In this article, we will take a look at the 10 Best Breakout Stocks To Invest In Right Now.
Since 1950, the S&P 500 has posted at least a 15% gain through September on 17 occasions. In those years, the index rose a median of 5.4% in the fourth quarter and ended the year with gains in all but three instances, according to Keith Lerner, co-chief investment officer at Truist Advisory Services. Strong gains in U.S. stocks this year suggest a positive outlook for the remainder of 2024, if historical trends hold.
The S&P 500 is currently up 20% year-to-date, nearing a record high and poised for its best January-to-September performance since 1997. Optimism around a potential ‘soft landing’ has fueled this rally, alongside a recent 50 basis point rate cut by the central bank.
Overall, inflation in the U.S. is steadily nearing the Federal Reserve’s 2% annual target. Analysts suggest that the ongoing moderation in consumer prices could prompt further interest rate cuts to prevent a spike in unemployment. The personal consumption expenditures price index, a key inflation measure monitored by the Fed, increased by just 0.1% in the past month. This brings the 12-month inflation rate to 2.2%, down from 2.5% in July, marking its lowest level since February 2021. Moreover, Fed officials have seem to have shifted their focus from combating inflation to prioritizing support for a labor market showing signs of slowing. During their recent meeting, policymakers signaled the possibility of a half-percentage-point cut this year, followed by a full-point reduction in 2025.
That said, the current financial landscape reflects the Fed’s cautious strategy to engineer a soft landing for the economy—curbing inflation without inducing a recession. Gregory Daco, Chief Economist at EY-Parthenon, observes that the U.S. economy is gradually decelerating, with both consumers and businesses adopting more cautious spending behaviors due to a tightening labor market and rising costs. Although consumer spending hasn’t seen a sharp decline, Daco suggests that slower growth in disposable income could lead to more subdued spending in 2025. He projects consumer spending growth to slow to an average of 2.5% in Q4 2024, dropping further to 2% in 2025.
On another front, Mark Spitznagel, Chief Investment Officer and founder of Universa, believes the U.S. is on the brink of a significant downturn due to the high levels of debt and sustained high interest rates. “The clock is ticking, and we are entering black swan territory,” he told Reuters, warning that the recent “disinversion” of a key segment of the U.S. Treasury yield curve—a crucial recession indicator—signals an impending sharp downturn. Spitznagel anticipates a recession could hit as early as this year, prompting the Fed to slash rates aggressively from the current 4.75%-5% range and potentially returning to quantitative easing (QE), or bond buying.
Our Methodology
To compile our list of the best breakout stocks, we analyzed the holdings of the IBD Breakout Opportunities ETF and ranked them based on the number of hedge funds that initiated long positions in Q2 2024. From this group, we identified the top breakout stocks that are the most widely held by hedge funds.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. DaVita Inc. (NYSE:DVA)
Number of Hedge Fund Holders: 34
DaVita Inc. (NYSE:DVA) provides medical care services and is the leading provider of kidney dialysis services in the United States, operating 2,675 outpatient dialysis centers domestically and an additional 367 sites across 11 countries.
Despite operational challenges, DaVita Inc. (NYSE:DVA) has shown financial resilience. In August 2024, the company raised its EBIT guidance by $35 million, a 2% increase, despite incurring an extra $60 million in annual clinic expenses that were previously unaccounted for. Moreover, DaVita Inc. (NYSE:DVA) saw a 1.1% increase in dialysis treatments, reaching $7.265 million. The company reported revenues of $3.187 billion and a net income of $223 million, or $2.59 per share, and ended the quarter with a strong financial footing, generating $1 billion in free cash flow.
Analysts forecast DaVita’s earnings per share to be $9.77 for the current fiscal year, with an expected increase to $10.74 for the following year, indicating a promising outlook for the company’s profitability.
A review of 912 hedge fund portfolios by Insider Monkey for Q2 2024 found 34 investors with holdings in DaVita Inc. (NYSE:DVA). The largest stakeholder was Warren Buffett’s Berkshire Hathaway, with a $5 billion investment.
