The #1 growth stocks set to explode in 2025

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The name Thomas Rowe Price Junior should have been consigned to the investing scrap heap.

Born in 1898, Price’s career was just hitting its stride as the Great Depression hit and hit hard. At the time, he was the head of investment for the broking firm MacKubin, Legg and Co., but instead of developing great hate for markets, he fell even more in love with them.

That inspired him to start T. Rowe Price and Associates in 1937, with a then-revolutionary focus on growth investing.

His guiding philosophy was that by investing in well-managed companies operating in deep pools of opportunity, he could generate returns ahead of inflation and the overall economy.

It’s a philosophy that would earn Price the moniker the “Father of growth investing”. T. Rowe Price still operates to this day and manages around US$1.6 trillion globally.

So, how would Price’s philosophy stack up nowadays? Probably pretty well. From 1990-2020, growth stocks delivered an average annual return of about 12%, compared to around 9% for value stocks. 

Over the journey, growth investing has shown resilience during economic downturns, as companies with strong fundamentals and innovative products tend to recover faster and maintain their competitive edge.

With all this in mind, we asked ten of Australia’s brightest investment minds, covering both ASX and global stocks, for their top growth pick in 2025.

Our featured fund managers include (in order of appearance):

• Lucas Goode, IML
• Rachel Folder, Pendal Group
• Sam Ruiz, T. Rowe Price
• Jessica Farr-Jones, Regal Funds Management
• Elise Kennedy, Schroders
• Nick Guidera, Eley Griffiths Group
• Todd Warren, Tribeca Investment Partners
• Brittany Isakka, Spheria Asset Management
• James Barker, Ellerston Capital
• Zoe Middleton, Platinum Asset Management

Note: We would like to thank the fund managers listed above for sharing their top ideas for 2025 in the spirit of the Outlook Series. All of the fund managers featured in this series run diversified portfolios and do not invest solely in the stocks mentioned below. This list is not, nor is it intended to be, a set of recommendations. Please do your own research and seek advice from a professional before making any investment decisions of your own. Past performance is not a reliable indicator of future returns.

Edited Transcript

#1 - Cyclopharm (ASX: CYC)

Lucas Goode: One within our portfolio that we really think has a lot of upside into 2025 is a company called Cyclopharm. So, this is a nuclear medicine business, it does functional lung imaging, and its Technegas product is already the standard of care for pulmonary embolism across many markets. It's taken the place of traditional CT scans.

However, as always with anything in healthcare, the real pot of gold at the end of the rainbow, it's always the United States. That's where you can make the most money. And to that end, recently Cyclopharm was awarded pass-through designation by the FDA. I won't bore you with all the details, but effectively what that means is not only is this a clinically superior method of imaging lungs, but it's, crucially, economically superior for hospitals.

And as a result of that, Veterans Affairs, which is the largest hospital owner in the world with nearly 200 sites, has recently signed an agreement to roll out the Technegas product across their sites. It gives Cyclopharm a real leg up in progressing towards their target for 2025 of 300 installations. We think there's tremendous upside in the stock if it even looks like they're getting anywhere close to that.

We do think that eventually Technegas will dominate the market for functional lung imaging, and that implies annual recurring revenues well in excess of the company's current market cap.

#2 - Zip Co (ASX: ZIP)

Rachel Folder: So Zip would be my pick for growth in 2025. It's done incredibly well already, but I think they're just getting started. And I think one way to look at it is how the business has pivoted over the last 12 to 18 months. They've had a new CEO who's come in, Cynthia Scott. She's done an amazing job refocusing the business and exiting non-profitable parts and growing in their core markets.

So now, as they refocus into partnerships, marketing, they should put themselves in a really good position to grow customers. And it's really interesting, they've had an amazing growth year, but they haven't grown customers over this time so I think that's still yet to come through.

We still see the outlook for the US consumer as being pretty strong and buy-now-pay-later penetration is still only 2% of the market, so there's a long runway of adoption left to go.

#3 - Sartorius (STR.DE)

Sam Ruiz: The company for us is a company called Sartorius in Germany. They are about a $15 billion market cap, so a little bit smaller than some others. This is a company that's really been doing it tough for the past couple of years. So they are at the absolute sweet spot of one of the most durable themes in healthcare. It's biologics and biopharma.

