The Disruption Score
How we identify stocks benefiting from disruption right now
The Disruption Score is our framework for identifying companies where disruption is already showing up in the numbers, not just in narratives or long-term promises.
Unlike Disruption Aristocrats, which focus on durability across many years and market cycles, the Disruption Score is designed to capture real-time execution. It highlights disruptive stocks where innovation, demand, and economic strength are converging today, regardless of company age or size.
Each company earns one point for each criterion it meets, for a maximum score of 5 out of 5.
What the Disruption Score measures
The Disruption Score focuses on five signals:
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accelerating demand
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heavy reinvestment in innovation
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early signs of pricing power
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real cash generation
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and market recognition
Together, these factors help distinguish companies driving disruption from those merely associated with it.
The Disruption Score criteria
1) High growth velocity
Revenue growth (1Y) ≥ 20%
Disruption shows up first in demand.
Companies earning this point are not growing slowly or incrementally, they are capturing share rapidly as new technologies or business models gain adoption. Using a short, one-year window avoids penalizing younger companies while still setting a meaningful bar.
Fast growth alone isn’t enough to prove durability. But without it, disruption is rarely real.
2) Investing in the future
R&D ≥ 10% of revenue
True disruptors reinvest aggressively.
High R&D intensity signals that a company is building proprietary technology, intellectual property, or platform advantages rather than relying on incremental improvements or financial engineering. This criterion helps filter out trend-followers and highlights companies creating the next generation of products and services.
This is often where structural moats first appear.
3) Operating moat
EBITDA margin ≥ 20%
Margins are where advantage begins to show.
An EBITDA margin above 20% suggests pricing power, cost advantages, or operating leverage that competitors struggle to replicate. At this level, profitability is no longer incidental. It reflects real differentiation in the business model.
This criterion helps ensure disruption is translating into operating strength, not just top-line growth
4) Economic reality check
Free cash flow margin ≥ 10%
Cash matters.
Free cash flow confirms that operating strength survives reinvestment, capital spending, and growth. Companies that clear this bar are not just profitable on paper. They are generating real, repeatable cash.
This criterion filters out companies where growth is driven by unsustainable spending or accounting artifacts rather than genuine economic power.
5) Market validation
1-year stock return > S&P 500
Markets tend to recognize disruption before it becomes consensus.
Beating the S&P 500 over the past year confirms that investors are beginning to price in the company’s advantage. Using a one-year window avoids long-cycle bias while still grounding the score in real-world outcomes.
Innovation only matters if it ultimately shows up in returns.
How to interpret the score
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5 / 5 → High-conviction disruptor with strong execution
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4 / 5 → Disruptor showing multiple reinforcing signals
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3 / 5 → Emerging disruptor worth close monitoring
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Below 3 → Early, speculative, or unproven
A high Disruption Score does not guarantee long-term dominance. It signals that disruption is already visible—and accelerating.
These 15 stocks earned a Perfect 5/5 disruption score
List updated on January 1, 2025
Western Digital (WDC) — Disruption Score: 5/5 · +188.90% (1Y)
Lam Research (LRCX) — Disruption Score: 5/5 · +136.99% (1Y)
Palantir (PLTR) — Disruption Score: 5/5 · +135.03% (1Y)
Vicor (VICR) — Disruption Score: 5/5 · +126.82% (1Y)
Credo Technology (CRDO) — Disruption Score: 5/5 · +114.09% (1Y)
TransMedics (TMDX) — Disruption Score: 5/5 · +95.11% (1Y)
KLA Corp (KLAC) — Disruption Score: 5/5 · +92.83% (1Y)
Rambus (RMBS) — Disruption Score: 5/5 · +73.84% (1Y)
Nova (NVMI) — Disruption Score: 5/5 · +66.74% (1Y)
InterDigital (IDCC) — Disruption Score: 5/5 · +64.35% (1Y)
Krystal Biotech (KRYS) — Disruption Score: 5/5 · +57.37% (1Y)
Monolithic Power Systems (MPWR) — Disruption Score: 5/5 · +53.18% (1Y)
Broadcom (AVGO) — Disruption Score: 5/5 · +49.28% (1Y)
Eli Lilly (LLY) — Disruption Score: 5/5 · +39.21% (1Y)
Arista Networks (ANET) — Disruption Score: 5/5 · +18.55% (1Y)
How the Disruption Score fits with Disruption Aristocrats
The Disruption Score and Disruption Aristocrats are complementary, not competing frameworks.
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The Disruption Score identifies stocks benefiting from disruption today.
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Disruption Aristocrats recognize companies that have proven they can sustain that advantage over many years, across market cycles, and at scale.
All Disruption Aristocrats once scored highly on the Disruption Score.
Only a small subset of disruptors ever earn Aristocrat status.
Why this matters
Disruption is a process, not a moment.
The Disruption Score helps investors spot that process in real time.
It’s about identifying which disruptive stocks are turning innovation into real economic power.
Quality disruptors tend to outperform the broader stock market. If you look at the best-performing stocks of the last decade, most have profited from disruption.
Companies on the Disruption Aristocrats list balance innovation with stability. They offer exposure to long-term megatrends without the volatility of early-stage stocks.