In this article, we will take a look at the 12 best fast growth stocks to buy now. To see more such companies, go directly to 5 Best Fast Growth Stocks to Buy Now.
Growth stocks were hammered in 2022 as inflation started to spike and the Federal Reserve began to increase interest rates. While 2023 provided no relief to investors and the market remains uncertain, some believe now is the time to pile into growth stocks for long-term gains. In February, JPMorgan’s Mislav Matejka said that value stocks might not maintain their momentum in 2023 and recommended investors to consider piling into growth stocks.
According to Bloomberg, Matejka recommended investors to be “outright underweight value versus growth” since the analyst believed at the time that in the second half of 2023 the market will be “moving back to the recession trade, but even if the opposite scenario gains traction, value might not be the best place to be.”
In November 2022, T. Rowe Price published a comprehensive report on growth investing titled “Navigating a Tough Environment for Growth Stocks.” The report said that growth stocks could begin to rebound when inflation starts to ease. The firm believes growth companies working on solid products have a lot of room to run.
The T. Rowe Price report talked about the transition of companies from on-premise data centers to Cloud platforms over the past few years to explain the importance of spotting growth opportunities in the market. The report said that the penetration of Cloud platforms is still in its early stages. This huge opportunity in the industry gave a boost to several growth stocks that were operating in the space.
The report also discussed the concentrated nature of US stock indexes and the importance of looking beyond major growth stocks like Amazon, Alphabet, Microsoft and Meta Platforms.
These entrenched businesses have advantages of scale, but constant due diligence is required to evaluate whether they can overcome the law of large numbers. Achieving a robust rate of earnings or cash flow growth becomes more challenging off a large base.
T. Rowe Price mentioned the following factors it believes are important in growth investing:
Valuations
How effectively a company is investing in growth initiatives
The levers they could pull to create value”
Capital returns for shareholders
Before the Fed's May meeting, investors were in a wait-and-see more. But even after the lates rate hike, the situation is not clear as the labor market in the US remains strong.
The signs in early April were strong. But fast forward to May, the is still uncertainty around a lot of market factors. Still, growth stocks with solid catalysts remain a top choice for prudent investors and hedge funds. According to a Wall Street Journal report in April, Stephen Lee, founding principal at Logan Capital Management, said he was mulling buying “growthier stock names in the consumer discretionary and industrial tech areas.”
Best Fast Growth Stocks to Buy Now
Pixabay/Public Domain
Our Methodology
For this article we used a stock screener to find stocks which have posted over 30% in sales growth over the past five years and over 30% sales growth quarter over quarter as of April 28. From this long list of stocks we picked growth stocks with the highest number of hedge fund investors. These are the best fast growth stocks to buy according to hedge funds. We gauged hedge fund sentiment from Insider Monkey’s database of 943 hedge. Some notable names in the list include Uber Technologies, Inc. (NYSE:UBER), Tesla, Inc. (NASDAQ:TSLA) and Booking Holdings Inc. (NASDAQ:BKNG).
Best Fast Growth Stocks to Buy Now
12. Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT)
Number of Hedge Fund Holders: 9
RNA medicines biotech firm Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) shares have gained over 50% in 2023 through April 27. It is one of the best fast growth stocks to buy. Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT)’s revenue in the fourth quarter of 2022 increased by a whopping 2663% year over year to reach $160.29 million, beating estimates by $79.77 million.
As of the end of the fourth quarter of 2022, 9 hedge funds tracked by Insider Monkey had stakes in Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT). The biggest hedge fund stakeholder of Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) was ARK Investment Management of Catherine D. Wood which owns a $34 million stake in the company.
Like Uber Technologies, Inc. (NYSE:UBER), Tesla, Inc. (NASDAQ:TSLA) and Booking Holdings Inc. (NASDAQ:BKNG), ARCT is one of the best growth stocks to buy according to hedge funds.
