High-return stocks, also known as growth stocks, are often preferred by investors seeking long-term growth because they are expected to grow significantly above the market average.
Many stocks available in the Indian stock market qualify as growth stocks and have given greater returns in the past. This article will discuss the top high-return stocks of 2024, how to identify them, and the advantages of investing in them.
Features of High Return Stocks
The following are some of the features that are exhibited by high-return stocks:
- Strong Fundamentals: High-return stocks often display robust earnings growth, a solid balance sheet, and strong cash flows.
- High Return on Equity (ROE) and Return on Capital Employed (ROCE): Companies of high-return stocks efficiently manage their capital in the business and generate greater returns for every rupee invested. High-return stocks generally have ROE and ROCE higher than 15% or greater than industry ROE.
- High Operating Profit Margin: Generally, high-return stocks should have a high operating profit margin. A company with a higher gross or operating profit margin indicates that customers don’t have any issue paying high prices for its products because it creates value.
- Sales Growth: High-return stocks often have higher double-digit revenue growth year-on-year.
- Reinvestment of Profits: Companies of high-return stocks often reinvest their profits into the business to fuel further growth instead of paying regular dividends. This leads to higher growth than the market averages, and the company has to rely less on external funds to pursue growth.
High-return Stocks of 2024
The following are the high-return stocks of 2024 from the large-cap space, with revenue and net profit growth of over 15% in the last three years.
- Reliance
- Titan
- Tata Power
- Polycab
- Avenue Supermart
- PI Industries
- BPCL
- Jindal Stainless
- LTTS
- Macrotech Developers
Reliance Industries Limited
Reliance Industries Limited is a multinational company that operates in several industries, including oil & chemical, petroleum refining, retail, telecom, textiles, entertainment, and mass media. In the last 10 years, the company has steadily reduced its dependence on the oil & gas business for revenue generation. It is now focusing on strengthening its footprint in retail and online marketplaces, telecommunications, and entertainment, providing a long runway of growth opportunities.
| 5-year stock price CAGR | 16% |
| 3-year compounded profit growth | 19% |
| 3-year compounded profit growth | 25% |
| 3 year compounded profit growth | 16% |
| 3-year stock price CAGR | 9.23% |
Titan
Titan is India’s premier lifestyle company, with a strong presence in the watch, jewelry, eyewear, perfume, and fashion accessories industries. Sonata has successfully targeted society’s aspirational class with lifestyle brands such as Fastrack, Raga, Skinn, Zoya, and Caratlane—the fastest-growing segment, as seen by the company’s revenue growth during the previous three years.
| 5-year stock price CAGR | 30% |
| 5 year stock price CAGR | 22% |
| 3-year compounded sales growth | 33% |
| 3-year compounded profit growth | 54% |
| Return on Equity | 32.9% |
Tata Power
Tata Power is India’s largest integrated power generation company based in Mumbai. It has an installed thermal energy capacity of 14,9690 MW. The company is rapidly transitioning to a renewable energy producer and has a renewable energy portfolio of 9,000 MW. By 2045, Tata Power plans to become a 100% renewable energy company.
| 3-year stock price CAGR | 61% |
| 5-year stock price CAGR | 476% |
| 3-year compounded sales growth | 23% |
| 3-year compounded profit growth | 45% |
| Return on Equity | 11.5% |
Polycab India Ltd.
Polycab is India’s leading cable, wire, and allied product manufacturer, with a 25-26% market share in FY24. It recently expanded its product offerings to include lighting and luminaries, switches, switchgear, solar items, and home appliances.
Also Read: Top 10 Solar Energy Stocks in India
The company’s international business was 8% of the total business in FY24, and in the last five years, revenue from international business has grown by 42% CAGR from Rs 250 crores to Rs 1440 crores.
| 3-year stock price CAGR | 589% |
| 5-year stock price CAGR | 61% |
| 3-year compounded sales growth | 27% |
| 3-year compounded profit growth | 27% |
| Return on Equity | 24.1% |
Avenue Supermart
Avenue Supermart is a leading retail store chain that operates the DMart supermarket. It was founded by Radhakishan Damani in 2002. DMart has 368 stores across 12 states in India and offers a wide range of products, including groceries, staples, and daily household essentials. The company is known for its unique business model of offering value-for-money products and maintaining high customer service standards.
| 5-year stock price CAGR | 165% |
| 5 year stock price CAGR | 29% |
| 3-year compounded sales growth | 28% |
| 3-year compounded profit growth | 32% |
| Return on Equity | 14.6% |
PI Industries
PI Industries is a fast-growing agriscience company incorporated in 1947. It operates across the Agchem value chain, from R&D to distribution.