Here’s what Ariel Global Fund mentioned about DaVita Inc. (NYSE:DVA) in its Q1 2024 investor letter:
“Leading provider of dialysis services, DaVita Inc. (NYSE:DVA) outperformed during the period following a top- and bottom-line earnings beat. DaVita is benefitting from cost saving initiatives, early signs of a normalization in patient growth trends on par with pre-pandemic levels, improved leverage and an aggressive share buyback program. The company also recently announced an expansion of its international operations in Latin America, presenting an attractive long-term growth opportunity. Furthermore, management provided a 2024 financial outlook which is well above consensus and anticipates favorable growth. In our view, we believe the market misunderstands the long-term clinical impact of glucagon-like-peptide-1 (GLP-1s) on dialysis and as such, DaVita currently trades at a significant discount relative to our estimate of its intrinsic value.”
9. Axon Enterprise, Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 36
Axon Enterprise, Inc. (NASDAQ:AXON) is a U.S.-based company that manufactures a range of products for law enforcement, military, and civilian markets, including TASER energy weapons, cameras, and sensors.
In the second quarter, Axon Enterprise, Inc. (NASDAQ:AXON) achieved record performance, with revenues exceeding $500 million and new business bookings surpassing $1 billion. This growth was propelled by the launch of new products such as the TASER 10 and Axon Body 4, along with a strategic shift toward software and services, which now make up 39% of total revenue. The company has raised its full-year revenue guidance to between $2 billion and $2.05 billion, supported by a future contracted revenue of approximately $7.4 billion.
Moreover, Baird recently reiterated its Outperform rating for AXON, increasing the stock’s price target to $400 from $360. The firm cited potential growth drivers such as new AI capabilities and emerging opportunities in the enterprise sector and drone technology. These prospects are expected to complement the strong performance of Axon’s core products and software offerings.
In the second quarter of 2024, 36 out of 912 hedge funds tracked by Insider Monkey held stakes in Axon Enterprise, Inc. (NASDAQ:AXON). The largest shareholder among them was Neil C. Bradsher’s Broadwood Capital, with 760,062 shares valued at $223.64 million.
8. Arch Capital Group Ltd. (NASDAQ:ACGL)
Number of Hedge Fund Holders: 37
Arch Capital Group Ltd. (NASDAQ:ACGL), headquartered in Bermuda, provides insurance, reinsurance, and mortgage insurance globally, with a specialization in niche areas of the insurance market that deal with complex and unique risks.
In the second quarter of 2024, Arch Capital Group Ltd. (NASDAQ:ACGL) delivered outstanding results, reporting operating earnings per share of $2.57, far exceeding analyst expectations of $2.09 and consensus estimates of $2.21. This strong performance was attributed to favorable reserve development, higher-than-expected net investment income (NII), and improved underwriting results. The company’s book value also saw a robust sequential growth of 7%, reaching $52.75, showcasing its financial stability.
Analysts have adjusted their price targets for ACGL following these results. Citi initiated coverage with a Neutral rating and a $114 price target, while Roth/MKM raised their target to $125. On the other hand, BMO Capital Markets set a target of $98, introducing a 2026 EPS estimate of $9.76, while Keefe, Bruyette & Woods increased their target to $121 and revised their EPS projections for 2024 and 2025 to $8.55 and $9.30, respectively.
In the second quarter of 2024, 37 hedge funds held stakes in Arch Capital Group Ltd. (NASDAQ:ACGL), with total holdings valued at $1.35 billion. Egerton Capital Limited emerged as the largest shareholder, holding a stake worth $326.2 million as of June 30.
7. Agnico Eagle Mines Limited (NYSE:AEM)
Number of Hedge Fund Holders: 50
Agnico Eagle Mines Limited (NYSE:AEM), a key player in the Canadian gold industry, operates mining sites across Canada, Finland, Australia, and Mexico, along with exploration and development projects in the United States. The company adheres to a strategy of maintaining full exposure to fluctuating gold prices by avoiding forward gold sales.
