Conestoga Capital Advisors, an asset management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. At its September meeting, the Federal Reserve lowered the Federal Funds rate by 50 basis points due to weaker employment growth and moderate inflation. Equity markets welcomed the news, raising optimism for a soft landing in the U.S. economy. On September 26th, the S&P 500 Index achieved a record high, the Russell 2000 Index also moved higher over the quarter but remains roughly 10% below its all-time high. The Conestoga Small Cap Composite surged 10.09% (net) in the third quarter outperforming the Russell 2000 Growth Index’s 8.41% return. The Conestoga SMid Cap Composite returned 12.94% (net) versus the Russell 2500 Growth Index’s 6.99% return. The Conestoga Micro Cap Composite advanced 7.60% (net) but trailed the Russell Microcap Growth Index’s return of 8.57%. Finally, the Conestoga Mid Cap Composite returned 8.36% (net) outperforming the Russell Midcap Growth Index’s 6.54%. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2024.

Conestoga Capital Advisors highlighted stocks like Vericel Corporation (NASDAQ:VCEL), in the third quarter 2024 investor letter. Vericel Corporation (NASDAQ:VCEL) is a commercial-stage biopharmaceutical company. The one-month return of Vericel Corporation (NASDAQ:VCEL) was -7.96%, and its shares gained 16.23% of their value over the last 52 weeks. On October 21, 2024, Vericel Corporation (NASDAQ:VCEL) stock closed at $41.18 per share with a market capitalization of $2.019 billion.

Conestoga Capital Advisors stated the following regarding Vericel Corporation (NASDAQ:VCEL) in its Q3 2024 investor letter:

"Vericel Corporation (NASDAQ:VCEL) develops advanced cell therapies for the sports medicine and severe burn care market. VCEL’s growth engine has been MACI, an autologous chondrocyte membrane for the repair of cartilage defects, which continues to grow more than 20% and has a near-term market expansion opportunity by offering an arthroscopic option. VCEL’s stock pulled back 7.9% in the third quarter, after appreciating by greater than 20% in the first half of the year."

A lab worker holding a vial of biopharmaceuticals for cellular therapies.

Vericel Corporation (NASDAQ:VCEL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Vericel Corporation (NASDAQ:VCEL) at the end of the second quarter which was 17 in the previous quarter. Vericel Corporation (NASDAQ:VCEL) generated record revenue of $53 million in the second quarter of 2024. While we acknowledge the potential of Vericel Corporation (NASDAQ:VCEL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.