In this article we present the list of 10 Best Fast Growth Stocks to Buy Now. Click to skip ahead and see the 5 Best Fast Growth Stocks to Buy Now.
MercadoLibre, Inc. (NASDAQ:MELI), Lululemon Athletica inc. (NASDAQ:LULU), and CF Industries Holdings, Inc. (NYSE:CF) are some of the fastest growing stocks on the market that are currently trading at more than reasonable valuations.
It’s no secret that growth stocks have struggled heavily over the last year, as rising inflation has sent investors scrambling into the confines of safer and more established companies. According to Morningstar data, large-cap growth stocks have fared the worst over the last year, losing 33.7% of their value, which has pushed several of them into undervalued territory.
Some of the fastest growing stocks tend to be small and mid-cap companies, though they haven’t fared much better over the last year, losing 29.5% and 26.9% of their value respectively. In contrast, mid and large-cap value stocks have lost just 2.38% and 2.36% of their value respectively over the same period.
The flight from growth stocks makes for a great opportunity for investors to be greedy while others are fearful, as Warren Buffett famously implored investors to do. And over the longer-term, the pendulum still remains on the side of growth stocks despite their recent losses. Growth stocks have gained an average of 223% over the last decade, compared to 143% gains for value stocks.
Several of the best growth stocks on this list have bucked the overall trend and posted gains in 2022 thanks to their exceptional growth. Yet just as many others have experienced similar growth rates yet lost value on the stock market this year because of broader economic concerns, like continued rate increases.
While interest rates aren’t likely to cool anytime soon, their predicted rise through 2023 has already been baked into most growth stocks, if not burnt into them. That gives investors a clear pathway to big gains when rates do inevitably stall or even recede. And unlike many traditional growth stocks, the majority of high growth stocks to buy now that are featured on this list are already profitable and growing those profits at a rapid rate.
If you’re ready to get greedy, read on to check out the 10 best fast growth stocks to buy now.
Our Methodology
The following fast growth stocks are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q2 2022 reporting period.
10 Best Fast Growth Stocks to Buy Now
10. Palomar Holdings, Inc. (NASDAQ:PLMR)
Number of Hedge Fund Shareholders: 9
CF Industries Holdings, Inc. (NYSE:CF), MercadoLibre, Inc. (NASDAQ:MELI), and Lululemon Athletica inc. (NASDAQ:LULU) are some of the best fast growing stocks to buy now. Another is small-cap insurance company Palomar Holdings, Inc. (NASDAQ:PLMR), which has carved out a profitable niche for itself by selling insurance coverage in underserved areas of the market.
Palomar Holdings, Inc. (NASDAQ:PLMR) has been growing its revenue at close to a 50% clip over each of the last three years, with its trailing twelve-month (TTM) revenue totaling $312 million compared to just $73 million in sales in 2018. After taking a hit in 2020, its net income and EPS also skyrocketed in 2021, hitting $45.8 million and $1.76 per diluted share respectively. Its net income has continued to climb higher this year and analysts expect the company to pull in $3.72 in EPS next year, double what it managed in 2021, while its revenue is expected to top $1 billion for the first time.
Hedge fund ownership of Palomar Holdings, Inc. (NASDAQ:PLMR) peaked in the middle of 2020 and bottomed out a year later. It’s since rebounded slightly, doubling between Q3 2021 and Q1 2022. Steve Cohen’s Point72 Asset Management owned the largest stake in PLMR on June 30, while Richard Driehaus’ Driehaus Capital added a 252,155-share position to its 13F portfolio during the quarter.
9. Canadian Solar Inc. (NASDAQ:CSIQ)
Number of Hedge Fund Shareholders: 13
Canadian Solar Inc. (NASDAQ:CSIQ), which manufactures solar panels in China, is on a tremendous growth trajectory. Revenue grew by more than 50% last year to $5.28 billion and its trailing twelve-month revenue is up by another $1 billion to $6.32 billion and the company is guiding for a 47% year-over-year sales increase this year.
Gross profit also made a big jump last year and has continued to rise over the past 12 months, though expenses have also been rising rapidly to offset those gains. Canadian Solar Inc. (NASDAQ:CSIQ) trades at just 17.4x earnings, which is quite cheap for a company growing at this type of rate. There are some concerns investors should be aware of however, namely the company’s more than $3 billion in debt, much of which is short-term.
Canadian Solar Inc. (NASDAQ:CSIQ) shares more than quadrupled in value from their pandemic floor in March 2020 through January 2021. Hedge funds poured into the stock in Q3 2020 but many took some profits from their holding and quickly unloaded it a quarter later. Overall hedge fund ownership of CSIQ has been cut in half since Q3 2020.