In the second quarter of 2024, Agnico Eagle Mines Limited (NYSE:AEM) produced 0.9 million ounces of gold, bringing its total production for the first half of the year to 1.77 million ounces. This performance keeps the company on track to meet the higher end of its annual production forecast. With robust output and rising gold prices, Agnico Eagle’s revenue grew by 20.9% year-over-year in Q2, and by 21% year-over-year for the first half of 2024.
At the end of the second quarter of 2024, 50 hedge funds tracked by Insider Monkey held positions in Agnico Eagle Mines Limited (NYSE:AEM). The largest shareholder was Jean-Marie Eveillard’s First Eagle Investment Management, which owned 6.64 million shares, valued at approximately $434.95 million.
Alluvium Asset Management said the following regarding Agnico Eagle Mines (NYSE:AEM) in their second-quarter 2024 investor letter:
“Our gold miners had quite divergent performance, Agnico Eagle Mines Limited (NYSE:AEM) was up 11.4%, but Regis Resources was down 12.9%. They both provided quarterly updates. Regis reported business disruptions due to poor weather, but management maintained its output and cost guidance. It also announced the approval of two underground projects that will add around 25% to production levels from 2027, but they will cost circa AUD 150m. Agnico reported more positive results and reiterated guidance. We have revised our long-term gold price and exchange rate assumptions (which remain conservative). On our earnings based models we still view Regis as cheap and Agnico as expensive. But that ignores management, and, to a large extent, growth prospects. And when we consider those factors the equation looks decidedly more balanced. So despite Regis trading at an even larger discount to our valuation we have not bought more, and despite Agnico trading at an even larger premium to our valuation, we have not recently sold any. The Fund’s combined position in these gold miners is 6.6%.”
6. Sharkninja Inc. (NYSE:SN)
Number of Hedge Fund Holders: 52
SharkNinja Inc. (NYSE:SN) is a consumer goods company specializing in innovative home appliances, renowned for its Shark vacuum cleaners and Ninja kitchen products.
In the recent quarter, SharkNinja Inc. (NYSE:SN) posted a 31% year-over-year increase in sales, bringing in $1.25 billion in revenue, along with a 34% rise in earnings per share. Sales in food preparation appliances soared nearly 80%, while cooking and beverage appliances grew by 18.2%, fueled by expansion into Europe. All major product categories experienced double-digit growth, with the cleaning segment leading at 20%. Domestic sales surged by 35%, and adjusted net sales for international business increased by 46%, driven primarily by gains in Germany and France.
On September 6, Canaccord Genuity reaffirmed its Buy rating for SharkNinja Inc. (NYSE:SN), setting a price target of $105. The firm praised the company’s strong quarterly performance and raised guidance, noting it as a standout stock in their 2024 Outlook with the most potential upside relative to consensus estimates.
During the second quarter of 2024, 52 hedge funds held stakes in SharkNinja Inc. (NYSE:SN), with combined positions valued at $1.36 billion.
Ave Maria World Equity Fund stated the following regarding SharkNinja, Inc. (NYSE:SN) in its Q2 2024 investor letter:
“Top contributors to performance included SharkNinja, Inc. (NYSE:SN) and Taiwan Semiconductor Manufacturing Company Limited. SharkNinja, Inc. is a global product design and technology company focused on creating solutions that increase efficiency, convenience and enjoyment of consumers’ daily tasks and improve everyday lives. The company has built two billion-dollar brands, Shark and Ninja, and has a proven track record of establishing leadership positions by disrupting numerous household product categories, including cleaning, cooking, food preparation, home entertainment and beauty.”
5. Interactive Brokers Group, Inc. (NASDAQ:IBKR)
Number of Hedge Fund Holders: 52
Interactive Brokers Group, Inc. (NASDAQ:IBKR) provides execution, clearance, and settlement services for a variety of financial products, including stocks, options, futures, bonds, and foreign exchange. It operates the largest electronic trading platform in the U.S. based on daily average revenue trades.
Citi recently reaffirmed its Buy rating on Interactive Brokers Group, Inc. (NASDAQ:IBKR) with a price target of $145, following a meeting with Chairman Thomas Peterffy. The firm expressed confidence in the company’s long-term potential for account growth and strong operating margins.
