In this article we take a look at some of the best fast growth stocks to buy now. You can skip this part and go directly to see 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 recommend 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.
What gives us confidence in growth investing over the long term? The extended runup in growth stocks that occurred in the aftermath of the global financial crisis was supported by meaningful increases in free cash flow per share, not just expanding valuation multiples. We believe that some of the powerful trends that have driven outsized growth remain intact and should have room to 3 run, even if these stories may seem old hat to many investors.
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
We are in the middle of the latest earnings season and investors are digesting quarterly earnings reports from major companies. But so far signs remain mixed and the market is struggling to find a direction. The next big thing that could decide the market trajectory is the Federal’s Reserve decision about rate hikes in May. Several analysts believe the central bank will increase interest rates for in May and then hit pause on rate hikes at least for 2023. This anticipated pause in interest rate hikes are causing many to amass growth stocks.
According to a Wall Street Journal report, Stephen Lee, founding principal at Logan Capital Management, said that he “wouldn’t be surprised at 25 basis points, but again, the big picture is that we’re closer to the end. There’s not much beyond that.”
The report said the analyst was mulling buying “growthier stock names in the consumer discretionary and industrial tech areas.”
12 Best Fast Growth Stocks to Buy Now
Pixabay/Public Domain 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. 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.
12. Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT)
Number of Hedge Fund Investors: 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.
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 the company 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. The company 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 the company’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 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.
Cloud security company Zscaler, Inc. (NASDAQ:ZS) in March posted its fiscal second quarter results, according to which Zscaler, Inc. (NASDAQ:ZS)’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 Zscaler, Inc. (NASDAQ:ZS).
Online marketplace company Mercadolibre Inc (NASDAQ:MELI) ranks 7th in our list of the best fast growth stocks to buy now. During the fourth quarter Mercadolibre Inc (NASDAQ:MELI)’s revenue increased by 41% year over year to reach $3 billion, beating estimates by $40 million. GAAP EPS in the quarter came in at $3.25, beating estimates by $0.93.
Insider Monkey’s database of 943 hedge funds shows that 75 hedge funds had stakes in Mercadolibre Inc (NASDAQ:MELI) as of the end of the fourth quarter of 2022. The total worth of these stakes was $3.2 billion.
Enphase Energy Inc (NASDAQ:ENPH) earlier this 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.