8. Clearfield, Inc. (NASDAQ:CLFD)
Number of Hedge Fund Shareholders: 16
Fiber optic management and products company Clearfield, Inc. (NASDAQ:CLFD) has been around for decades and was unprofitable for much of that time. But the company has recently found its footing in the fiber optic delivery space and is starting to grow at an impressive rate. In its latest full fiscal year ended September 2021, the company grew revenue by more than 50% to $141 million and its TTM revenue has already jumped by another 50% to $221 million.
Even more impressively, Clearfield, Inc. (NASDAQ:CLFD)’s net margins are greatly expanding alongside its sales, growing by 178% year-over-year during its previous fiscal year, which contributing to EPS nearly tripling year-over-year to $1.47 per diluted share. Net income has nearly doubled during the TTM period, while operating income has more than doubled and is nearly 10x greater than what it was during the company’s fiscal year ended September 2019. CLFD trades at 30.8x earnings, which looks more than reasonable given its growth trajectory and the efficiency it’s displaying in becoming more profitable.
Clearfield, Inc. (NASDAQ:CLFD) shares have been on an absolute tear in recent quarters and hedge funds have increasingly come along for the ride, with the number of funds long CLFD jumping from just three at the end of Q3 2020 to 17 at the end of Q2 2022. Brad Farber’s Atika Capital owned the largest Clearfield stake at the end of Q2, holding 417,000 shares worth $25.8 million.
7. Ameresco, Inc. (NYSE:AMRC)
Number of Hedge Fund Shareholders: 17
After several years of steady but unspectacular growth, renewable energy company Ameresco, Inc. (NYSE:AMRC) has taken off this year, growing its TTM revenue to $1.91 billion compared to $1.22 billion in 2021. The company’s TTM operating income has also jumped by 50% compared to 2021, hitting $145 million.
Ameresco, Inc. (NYSE:AMRC)’s Q3 revenue grew by 61% year-over-year to $441 million, while GAAP EPS grew by 55% to $0.51. The company was awarded several major projects during the quarter, including a $98 million utility savings project in Fort Irwin, California, and stands to be a big beneficiary of the Inflation Reduction Act, which should provide it with substantial long-term growth opportunities. Among its
Hedge fund ownership of Ameresco, Inc. (NYSE:AMRC) has seen a similar climb as Clearfield in recent quarters, jumping from five funds long AMRC in the middle of 2019 to 18 long the stock three years later. Israel Englander’s Millennium Management added Ameresco to its 13F portfolio during Q2, as did Till Bechtolsheimer’s Arosa Capital Management.
6. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Shareholders: 48
Closing out the first half of the list is data center equipment company Arista Networks, Inc. (NYSE:ANET), whose shares are down by nearly 10% this year despite the company’s spectacular results. Arista grew revenue by 57% year-over-year in Q3 to $1.18 billion, while net income jumped by 58% to $354 million and EPS soared by 61% to $1.13.
The company is predicting 45% revenue growth in Q4 at the midpoint of its guidance range and believes it has a significant total addressable market that should lead to sustained growth in the coming years. Companies are increasingly upgrading to 400-gig technology, which nonetheless isn’t projected to overtake 100-gig deployments until 2025, so there’s a long runway ahead for Arista Networks.
Hedge fund ownership of Arista Networks, Inc. (NYSE:ANET) has jumped higher for three straight quarters, rising by more than 50% during that time and hitting new all-time highs during each of those quarters as the smart money shows increasing bullishness in Arista’s secular tailwinds. Steve Cohen’s Point72 Asset Management (1.89 million shares) and Brian Ashford-Russell and Tim Woolley’s Polar Capital (1.33 million shares) owned the largest ANET stakes on June 30.
The Artisan Mid Cap Fund is bullish on Arista Networks, Inc. (NYSE:ANET)’s profit cycle, as discussed in its Q4 2021 investor letter:
“Arista Networks is the market leader for cloud networking equipment used in data centers for public, private and hybrid cloud deployments. The company’s top line growth has recently been bolstered by 400G deployments—the next generation of tech powering data centers—and further enterprise network penetration as customers migrate away from Cisco (~80% market share vs. ~5% for Arista). While the profit cycle is nicely in motion, we pared our exposure as shares began to approach our PMV estimate.”
Lululemon Athletica inc. (NASDAQ:LULU), CF Industries Holdings, Inc. (NYSE:CF), and MercadoLibre, Inc. (NASDAQ:MELI) are some of the best fast growth stocks to buy now. See why by clicking the link below.
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Disclosure: None. 10 Best Fast Growth Stocks to Buy Now is originally published at Insider Monkey.