BeiGene, Ltd. (NASDAQ:BGNE) is a biotech company focused on making cancer treatments. In February BeiGene, Ltd. (NASDAQ:BGNE) posted its Q4 results. Revenue in the quarter increased by about 77% year over year to $380.1 million. However the metric missed the consensus estimate by $8.07 million.
15 hedge funds out of the 943 funds tracked by Insider Monkey were long BeiGene, Ltd. (NASDAQ:BGNE) as of the end of the fourth quarter of 2022. The biggest hedge fund stakeholder of BeiGene, Ltd. (NASDAQ:BGNE) was Baker Bros. Advisors of Julian Baker and Felix Baker which owns a $2.6 billion stake in the company.
Biotech firm Zymeworks Inc. (NYSE:ZYME) in the fourth quarter of 2022 saw a 1925% increase in its revenue on a YoY basis. GAAP EPS in the period came in at $4.65, beating estimates by $2.16. Net income in the quarter came in at $309.4 million, easily beating estimates.
A total of 24 hedge funds tracked by Insider Monkey have stakes in Zymeworks Inc. (NYSE:ZYME). The total worth of these stakes is $287 million.
Cloudflare, Inc. (NYSE:NET) saw a 41.9% year-over-year increase in revenue during the fourth quarter of 2022. Cloudflare, Inc. (NYSE:NET) ’s adjusted EPS in the period came in at $0.06, beating estimates by $0.01.
Cloudflare, Inc. (NYSE:NET) is seeing a huge demand for its services from small and large companies. It was recently reported that Cloudflare, Inc. (NYSE:NET)’s services are used by ChatGPT. Cloudflare, Inc. (NYSE:NET) management, without naming OpenAI, said during a latest earnings call:
"A leading generative AI company signed a one-year $1 million deal. Cloudflare, Inc. (NYSE:NET) had been a user of our free tier since 2017. And this deal originally started out as a relatively small gateway DNS opportunity to replace Cisco Umbrella. However, when their browser-based application debuted in late November, demand for Cloudflare, Inc. (NYSE:NET)’s AI-generated content absolutely exploded with unprecedented rates of adoption. Their Azure Front Door had quickly proved insufficient at handling the massive load on their services from legitimate users as well as keeping fraudulent users from exhausting their resources. They started off with CVM, DDoS, bot management, gateway DNS and more. We are actively exploring various paths for expansion to support their incredible growth as well as emerging use cases of their AI models and applications with Cloudflare, Inc. (NYSE:NET) Worker, API Shield, imagery sizing and more."
As of the end of the fourth quarter of 2022, 40 hedge funds had stakes in Cloudflare, Inc. (NYSE:NET). The biggest stakeholder of Cloudflare, Inc. (NYSE:NET) was Paul Marshall and Ian Wace’s Marshall Wace LLP which owns an $120 million stake in the company.
Here is what Baron Funds specifically said about Cloudflare, Inc. (NYSE:NET) in its Q3 2022 investor letter:
“We continued to build our position in Cloudflare, Inc. (NYSE:NET) during the quarter as the shares declined with the overall software space and the long-term risk/ reward balance became more compelling. The company reported a strong second quarter, with revenue growth accelerating to 54%, as well as better gross and operating margins. Third quarter guidance was also ahead of Wall Street expectations. Given Cloudflare’s proprietary network and massive global scale, its software products have a disruptive price-performance advantage over competitors. As the company introduces new products as well as disruptive packaging/pricing, its unit level economics should continue to improve over time, with the company already well ahead of its long-term gross margin target of 74%, reporting 78.9% for the second quarter. This drives strong cross/upselling activity with customers, reflected in strong net-dollar expansion rates in excess of 125%. Indeed, in the most recent quarters, customers purchasing five or more products reached 81% of the base, six or more products reached 70% of the base, and seven or more products reached 58% of the base. Enterprise penetration continues to be a key long-term driver, with 1,749 customers now spending over $100,000 annually with the company, growing 61% and now accounting for over 60% of total revenue. With approximately 152,000 paying customers at the end of last quarter, large enterprise customers still represent just 1% of total paid customers and thus a material growth opportunity in the coming years. We continue to have high confidence in the company’s ability to innovate at a rapid pace (announced 20 new products or enhancements in September alone), package and bundle with disruptive pricing, and take material share in its large and growing addressable markets.”