In Q2 2024, Interactive Brokers Group, Inc. (NASDAQ:IBKR) delivered impressive financial results, posting record net revenues and pretax income, fueled by increased trading activity. Commissions surged to $406 million, while net interest income reached a new quarterly high of $792 million. The company also reported a 36% year-over-year rise in client equity, which totaled $497 billion. Additionally, 178,000 new accounts were added during the quarter, highlighting the company’s strong growth in customer acquisition.
In the second quarter of 2024, 52 out of the 912 hedge funds monitored by Insider Monkey held positions in Interactive Brokers Group, Inc. (NASDAQ:IBKR). The largest of these was Orbis Investment Management, which owned 6.96 million shares valued at $853.5 million.
TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding Interactive Brokers Group, Inc. (NASDAQ:IBKR) in its Q2 2024 investor letter:
“In the Financials sector we tend to avoid banks that face credit deterioration or rising deposit costs, preferring either asset managers or specialized insurance companies. One contributor this quarter was Interactive Brokers Group, Inc. (NASDAQ:IBKR), which offers automated, low-cost securities brokerage services for global retail investors. The company’s revenues and earnings edged ahead of forecasts. Interactive’s volume of daily average revenue trades increased each month during the quarter, its margins remained high—benefiting from the sustained high interest rate environment, and its management increased the company’s dividend. Combined, that gave its shares a 10% lift.”
4. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 61
Newmont Corporation (NYSE:NEM) is the world’s largest gold producer, also engaged in mining copper, silver, zinc, and lead. The company operates in key mining regions across Africa, Australia, Latin America and the Caribbean, North America, and Papua New Guinea.
Recently, Newmont Corporation (NYSE:NEM) announced its agreement to sell certain Australian assets to Greatland Gold plc, with the transaction expected to finalize in the fourth quarter of 2024. This sale includes the Telfer operation and Newmont’s 70% stake in the Havieron gold-copper project, which is projected to generate up to $475 million for the company. As a result of this sale, Newmont Corporation (NYSE:NEM) has adjusted its non-core gold and copper production guidance for 2024, although its Tier 1 gold production target remains unchanged at 5.63 million ounces.
Jefferies has maintained its Buy rating on Newmont Corporation (NYSE:NEM) with a price target of $54. The firm noted that the recent transaction exceeds Jefferies’ own valuation of $271 million. The deal encompasses various elements, including equity, deferred cash, and repayment of a joint venture loan.
In its Q2 2024 results, Newmont Corporation (NYSE:NEM) reported revenue of $4.4 billion, fueled by the production of 1.6 million ounces of gold and 477,000 gold equivalent ounces from other metals. This led to robust cash flow of $1.4 billion from operations and $594 million in free cash flow.
As of the end of the second quarter, 61 hedge funds monitored by Insider Monkey held stakes in Newmont Corporation (NYSE:NEM).
3. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 89
The Progressive Corporation (NYSE:PGR) is an insurance holding company that provides personal and commercial auto insurance as well as residential property insurance. In late 2022, it became the largest motor insurance carrier in the U.S.
In its Q2 2024 financial report, The Progressive Corporation (NYSE:PGR) surpassed analysts’ expectations for adjusted earnings per share, reporting $2.48, which is $0.45 above the anticipated $2.03. However, the company slightly fell short of revenue estimates, generating $17.21 billion compared to the expected $17.54 billion.
BofA Securities maintained a Buy rating on Progressive’s shares following a notably strong operational month. Meanwhile, Keefe, Bruyette & Woods revised its outlook, raising the stock’s price target to $280 from $275. Their analysis indicates that Progressive’s financial performance and growth prospects remain favorable despite potential challenges.
By the end of Q2 2024, 89 hedge funds tracked by Insider Monkey held positions in The Progressive Corporation (NYSE:PGR), with Viking Global, led by Andreas Halvorsen, as the largest shareholder, holding a stake valued at $832.2 million.
