CAGR Catalysts
Revenue growth is the heartbeat of a business. Everything else — earnings, margins, cash flow — follows from a company's ability to grow its top line.
Stoquity AI Committee1Strategy Overview
CAGR Catalysts is Stoquity's pure growth strategy, designed to capture the compounding effect of sustained revenue expansion. The portfolio identifies companies growing revenue at 20%+ annually across all sectors, then applies quality and momentum filters to separate sustainable growers from one-time beneficiaries.
The strategy is sector-agnostic — a healthcare company compounding at 30% is evaluated identically to a technology company at the same rate. What matters is the growth trajectory, its sustainability, and the market's underappreciation of the compounding math.
A company growing revenue at 25% annually will 3x its top line in 5 years and nearly 10x in 10 years. The market consistently underestimates the impact of sustained compounding, creating persistent alpha for investors who identify and hold true compounders.
2Investment Thesis
Academic research consistently shows that revenue growth is the most durable predictor of long-term stock performance. Unlike earnings — which can be managed through accounting choices — revenue growth reflects genuine demand expansion. A study by McKinsey found that companies in the top quartile of revenue growth delivered 3.5x the total shareholder return of bottom-quartile growers over 15-year periods.
The challenge is distinguishing sustainable compounders from temporary growth stories. The pandemic created dozens of false compounders — companies that appeared to be growing 30%+ but were simply pulling forward demand. CAGR Catalysts solves this with multi-quarter consistency requirements and quality overlays that filter for genuine compounding.
3How the Strategy Works
The CAGR scoring model applies three sequential filters:
1. Growth Gate — trailing 4-quarter revenue growth must exceed 20%, with no single quarter below 15%. This eliminates one-time spikes and ensures consistency. 2. Quality Overlay — growth must be accompanied by improving or stable gross margins. Revenue growth funded by margin deterioration is not sustainable. 3. Momentum Confirmation — price action must confirm the fundamental growth story. Stocks in downtrends despite strong revenue growth often signal hidden problems.
The portfolio rebalances weekly, adding new compounders as they cross the threshold and trimming positions where growth decelerates below 18% for two consecutive quarters.
| Factor | Weight | Rationale |
|---|---|---|
| Revenue Growth | 25% | Core factor — the entire strategy revolves around top-line compounding |
| Growth | 18% | Composite growth signal including forward estimates and analyst revisions |
| Momentum | 15% | Price confirmation of fundamental growth trajectory |
| Quality | 14% | Ensures growth is accompanied by business quality |
| Operating Margin | 10% | Improving margins signal operating leverage and scalability |
| Earnings Surprise | 8% | Beat frequency indicates analysts are underestimating growth |
4Risk Metrics
| Metric | Value |
|---|---|
| Sharpe Ratio | 1.44 |
| Beta | 1.28 |
| Alpha | 28.6 |
| Sortino Ratio | 1.68 |
| VaR (95%) | -5.1% |
| Max Drawdown | -17.4% |
| HHI (Concentration) | 0.07 |
| Annual Return | 38.4% |
| Volatility | 24.2% |
5Current Holdings
| Symbol | Company | Weight | Score | Sector |
|---|---|---|---|---|
| NVDA | NVIDIA Corporation | 8.6% | 97 | Technology |
| META | Meta Platforms | 7.2% | 93 | Communication Services |
| PANW | Palo Alto Networks | 6.4% | 90 | Technology |
| UBER | Uber Technologies | 5.8% | 88 | Technology |
| SHOP | Shopify | 5.4% | 87 | Technology |
| APP | AppLovin | 5% | 91 | Technology |
| TTD | The Trade Desk | 4.8% | 86 | Technology |
| CRWD | CrowdStrike | 4.6% | 89 | Technology |
| DDOG | Datadog | 4.4% | 85 | Technology |
| SPOT | Spotify | 4.2% | 84 | Communication Services |
6Recent Trades
| Date | Action | Symbol | Shares | Price |
|---|---|---|---|---|
| 2026-03-10 | ADD | APP | 45 | $412.6 |
| 2026-03-05 | BUY | SPOT | 30 | $624.8 |
| 2026-03-02 | TRIM | TTD | 20 | $98.4 |
7Risk Considerations
Growth stocks are highly sensitive to interest rate changes. Rising rates increase the discount rate applied to future earnings, compressing the valuations of long-duration growth stocks. In 2022, the Nasdaq fell 33% as rates rose from 0% to 4.5%. CAGR Catalysts holdings would have experienced similar declines.
Growth deceleration is the other primary risk. When a 30% grower decelerates to 20%, the stock often falls 30-40% even though the company is still growing meaningfully. The portfolio manages this through strict growth threshold monitoring and systematic trimming when deceleration is detected.
Valuation discipline is maintained through the quality overlay — the portfolio avoids growth stocks trading at extreme multiples without corresponding profitability improvements.
Growth stocks have negative duration exposure — they decline when interest rates rise. If rates increase significantly from current levels, expect meaningful drawdowns. The Drawdown Governor provides some protection, but investors should size their CAGR Catalysts allocation with rate risk in mind.
8Who Is This For?
CAGR Catalysts suits investors who believe in the power of compounding revenue and can tolerate growth stock volatility. Best as a core growth allocation within a diversified portfolio.
| Investor Types | Growth-focused investors, Long-term wealth builders, GARP (Growth at a Reasonable Price) advocates |
| Time Horizon | 5+ years |
| Risk Profile | Aggressive — growth stocks carry above-average volatility |
| Income Needs | None — compounders reinvest for growth, not dividends |
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