3 high growth stocks that are just getting started

Most stocks will never beat the long-term return of S&P 500 . In fact, only 4% of all listed companies have accounted for the net gain in the entire stock market since 1926, according to an analysis by Hendrik Bessembinder at Arizona State University. All the others have underperformed or, more likely, ceased to exist.

The simple observation led to the creation or indexing of mutual funds and ETFs that mimic the composition of the S&P 500, which can be a powerful component of any wealth management strategy. It can also be a bit boring. That's why we recently asked three contributors from Fool.com for their top high growth stocks for investors looking to add some excitement to their portfolios. Here's why they chose Enphase Energy (NASDAQ: ENPH) HealthEquity (NASDAQ: HQY) and iRobot (NASDAQ: IRBT) .

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Powering the rise of solar energy

Maxx Chatsko (Enphase Energy): Sure, the shares of Enphase Energy have risen 580% since the beginning of the year, but the operating results for the first half of 2019 suggest that there is plenty of room for to run.

The hardware hardware supplier reported sales growth of 60% year-on-year and an increase in operating revenue of nearly $ 28 million over that time. The latest quarterly results actually exceeded management's long-term goals for gross profits, operating expenses and revenues, but CEO Badri Kothandaraman said he will wait a few quarters until he sets new operating goals.

It will give Enphase Energy good flexibility to navigate any upcoming obstacles and opportunities. For example, solar panels provide about 3% of total electricity in the United States right now, which is sure to grow significantly in the coming years. Predicting the pace of that growth – or the potential for a downturn in the next economic cooling down – is increasingly difficult given the recent state mandates, the US-China trade war, and the growing bipartisan pressure to take action on climate change at the federal level.

There is also the upcoming launch of Enphase Energy's renewed energy storage platform and the company's ability to continue to upgrade its portfolio with the latest technology. While 98% of all shipments in the second quarter of 2019 included the latest generation of IQ 7 technology, the next generation IQ 8 microinverter – which has 31% more computing power than today's technology – is already on the horizon. [19659002] Simply put, with the business threatening to raise revenues to $ 500 million in 2019 and to a billion dollars a year in the near future, Enphase Energy is a high-growth stock market to explore more seriously. Some investors may find it more attractive to wait for the stock price to withdraw before pulling the trigger, but with a long enough time horizon, even the current price can be justified.

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A Huge Runway for Growth

Brian Feroldi (HealthEquity): Medical costs in America have been growing much faster than inflation for decades. It has prompted millions of employers and employees to look for ways to reduce their health care costs. One way they can do that is by signing up for a Health Savings Account (HSA), which is a benefit of three taxes. These accounts have become a no-brainer for qualified employees, who play right into the hands of HealthEquity.

HealthEquity has taken part in the HSA market for many years. It does this by offering employers a high-touch model that encourages employees to save more in HSA, comparison shop and investing idle capital. This makes it easier for consumers to deal with unexpected health services when they eventually show up.

The market for HSAs is already large – 25 million Americans have $ 54 billion in assets – but these numbers should continue to grow as more people look for ways to save on growing healthcare. Since HealthEquity is making money from customers in many ways, it seems that revenues and profits will continue to grow at double-digit rates in the years to come.

But there's more. HealthEquity recently expanded its addressable market opportunity with the acquisition of WageWorks (NYSE: WAGE) . The agreement will allow the combined company to become a force in the markets for HSAs, flexible spending accounts (FSAs), health reimbursement schemes (HRAs), COBRA benefits, commute accounts, and more. While large acquisitions always carry risks, I am comforted by the fact that WageWorks was founded by Jon Kessler, who just happens to be the current CEO of HealthEquity. HealthEquity also has a good opportunity to cross-sell products to WageWork's existing customers, which is a low-risk growth strategy.

HealthEquity appears to be still at a very early beginning of the growth phase. Although stocks aren't particularly cheap – the stock is trading for more than 13 times sales and 44 times earnings, I think the opportunity ahead could be so great that the premium is worth paying.

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iRobot aims for a rebound

Demitri Kalogeropoulos (iRobot): There is no doubt that the US-China trade shoot has hurt iRobot's short-term growth prospects. The Robot Cleaner Specialist has seen its sales gain, while struggling to increase customer costs. Even worse is that major retail partners are ordering holidays while waiting for clarity on the tariff rates. This shift increases the risk of a tough fourth quarter for the company.

As painful as these trends are, iRobot sees them as only temporary speed bumps that are likely to be forgotten as the industry matures into a much larger footprint in the coming decade. CEO Colin Angle and his team cited strong demand for the latest line-up of Roomba vacuum models to support their claim that there is a long runway ahead of the market leader despite major trade disruptions this year.

Investors who agree with the optimistic vision may consider buying stocks now that they have fallen by around 50% from the highs earlier this year. Certainly the sales conditions have gotten worse since then. But for now, there is no reason to believe that iRobot will not be able to regain the robust growth rate when trade problems have settled.