Parnassus Investments, an investment management company, released first quarter 2024 investor letter and mentioned The Progressive Corporation (NYSE:PGR). Here is what the fund said:
“The Progressive Corporation (NYSE:PGR) shares appreciated as investors reacted well to the insurer’s latest financials, including higher-than-expected-growth in net premiums. The company’s consistently profitable underwriting, scale advantages and strong execution are becoming more evident to investors as it continues to gain market shares.”
2. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 90
S&P Global Inc. (NYSE:SPGI) is a capital markets firm specializing in financial information and analytics. It offers independent credit ratings, market intelligence, and risk analytics services, providing a range of products that assist investors, businesses, and governments in making informed decisions.
Morgan Stanley recently revised its outlook on S&P Global Inc. (NYSE:SPGI), raising the price target from $530 to $564 while maintaining an Overweight rating on the stock. The firm cited the company’s strong competitive position, significant market share, and high profit margins as key factors supporting its positive assessment. Morgan Stanley commended S&P Global for its financial strength and growth potential, highlighting the company’s ability to leverage pricing power, innovate with new products, expand globally, and capitalize on cross-enterprise opportunities.
S&P Global Inc. (NYSE:SPGI) has shown robust financial performance, reporting a notable 16% increase in total revenue, driven by a 60% surge in transaction revenue from its ratings division. Additionally, subscription products experienced an 8% year-over-year growth. Additionally, the company’s management has significantly upgraded its full-year 2024 outlook for rated debt issuance, increasing the forecast from a 6-10% rise to approximately 25%, which is expected to lead to mid-teens growth in Ratings revenue.
By the end of Q2 2024, 90 hedge funds tracked by Insider Monkey held stakes in S&P Global Inc. (NYSE:SPGI), down from 97 in the previous quarter. These investments collectively exceed $10 billion. Among these hedge funds, TCI Fund Management emerged as the leading stakeholder in Q2.
1. ServiceNow Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 97
ServiceNow Inc. (NYSE:NOW) is a cloud-based software company that offers a platform for digital workflows. Its role as an AI platform for business transformation is expanding rapidly, with NowAssist becoming the fastest-growing product in the company’s history, doubling its net new annual contract value quarter-over-quarter. In Q2, ServiceNow closed 11 deals, each worth over $1 million.
Bernstein recently reaffirmed its Outperform rating on ServiceNow Inc. (NYSE:NOW), setting a price target of $906. The firm sees the software company as a strong “quality compounder,” particularly for long-term investors. Bernstein suggested that any significant price pullback could provide a strategic opportunity to increase positions in the company, as seen during previous market downturns that created attractive buying opportunities.
ServiceNow Inc. (NYSE:NOW) continues to excel in customer service management, generating over $1 billion in revenue, and maintains a strong presence in the financial services sector, serving all of the top 24 global banks. Future growth is anticipated to be driven by increasing enterprise investment in AI, a market projected to reach $3 trillion by 2027.
At the end of Q2 2024, 91 of the 912 hedge funds tracked by Insider Monkey held stakes in ServiceNow Inc. (NYSE:NOW), positioning it as one of the top breakout stocks to consider.
Lakehouse Global Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its April 2024 investor letter:
“US-based software company, ServiceNow, Inc. (NYSE:NOW), provided another strong result, continuing its long and consistent track record of 20%-plus revenue growth combined with healthy profitability. Subscription revenues grew 25% year-on-year to $2.5 billion and free cash flow grew 47% year-on-year to $1.2 billion. The company’s core operating metrics were also impressive with remaining performance obligations growing 26% year-on-year to $17.7 billion (i.e. roughly 2x 2023 revenue) and renewal rates holding steady at 98%. Performance was evenly spread across segments, products, and geographies, with notable strength in the US federal government. The company now boasts 1,933 customers generating in excess of $1 million in Annual Contract Value (ACV), which is pleasing to see as it implies multiple solutions are involved and that the company’s platform model is increasingly resonating with customers. In our view, ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”
While we recognize the potential of NOW as an investment, we believe certain deeply undervalued AI stocks offer greater prospects for higher returns in a shorter period. If you’re seeking an AI stock with even more promise than those on our list and trading at less than 5 times its earnings, check out our report about the cheapest AI stock.
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