3 Reasons Why AppLovin (APP) Is a Great Growth Stock

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to inherent volatility and risks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - AppLovin (APP) is currently highlighted as a recommended growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth seen as indicative of strong future prospects [3] - AppLovin has a historical EPS growth rate of 247.6%, with projected EPS growth of 103.4% this year, significantly surpassing the industry average of 22.6% [4] Group 3: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, enabling them to fund new projects without relying on external financing [5] - AppLovin's year-over-year cash flow growth stands at 138%, compared to an industry average of -11.7% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 56.4%, against the industry average of 13.8% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [7] - AppLovin has experienced upward revisions in current-year earnings estimates, with the Zacks Consensus Estimate increasing by 1% over the past month [8] Group 5: Overall Assessment - AppLovin's combination of a Zacks Rank 2 and a Growth Score of A indicates its potential as an outperformer and a solid choice for growth investors [10]