So, old school medicines, we were fusing chemical compounds to make drugs like penicillin. New innovations now in bioprocessing, culturing live organisms, the cells allows us to be much more targeted in how we actually treat really hard to cure diseases.

So, Sartorius is one of the only pure plays you can access that's actually selling the tools to test for the R&D, the innovation, and to grow a lot of these drugs that are really going to help with things like cancers and gene therapy, et cetera.

It has been in a tough spot because there was an over ordering by their clients during Covid, a lot of the vaccine development, et cetera, and we think we're right on the cusp now of those customers coming back to traditional ordering dynamics in 2025.

#4 - Core Scientific (NASDAQ: CORZ)

Jessica Farr-Jones: One area that we're particularly excited about is, of course, the AI revolution that's going on at the moment. What's interesting though is in the ASX there's not that many ways to play this thematic.

So you see great companies like NEXTDC (ASX: NXT) and the soon to be listed [now listed] DigiCo Infrastructure REIT (ASX: DGT), they command very premium multiples. So, NEXTDC trades at 50 times EBITDA. DigiCo REIT is going to list at 44 times FY '25 EBITDA.

So there's a US listed small cap stock that we are very excited about. It's got a $4.5 billion market cap at the moment. It's called Core Scientific. The ticker is C-O-R-Z. And it is leveraged to this digital infrastructure thematic and these enormous AI tailwinds that are going to play through the next decade plus.

And one of the reasons why we really like it, is it's had the most amazing turnaround that I've actually ever seen in my investing career. It has 1.3 gigawatts of contracted power and it has taken 900 megawatts of that and it has basically changed that from Bitcoin mining to pursuing this AI data centre opportunity.

And over the past six months has signed a series of agreements with CoreWeave, which is the largest GPU-as-a-service company in the world. It's backed by Nvidia (NASDAQ: VNDA). It's likely to go public next year. It's currently got a $23 billion valuation. And this is the marquee customer for Core Scientific for their data centre operations.

They've signed a 12 year agreement, which involves US$9 billion US of revenue accruing to Core Scientific at 75-80% profit margins over that period. So it's a truly exceptional deal. This will see them generate, in Aussie dollar terms, over a billion dollars of revenue and over $850 million of profit per annum from this one marquee deal.

So we think it's significantly undervalued at the moment. And just to put it into context, that 500 megawatt deal it signed with CoreWeave, that compares to NextDC's contracted capacity of 173 megawatts and DigiCo REIT's capacity of 67 megawatts. So, it's multiple times the scale, multiple times the revenue and profit, but a fraction of the multiple as it stands today.

#5 - Life360 (ASX: 360)

Elise Kennedy: One of the preferences that I've had is Life360. It's obviously pulled back recently and I think a common error that everyone makes is it's more than just an iPhone tracker.

It is also an ecosystem of services continually broadening out, with the likes of advertising, tracking your pets, your objects with the tile integration. So, for me, that is a key opportunity and one that I think will keep on continuing to grow throughout the year.

#6 - Paragon Care (ASX: PGC)

Nick Guidera: So, I've got a bit of an unusual one. There's been a lot of attention on Sigma (ASX: SIG) in the last 12 months. I think it's up yesterday, 174% year-to-date, and that's largely on the backdoor listing of Chemist Warehouse, which has had a lot of attention.

The ACCC has now given that that's blessing, so that's going ahead. But realistically, that stock is probably going to be an ASX 100 stock in the not too distant future. So, for small cap investors, if you haven't been on that trade in the last six or nine months, you're looking for what's next and that's largely what we do.

So what we've found in the last six months is a company by the name of Paragon Care. Now, Paragon Care has been listed for a number of years, but in June 2024, they merged with CH2. Very similar, not a backdoor listing per se, but CH2 is a much larger company than Paragon Care, to the point that they now have more than $3 billion worth of revenue as a result of that merger.

What's interesting about CH2, it's a very similar business to what Sigma and EBOS were before Chemist Warehouse, they're big in wholesale pharmacy distribution. CH2 is also really big in hospital distribution.

