In this article, we discuss the 10 best cheap growth stocks to buy now. If you want to read about some more value stocks, go directly to 5 Best Cheap Growth Stocks To Buy Now.
Two fundamental investment techniques are growth investing and value investing. Growth stocks are shares of companies that are expected to grow at a significantly faster rate than the rest of the market. Growth stocks usually do not pay dividends as the growth strategy requires reinvestments of profits in the business to generate higher returns.
In the past decade, some growth stocks outperformed the market, particularly in the technology sector. Unfortunately for growth stock investors, the rapid rise in interest rates by the Federal Reserve in 2022 has resulted in some movement out of growth stocks. Given the headwinds investors face in this macroeconomic backdrop, stocks could continue to decline if economic data fails to meet expectations. As such, it could be a good idea to diversify across different stocks and sectors. There could also be an opportunity for long term investors to buy high quality stocks given the lower valuations.
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Our Methodology:
To find cheap growth stocks, we took stocks with the next 5 year annual EPS growth estimates of over 20% according to Finviz as of September 26 that also trade for below the average analyst target price according to Finviz by a substantial margin.
We then ranked 10 of those stocks based on the number of hedge funds in our database that held shares in the same stocks at the end of Q2 2022.
Best Cheap Growth Stocks To Buy Now
10. M&T Bank Corporation (NYSE:MTB)
Number of hedge fund holders: 39
Based in New York, M&T Bank Corporation (NYSE:MTB) offers retail and business banking services.
Although banks aren’t usually considered growth stocks, M&T Bank Corporation (NYSE:MTB) has a next 5 year expected EPS growth rate of 22.31% according to Finviz. If that occurs, M&T Bank Corporation (NYSE:MTB) could grow its earnings per share faster than what’s expected for the market.
M&T Bank Corporation (NYSE:MTB) could also be a cheap stock given that the average analysts’ target price for M&T Bank Corporation (NYSE:MTB) is $206.74, which is higher than its current price.
Our hedge fund data shows that M&T Bank Corporation (NYSE:MTB) was held by 39 hedge funds in the second quarter, with a total stake value of $1 billion. Citadel Investment Group was the largest stakeholder in the company, holding 1.93 million shares worth $309.07 million.
Alongside NVIDIA Corporation (NASDAQ:NVDA), Booking Holdings Inc. (NASDAQ:BKNG), and Amazon.com, Inc. (NASDAQ:AMZN), M&T Bank Corporation (NYSE:MTB) is a cheap growth stock that many hedge funds in our database owned at the end of Q2 2022.
9. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of hedge fund holders: 39
With over 3000 restaurants Chipotle Mexican Grill, Inc. (NYSE:CMG) is a global food chain. Although it’s already a big company, analysts expect Chipotle Mexican Grill, Inc. (NYSE:CMG) to grow EPS by an average annual rate of 26.11% over the next 5 years.
In July 2022, the company announced its Q2 results, reporting $2.21 billion in revenue with a normalized EPS of $9.30, which beat the estimate by $0.26. Analysts have a price target of $1,798.79 per share, which makes the stock cheap to some investors given the price at the end of September 29 of $1,543.35.
At the end of the second quarter of 2022, 39 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in Chipotle Mexican Grill, Inc. (NYSE:CMG), compared to 38 in the preceding quarter worth $2.95 billion. Pershing Square was the largest stakeholder in the company, holding 1.10 million shares worth $1.44 billion.
8. ASML Holding N.V. (NASDAQ:ASML)
Number of hedge fund holders: 47
ASML Holding N.V. (NASDAQ:ASML) operates in the semiconductors industry. The company specializes in advanced semiconductor equipment systems.
In July the company posted earnings for the second fiscal quarter of 2022, reporting normalized EPS of $3.60, beating analyst expectations by $0.06. The revenue over the period was $5.53 billion, beating market estimates by $148.55 million.
Although ASML Holding N.V. (NASDAQ:ASML) already is a huge company, the company also has a next 5 year expected EPS growth rate of 29.80%.
As of September, analysts have an average stock price target of $682.30, which makes the stock cheap to some investors given the current price.
At the end of Q2 2022, 47 hedge funds tracked by Insider Monkey owned stakes in ASML Holding N.V. (NASDAQ:ASML). These stakes hold a collective value of roughly $3.65 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q2.
7. General Electric Company (NYSE:GE)
Number of hedge fund holders: 49
General Electric Company (NYSE:GE) is a multinational that predominately operates in the energy sector, but has a foothold in numerous industries. These include aviation, healthcare, renewable energy, and power generation.
Although it’s already a huge company, General Electric Company (NYSE:GE) has a next 5 year expected EPS growth rate of 45.9%. Given its forward P/E ratio of 14.01 as of September 26, the stock is considered cheap by some investors.
At the end of the second quarter of 2022, 49 hedge funds in the database of Insider Monkey held stakes worth $3.80 billion in General Electric Company (NYSE:GE). Among these hedge funds, Eagle Capital Management was the company’s leading stakeholder.
6. Lululemon Athletica Inc. (NASDAQ:LULU)
Number of hedge fund holders: 50
Based in Canada, Lululemon Athletica Inc. (NASDAQ:LULU) is an athletic apparel retailer.
In September 2022, JPMorgan analyst Matthew Boss raised the price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $464 from $396 and kept an Overweight rating on the shares. The average analyst price target of the stock is $384.48.
Lululemon Athletica Inc. (NASDAQ:LULU) also is expected to grow earnings per share by an average of 21.73% per year over the next five years.
At the end of the second quarter of 2022, 50 hedge funds in the database of Insider Monkey held stakes worth $1.26 billion in Lululemon Athletica Inc. (NASDAQ:LULU). Citadel Investment Group was the largest stakeholder in the company, with shares worth $290.49 million.
Like Lululemon Athletica Inc. (NASDAQ:LULU), NVIDIA Corporation (NASDAQ:NVDA), Booking Holdings Inc. (NASDAQ:BKNG), and Amazon.com, Inc. (NASDAQ:AMZN) are cheap growth stocks that many hedge funds in our database own at the end of Q2 2022.
Click to continue reading and see 5 Best Cheap Growth Stocks To Buy Now.
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Disclosure. None. 10 Best Cheap Growth Stocks To Buy Now is originally published on Insider Monkey.
