Best Growth Stocks to Watch in February 2025

Growth stocks are companies that investors expect to outperform industry peers or the broader market in earnings, revenue, and share price increases. Unlike more established firms, which may return these profits to shareholders in the form of dividends or use them to buy back stock, growth stocks tend to reinvest these gains in expansion, research, development, and similar areas. However, although growth stocks may generate sizable returns for investors, they also carry a higher degree of risk as a result of market volatility. Growth is one key factor investors consider, along with others such as value and momentum.

Below, we explore the best growth stocks to watch this month and offer a detailed explanation of our methodology for compiling this list. All data are current as of Jan. 30, 2025.

Growth Stocks in the Current Market Environment

In general, growth stocks tend to perform better in periods of economic expansion when the cost of borrowing is low. Though inflation is lower than it has been in recent years, higher interest rates and slowing economic growth mean that the current environment may not be ideal for these firms.

That said, not all growth stocks benefit from the same market conditions. For example, companies that enjoy a particular competitive edge within their industries or a dominant position in the market may be more likely to grow regardless of the macroeconomic environment. Similarly, firms in a hot industry that is experiencing significant growth may also outperform independently of other factors. A recent example has been technology stocks focused on AI, although an industry sell-off following the unveiling of a competitive AI platform by Chinese firm DeepSeek in January 2025 is a reminder that these conditions may change suddenly.

Health technology and biotech firms are often present in lists of top growth stocks thanks to their potential for massive breakouts following strong data about a new product or launches of a blockbuster drug or piece of equipment. Despite turbulence due to inflation and a slowdown in product launches, this sector may still be poised for significant growth due to an aging population and increased health care spending, with national health expenditures climbing to $4.9 trillion in 2023.

How We Chose the Best Growth Stocks

In our growth stocks screen, we focused on companies listed on either the Nasdaq or the New York Stock Exchange. To ensure that the firms we screened are well-established, we excluded stocks trading under $5 per share, those with a market capitalization under $300 million, and any with a daily trading volume under 100,000. Additionally, companies with growth in excess of 1,000% were excluded as outliers.

From this list, we selected the stocks with the highest 30-day returns to complete our ranking. In many cases, companies with a strong recent history of outperformance relative to industry peers or the broader market have built momentum thanks to positive company or external news, favorable market sentiment, or appealing technicals. If these conditions remain the same, these companies may experience continued growth in the future, though past performance is not an indicator of future returns.

How to Invest Wisely in Growth Stocks

Besides 30-day return, there are many key financial ratios that are helpful to use to identify potential growth stock investments. Using multiple metrics provides a fuller picture of the benefits different candidates offer, their financial positions, and how the market views them with respect to potential future gains.

Earnings Per Share (EPS) Growth

Earnings per share (EPS) growth is a measure of the percentage increase in a company’s earnings per share over a given period, typically year-over-year. Positive or accelerating EPS growth indicates underlying financial health and suggests the potential for future returns.

Price-to-Earnings (P/E) Ratio

Price-to-earnings (P/E) ratio is a comparison of a company’s stock price and its EPS. Higher P/E ratios suggest that investors are bullish about a company but may also signal that it is overvalued. On the other hand, a low P/E ratio may mean that a stock is undervalued relative to the industry or the broader market, or that investors are not especially optimistic about its prospects.

Price-to-Book (P/B) Ratio

Price-to-book (P/B) ratio is a measure of a firm’s market value against its book value, or the net value of the assets on its balance sheet. Some contrarian investors believe that a low P/B ratio indicates an undervalued stock that may have growth potential. However, P/B ratios can vary significantly from industry to industry, so it’s important to take stock of how a particular company compares with its peers.

How to Find Growth Stocks

Investors don’t have one single method for identifying promising growth stocks. Factors such as financial health, management, returns, and market position relative to industry peers are all helpful to consider.

Looking at a prospective growth stock investment, you should consider the company’s revenue, EPS, and profit margin history. Companies with a consistent record of increasing earnings may be likely to continue to grow into the future. It’s best to avoid stocks paying a dividend if you’re interested in growth potential—companies paying a dividend are opting to not reinvest profits back toward investment in company growth.

Identifying firms with a relative industry advantage over their peers depends upon the specific sector and industry. For instance, some industries—like health care—may be quite opaque to investors without special expertise. In other cases, it may be easier to identify a sustainable competitive edge in the form of a unique product, technology, or service that a company offers. An example of a competitive edge is NVIDIA Corp.’s (NVDA) data center processors, widely viewed as advantageous over rival products thanks to their system-scale integration capabilities.

A company’s management and corporate governance can also be helpful clues to its growth potential. How have the firm’s leaders navigated challenges and taken advantage of opportunities in the past? Looking to historical earnings reports can show whether a firm has been able to meet its goals, including in the area of forecasted EPS and revenue performance.

Lastly, share price performance can be an indicator of future growth potential. Look for companies that have higher stock price gains than their industry or the broader market. When making a comparison, it’s helpful to benchmark a firm’s performance against the Russell 1000 Index. As of Jan. 30, 2025, the Russell 1000 had returned 2.6% in the last 30 days. The stocks in our screen above have all significantly outperformed this level, potentially suggesting the prospect of future growth as well. A metric like compound annual growth rate (CAGR) can also help to compare two companies more directly.

Are These the Best Growth Stocks?

It is difficult to assess which growth stocks are the “best.” In reality, growth stocks in general—and these companies in particular—may not be suitable for each type of investor. Growth stocks may exhibit a higher degree of volatility than some more established, larger peers. Because many growth stocks are companies making aggressive maneuvers to expand operations, and because these moves may or may not succeed, investing in growth stocks can carry certain risks. Further, it can be difficult to predict which stocks exhibiting growth characteristics, such as the metrics identified above, will successfully generate outsized returns.

Investors interested in growth stocks should keep in mind that recent performance history is not a guarantee of future returns.

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As of the date this article was written, the author does not own any of the above securities.