffett has advised, to be greedy when others are fearful, we believe the best way to make money in the market is to engage in smart contrarian bets when everyone else is reluctant. The US stock market is still more than 10% below its all-time high as market participants are still digesting the tariffs situation as well as the new economic data, which is quite disappointing. The Philadelphia Fed manufacturing index decreased to -26.4 in April, well below expectations and the lowest reading since April 2023. It is also the second lowest level outside of official recessions, which hints towards the possibility that we are already in a recession that will only be declared at a later date. The employment, shipments, and new orders components all decreased as well, further pointing towards a slowing economy. Business surveys have also been quite grim – Hamilton Lane recently reported that at least 62% of CEOs see a recession on the horizon, while the 6-month Capex expectations fell to the lowest level since the pandemic. It is now clear that pretty much everyone is thinking about a recession now, and that's actually the most bullish indicator out there. The stock market is a forward-looking animal, meaning that its prices reflect the state of the economy 6-12 months from now. Given that the average recession in the US has historically lasted for about 3-4 quarters, and assuming that revised Q1 2025 data will be later recognized as the beginning of the recession, odds are that the US economy will already return to growth in calendar 2026. Also, history shows that the forward-looking stock market tends to disappoint the majority of investors, which means that if the majority expects a recession, then odds are that it is already priced in and that the market bottom is already in the rear-view mirror. To sum up, the fact that the US economy is in a slowdown and a state of uncertainty is pretty much obvious at this point. The key takeaway for readers is that stock prices are forward-looking and reflect the investors' outlook for several quarters ahead. Once it becomes completely clear that calendar 2026 will be past the current tariff turmoil, the US stock market will very likely return to growth. It is therefore an opportune moment to look for the most profitable growth stocks to add in anticipation of a broad market melt-up. A close-up of a hand using a laptop to control an immersive video meeting. To compile our list of most profitable growth stocks, we used a screener to identify stocks with at least 30% revenue CAGR in the last 5 years and a net profit margin of at least 20%. Then we included in the article the top 13 stocks with the highest net profit generated in the most recent fiscal year, ranked in ascending order. We also included the number of hedge funds that own each stock, as per Insider Monkey's Q4 2024 database. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().Zoom Communications Inc. (NASDAQ:ZM) is a provider of a cloud-native communications platform for video conferencing, team chat, phone services, and collaboration tools. Its notorious product suite includes Zoom Meetings, an AI-powered collaboration platform designed for modern work environments. ZM ranked fifth on our recent list of 10 Best Telehealth Stocks to Buy Now. Zoom Communications Inc. (NASDAQ:ZM) had a strong Q4 2025, with total revenue growing 3% YoY to $1.184 billion, exceeding guidance expectations. The company demonstrated significant progress in AI adoption, with AI Companion usage growing 68% QoQ, while also securing major wins, including Amazon as a Zoom Workplace customer and its largest ever Contact Center deal with a Fortune 100 tech company for over 15,000 agents. Enterprise revenue grew 6% YoY and now comprises 60% of total revenue, while the online business showed signs of stability with the lowest fourth-quarter churn rate ever at 2.8%. Looking ahead to fiscal 2026, Zoom Communications Inc. (NASDAQ:ZM) is focusing on three key strategic priorities: expanding AI capabilities, innovating within Zoom Workplace, and building upon momentum in new products like Contact Center and Workvivo. The company is launching new initiatives, including a Custom AI Companion add-on in April and enhanced AI capabilities for healthcare providers. Despite ongoing macro challenges, ZM's financial outlook remains stable, with fiscal 2026 revenue expected to grow approximately 2.7% YoY to $4.785-$4.795 billion, while maintaining strong profitability, which secures its place on our list of the most profitable stocks to buy now. Overall, ZM ranks 7th on our list of most profitable blue chip stocks to buy now. While we acknowledge the potential of ZM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ZM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
