AN UNTAPPED PATH TO HIGH RETURNS
Hypergrowth Stocks — companies growing revenue 40%+ year over year — have outperformed every major asset class since being coined in the Harvard Business Review. Despite delivering market-beating results for more than a decade, we believe they remain under-owned by most investors. Hypergrowth Stocks provide access to public companies with exceptional growth that are often missed by traditional indices. Regardless of their limited index exposure, these companies are among the strongest contributors to market alpha based on our research.
NOT YOUR TRADITIONAL GROWTH STOCKS
Hypergrowth Stocks are not your traditional growth stocks. They are companies demonstrating exceptional revenue acceleration. Since 2008, Hypergrowth Stocks have quietly delivered the strongest returns in the stock market. As structural innovation accelerates in the Fourth Industrial Revolution, this elite subset of growth companies continues to offer outsized potential. Hypergrowth Stocks hold the potential for being considered the ‘Hidden Gem Among All Growth Stock Classes’
The Power of Hypergrowth Stocks 1
Average Return Based on Golden Eagle Strategies Study of 21,763 Stocks (2009-2024)
Average Number of Hypergrowth Stocks Per Month
Average Percentage of Hypergrowth Stocks in S&P 500
Average Percentage of Hypergrowth Stocks in Nasdaq 100
Although there are over 4,000 ETF products in the U.S., more than 40% of assets are concentrated in funds tracking the S&P 500 and Nasdaq 100—indices where Hypergrowth Stocks typically make up just 3–6% of the weight. Because these indices add companies only after they mature, they often miss the most explosive growth phase. Thus, adding Hypergrowth Stocks to your portfolio can translate into an opportunistic and diversified portfolio.
Golden Eagle Strategies Research Study (2010-2024)2
Hypergrowth is dynamic and emerges across a wide range of sectors—not just technology. Many investors associate hypergrowth with the technology sector, but if investors only look within technology, they can miss some of the best opportunities. Hypergrowth occurs across all sectors, even in areas not typically associated with growth such as consumer goods, energy, and utilities (see examples). These companies may be fueled by powerful secular trends or experiencing sharp, cyclical turnarounds that drive sales growth of 40% or more. Because they evolve quickly and often fall outside traditional index screens, passive strategies tend to miss them. Adding an allocation of Hypergrowth Stocks can thus unlock greater long-term return potential.
Hypergrowth Stocks by Sector 3
Based on Golden Eagle Strategies Study (May 2020 – December 2024)
HYPERGROWTH BETTER UNDERSTOOD
Hypergrowth Investing IS NOT:
Hypergrowth Investing IS:
5 REASONS HYPERGROWTH STOCKS MAY NOT BE ON YOUR RADAR
- 1
Traditional stock indices do not have significant exposure to Hypergrowth Stocks which have historically constituted just 3% of the S&P 500 Index and 6% of the Nasdaq 100.2
- 2
Passive strategies offer limited Hypergrowth exposure due to benchmark constraints, while Hypergrowth opportunities rotate across sectors and companies on a quarterly basis, requiring active positioning to capture.
- 3
We believe most investment managers underexpose or underutilize Hypergrowth Stocks due to structural constraints, traditional valuation frameworks, and limited media and research coverage of this emerging asset class.
- 4
Many hypergrowth companies, especially unprofitable ones, are bypassed by traditional investors due to dependence on metrics like P/E and earnings growth, which don’t capture sales momentum and future potential.
- 5
While often associated with the technology sector, Hypergrowth stocks exist across all sectors and market capitalizations (see examples). Capturing the full spectrum of Hypergrowth potential requires broad market screening and a dynamic approach.
1 Returns are illustrative and not the result of a hypothetical investment model; they show the opportunity associated with investing in different growth ranges. Annual returns for each group have been constructed retrospectively to illustrate the price behavior during the fiscal period which corresponds to their sales growth rates. The universe of stocks uses comprises the S&P 500, plus the top 1000 Nasdaq stocks by market cap. We ignored companies with less than $100mm in revenue during the year of comparison. To harmonize data, we only included companies with December fiscal years; this covers 82% of companies and avoids performance period mismatch.
2 Based on Golden Eagle Strategies research constructed retrospectively based on the sales growth rates of a company during the period 2010-2024. The total universe of stocks analyzed in this research study comprises all U.S. listed stocks including ADRs, the S&P 500 and the top 100 Nasdaq stocks by market cap.. We excluded companies with inadequate revenue and trading volume. Additional details available upon request.
3 The chart is based upon Golden Eagle month end sector breakdowns since inception. Data is available upon request.