The company produces generic molecules and chemicals used in the manufacture of agrichemicals such as insecticides, herbicides, fungicides, and other formulations. It is connected to more than 70,000 retail points across India to market its product
| 5-year stock price CAGR | 153% |
| 3-year compounded sales growth | 207% |
| 3-year compounded profit growth | 19% |
| 3 year compounded profit growth | 3216% |
| Return on Equity | 14.622.8% |
Bharat Petroleum Corporation Limited (BPCL)
Bharat Petroleum Corporation Limited is a Maharatna public sector undertaking and a Fortune 500 oil refining, exploration, and market conglomerate. It is India’s second-largest oil marketing company, with a market share of 25%, and third-largest refining capacity, with 14% of India’s refining capacity.
| 5-year stock price CAGR | 11% |
| 5 year stock price CAGR | 10% |
| 3-year compounded sales growth | 25% |
| 3-year compounded profit growth | 29% |
| Return on Equity | 41.9% |
Jindal Stainless
Jindal Stainless is a leading stainless steel manufacturer with an annual capacity of 3 million tonnes and is among the world’s top 5 stainless steel makers. Shri O.P. Jindal founded the company in 1970 and currently manufactures over 120 grades of diversified high-end products. It also exports its products to more than 50 countries.
| 5-year stock price CAGR | 954% |
| 5 year stock price CAGR | 80% |
| 3-year compounded sales growth | 47% |
| 3-year compounded profit growth | 94% |
| Return on Equity | 19.9% |
L&T Technology Services (LTTS)
L&T Technology Services, widely known as LTTS, is a premier global pure-play Digital Engineering Research and Development (ER&D) services provider. The company delivers consultancy, design development, and testing services and solutions, including software, embedded systems, engineering analytics, and plant engineering.
LTTS has filed over 1,296 patents for 57 of the Global Top 100 ER&D spenders. It operates across all industries, providing cutting-edge technology services and consultancy services on Industry 4.0, smart factories, product strategy, and security.
| 5-year stock price CAGR | 19% |
| 5 year stock price CAGR | 21% |
| 3-year compounded sales growth | 20% |
| 3-year compounded profit growth | 24% |
| Return on Equity | 25.8% |
Macrotech Developers
Macrotech Developers, an Indian multinational real estate company formerly known as Lodha Developers, is headquartered in Mumbai and has developed residential and commercial properties in Mumbai, Pune, Thane, Hyderabad, and London.
The company is primarily known for developing luxurious, iconic residential and commercial properties and city landmarks. Between 2014 and 2020, Macrotech was one of the largest real-estate developers in India by residential sales value.
| 5-year stock price CAGR | 55% |
| 5 year stock price CAGR | – |
| 3-year compounded sales growth | 24% |
| 3-year compounded profit growth | 69% |
| Return on Equity | 10.8% |
How to Identify High-Return Stocks
The following are the primary metrics to consider to identify high-return stocks of 2024:
- Revenue Growth: Look for companies that have showcased consistent and high revenue growth or higher than industry averages over multiple years. This indicates the company is successfully increasing its sales and improving market share.
- Earning Growth: Earning Per Share (EPS) growth is a critical metric to look for. It shows how much profit the company generates for each stock share and how it grows over time.
- Profit Margins: Like revenue, the company should have a high gross or operating profit margin. It indicates a more efficient company. Companies with higher operating profit margins are generally more financially healthy and can easily seize market opportunities.
- Return on Equity (ROE): ROE indicates how efficiently a company uses its equity to generate profits. High and increasing ROE should be preferred for identifying high-return stocks of 2024.
- Price-to-Earnings-to-Growth Ratio (PEG): To determine the PEG Ratio, divide the PE Ratio by the company’s earnings growth rate. A PEG Ratio of less than one suggests that the stock is undervalued in relation to its future growth possibilities.
You can learn more about Radhakishan Damani’s portfolio with our blog. High-return stocks or growth stocks have the potential to generate higher investment returns compared to other stock categories over the long term. Investing in these stocks can serve as a hedge against inflation as these companies successfully grow and maintain their revenue and profits, outpacing the rate of inflation. But, thoroughly studying these businesses for their fundamentals, management, prospects and more is essential.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
FAQs
What are high-return stocks?
High-return stocks are also called growth stocks as they have higher earning growth compared to the market averages and present a higher potential for wealth accumulation in the long term.
Which are the best high-return stocks?
Stocks that have showcased consistent and high revenue and earning growth or higher than industry averages over multiple years, higher profitability margins, and high and increasing return on equity can be termed high-return stocks.
What are the benefits of investing in high-return stocks?
Apart from the potential for high returns, investing in high-return stocks acts as a hedge against inflation. Companies that successfully grow their revenue and earnings can increase their value over time, outpacing the rate of inflation.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.