This 85-year-old business was bought out by management in 2015 - a management buyout, two gentlemen, the chairman and CEO of the business at the time. They vended that into Paragon Care and are now the CEO and chairman of Paragon Care going forward. What you've got now is a large wholesale distributor. You've also got a manufacturer and you've got a supplier into majority of the hospitals.

What we like about it though, why we think it's really interesting is you've got really strong structural growth markets like hospital and pharmacy and the like, that are growing mid-single to high-single digits year in, year out as the ageing population plays out. At the same time, you've got a nice merger of two businesses with a huge amount of synergies.

They've identified $5 million for FY '25 and another $12 million in FY '26. In addition to that, you've got huge alignment. The three guys, the founder of Paragon Care, plus the two founders of CH2, own over 60% of the stock.

So you've got some really good ingredients there that suggest that this business, once they deliver on the synergies and they can start to do some of the cross-selling opportunities, that these guys that have delivered some pretty impressive earnings at CH2 when it was an unlisted company, to where it is today, we've got the confidence that that can continue.

#7 - Boss Energy (ASX: BOE)

Todd Warren: One of our favourite names in '25 is going to be Boss Energy. So they're a uranium miner. They're just ramping up their first mine in South Australia called Honeymoon Well.

They will see their production go from around about 800,000 pounds this financial year. It'll double into the year after that and then go again, another 800,000 pounds into FY '27.

So it's actually a tripling from this year into FY '27, and we think that will drive huge growth for their earnings.

#8 - TechnologyOne (ASX: TNE)

Brittany Isakka: One we've owned in the fund for actually a number of years, and that's TechnologyOne. So the ticker is T-N-E. For those who don't know, it's the leading software player in Australia. They do software for justice, education departments, things of that nature.

It's not cheap, unfortunately on multiples today, but it has had very strong earnings growth and, I think, can have really strong earnings growth into next year.

So, they just released their full year result. Earnings grew 18% and that was ahead of their guidance of 12-16%. And then coming into 2025 and actually beyond, there's a couple of things that are driving earnings.

Firstly, they've got new customer wins in Australia, which is their core market. They've also got product upsells. So, you think when you take on a technology, you might not take all of the modules, you might take one or two. Then over time as you become more familiar, you take on more software.

And then thirdly, the UK opportunity. So today the UK is less than 10% of their revenue. It provides a significant runway for growth in the UK market. And finally, the SaaS Plus offering. So, they're converting what was traditionally implementation fee into the subscription revenue, which should drive higher earnings and cash flows in the coming years.

So, the business has less than 5% market share today, which is small, so we think earnings can grow significantly in the next couple of years.

#9 - Qoria (ASX: QOR)

James Barker: A stock that we hold in the portfolio at the moment that we think is a standout for 2025 is Qoria. It's the old Family Zone. Ticker Q-O-R. So, Qoria is a provider of software in cyber safety. It currently has about 24 million children that it protects each year, and it's got about 30,000 schools across Australia, the UK, the US and other regions.

This is a business that has had its challenges over the last couple of years. So, basically, the balance sheet got out of whack, it was burning a lot of money. Management's come in, it has right sized the cost base. It's projected to be free cash-flow positive into 2025 and we think the outlook looks really good there.

So the business currently has about $120 million of annual recurring revenue (ARR). That's expected to go to about $200 million over the next three years and the pipeline looks really good. So they've recently announced some good contract wins. There's new partnerships they're doing with the likes of SoftBank in Japan.

What we should see over that time is that incremental revenue, about half of that's expected to fall through to profitability. So it gets some really good material operating leverage coming through the business.

#10 - Trip.com (NASDAQ: TCOM)

Zoe Middleton: We've owned Trip.com for a number of years and we think that it's still got great growth potential in 2025 and probably further out as well.

It's the leading online travel agent in China and owns 50% of the leading online travel agent in India. So, the company is benefiting from growth in travel spend in those markets, and it's also taking market share so we think that sets it up well for 2020.

What's your #1 growth stock pick for 2025?

Let us know in the comments section below.