Cloud security company Zscaler, Inc. (NASDAQ:ZS) in March posted its fiscal second quarter results, according to which the company’s revenue in the period increased by about 51.7% year over year to total $387.6 million, beating estimates by $22.82 million. For the third quarter Zscaler, Inc. (NASDAQ:ZS) expects revenue to come between $396 million to $398 million.
A total of 42 hedge funds tracked by Insider Monkey had stakes in Zscaler, Inc. (NASDAQ:ZS) as of the end of the fourth quarter of 2022. The total worth of these stakes was $540 million. The most notable hedge fund stakeholder of Zscaler, Inc. (NASDAQ:ZS) was John Overdeck and David Siegel’s Two Sigma Advisors which owns an $81 million stake in the company.
Artisan Global Discovery Fund made the following comment about Zscaler, Inc. (NASDAQ:ZS) in its Q4 2022 investor letter:
“Zscaler, Inc. (NASDAQ:ZS) provides cloud-based Internet security solutions. In the quarter, it announced 54% revenue growth and expected growth of nearly 40% in 2023 (ahead of expectations). Despite solid fundamental momentum, shares have underperformed this year as investors have grown concerned about slowing demand for enterprise software as the broader global economy slows. We believe the dual trends of rising security vulnerability and increased enterprise digitization will lead to sustained demand, even in a recession. Cybersecurity remains a top concern for businesses and governments alike as cyberattacks can have devastating financial and reputational consequences. Meanwhile, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (Office 365, Salesforce, etc.) and a more remote workforce (versus pre-pandemic) make operating IT infrastructures increasingly complex. Give the attractive long-term outlook and depressed valuations, we added to the position.”
PDD Holdings Inc. (NASDAQ:PDD) ranks 7th in our list of the fast growth stocks to buy now according to hedge funds. In March, PDD Holdings Inc. (NASDAQ:PDD) posted its Q4 of 2022 results. Revenue in the period increased by 46% year over year to reach $5.77 billion. However, the figure missed estimates by $140 million.
Hedge fund sentiment remains strong for PDD Holdings Inc. (NASDAQ:PDD). Out of the 943 hedge funds tracked by Insider Monkey, 57 hedge funds reported owning stakes in the Chinese online retailer, up from 54 funds in the previous quarter. The most significant shareholder of PDD Holdings Inc. (NASDAQ:PDD) was D E Shaw which owns a $468 million stake in the company.
Enphase Energy, Inc. (NASDAQ:ENPH) last month posted first quarter of 2023 results. Adjusted EPS in the period came in at $1.37, beating estimates by $0.15. Revenue in the quarter jumped $726.02 million, beating estimates by $5.51 million.
Piper Sandler recently upgraded Enphase Energy, Inc. (NASDAQ:ENPH) to Overweight from Neutral with a $255 price target. The firm cited the potential for meaningful upward earnings revisions in 2023-24 on margins.
Like Uber Technologies, Inc. (NYSE:UBER), Tesla, Inc. (NASDAQ:TSLA) and Booking Holdings Inc. (NASDAQ:BKNG), Enphase Energy, Inc. (NASDAQ:ENPH) is one of the favorite growth stocks of hedge funds. ClearBridge Investments made the following comment about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q3 2022 investor letter:
“In IT, Enphase Energy, Inc. (NASDAQ:ENPH) delivered a strong quarter driven by secular growth in global rooftop solar, increased penetration into Europe, where demand accelerated, and a continued ramp up in battery storage sales. Also with a strong presence in the U.S., Enphase Energy designs and manufactures microinverters for residential and small commercial solar PV systems and has made strides in evolving from a solar inverter maker into a “home energy management” company that can act as the brains for the home’s energy system, including microinverters for solar, as well as storage and energy management software.”
