In this article, we will take a look at the 10 Best High Growth Stocks To Buy.
At Wall Street, long-standing investment strategies are being reshuffled as the monetary and political landscape evolves. Reallocation is the name of the game in a week where the S&P 500 and Nasdaq experienced declines of 1.97% and 3.65%, respectively, marking their largest weekly losses since April. Conversely, the Dow advanced 0.72%, and the small cap-focused Russell 2000 climbed 1.68%. A few tech mega-caps—led by Apple Inc., NVIDIA Corporation, Meta Platforms, Inc., and Amazon.com, Inc.—have dominated stock market returns, especially over the last 18 months, a trend that is evident in the diverging performances of the largest 50 stocks in the S&P 500, weighted by market capitalization. This trend, however, seems to have reversed sharply recently, with mega-caps selling off while the average stock holds close to record levels.
Investors are grappling with this sudden shift, and one possible explanation is that mega-caps may have become too expensive. “The stock market is experiencing a long overdue rotation,” said Glen Smith, chief investment officer at GDS Wealth Management. “Investors are pulling money out of high-performing big tech stocks and reallocating it to other market areas.” Notably, tech giants like NVIDIA Corporation, previously popular among options traders, saw a notable shift in sentiment, with demand for bearish puts surpassing calls at the highest rate in five months. “It signals a different regime,” said Erika Maschmeyer, a portfolio manager at Columbia Threadneedle Investments. “The market could be choppier and more volatile, with more dispersion than we have seen.”
This divergence has reassured some Wall Street experts who had been concerned about the rally’s dependence on a few massive tech stocks. Additionally, rising optimism about forthcoming interest rate decreases from the Fed has bolstered smaller and more cyclically oriented names. In that regard, the Fed’s battle against inflation might be nearing its end after U.S. consumer prices unexpectedly fell in June. Chicago Fed President Austan Goolsbee considers the latest inflation data “excellent” and describes persistent housing inflation improvement as “profoundly encouraging.” However, Scott Rubner of Goldman Sachs is skeptical about buying the dip. The tactical strategist believes the S&P 500 has little room for upward movement from its current position. He points out that historically, July 17 has marked a turning point for the equity benchmark, with data dating back to 1928 supporting this claim. Rubner notes that August typically sees the worst outflows from passive equity and mutual funds.
On another note, the U.S. economy added slightly more jobs than expected in June. Nonfarm payrolls increased by 206,000 for the month, surpassing the Dow Jones forecast of 200,000 but falling short of the revised May gain of 218,000, which was significantly reduced from the initial estimate of 272,000. However, the unemployment rate unexpectedly rose to 4.1%, matching the highest level since October 2021 and presenting a mixed signal for Federal Reserve officials considering their next monetary policy move. The jobless rate was forecasted to remain steady at 4%. Although June job creation exceeded expectations, much of this growth was driven by a 70,000 surge in government jobs. Additionally, the health care sector, a consistent leader, added 49,000 jobs, while social assistance contributed 34,000 and construction increased by 27,000.
The 2024 presidential election is heating up, with President Joe Biden opting not to run for re-election and Republican nominee and former President Donald Trump continuing his campaign after surviving an assassination attempt. Historically, presidential election years have often brought strong returns for stock investors, influencing short-term economic policy. However, recent events suggest that this election year may be far from typical.
Our Methodology
To compile our list of the best high growth stocks to buy, we identified companies with strong sales growth over the past five years. These companies were then ranked based on the number of hedge fund investors in the first quarter of 2024, out of a total of 919 hedge funds. Why are we interested in 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 Best High Growth Stocks To Buy
10. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 45
Annual Sales Growth Over the Past 5 Years: 30.67%
Palantir Technologies Inc. (NYSE:PLTR) is a leading developer of data mining and AI software that helps businesses and governments analyze large datasets to drive data-backed decisions. Its product lineup includes Palantir Gotham, Palantir Apollo, and Palantir Foundry. With the launch of its Artificial Intelligence Platform (AIP), Palantir Technologies Inc. (NYSE:PLTR) has become one of Wall Street’s favorite stocks, with shares surging 65% since the beginning of the year.
Palantir Technologies Inc. (NYSE:PLTR) started off as a provider of security software for the US government and its major customers included the United States Intelligence Community (USIC) and United States Department of Defense. It won the CIA as its first customer back in 2005 and later won contracts from the FBI, NSA, and NYPD. Back then, there was just Palantir Gotham which was being used by law enforcement and intelligence agencies to combine structured data such as spreadsheets with unstructured data like images to draw connections
In 2016, the Colorado-based software company launched “Foundry”, which was specifically designed for commercial customers to help them analyze large amounts of data to drive business decisions such as optimizing their supply chains using real-time data and analytics. In 2020, Palantir Technologies Inc. (NYSE:PLTR) launched the Apollo platform, its continuous delivery system that schedules automated updates for the Gotham and Foundry platforms, with little human intervention, and makes their maintenance less costly.
For the first quarter of the fiscal year 2024, Palantir Technologies Inc. (NYSE:PLTR) reported robust results with a notable rise in revenue and customer acquisition, especially within the US commercial sector. The company’s revenue reached $634 million, reflecting a 21% year-over-year increase, fueled by the success of its Artificial Intelligence Platform (AIP) and a strong US commercial business. Palantir added 41 new customers in the US commercial sector and recorded $81 million in GAAP operating income, a company record. Despite challenges in Europe, Palantir remains optimistic, citing the increasing demand for AIP and its essential global market contributions.
Palantir Technologies Inc. (NYSE:PLTR) core business is also picking up pace and the company became the first software company to win a contract with the U.S. army. Its US government business revenue grew 8% quarter on quarter, up from 3% quarter on quarter in Q4 2023.
On June 18, analysts at Argus initiated coverage on Palantir Technologies Inc. (NYSE:PLTR) with a Buy rating and a price target of $29 per share. The investment firm highlighted the company’s substantial improvements in profitability and cash flow over the past year. Argus noted that Palantir Technologies Inc. (NYSE:PLTR)’s government business accounted for 55% of its revenue in 2023, but they anticipate the commercial segment, particularly in the U.S., to drive future growth.
A review of 919 hedge fund portfolios by Insider Monkey for the March quarter of 2024 revealed that 45 held stakes in Palantir Technologies Inc. (NYSE:PLTR). The leading investor was D. E. Shaw, with 13.48 million shares valued at $310.23 million.
Palantir Technologies Inc. (NYSE:PLTR) is one of the largest pure-play data analytics companies that has a diverse client base comprising both government and commercial customers. It has the potential to gain further share using its technological prowess as artificial intelligence penetrates military applications and as it simultaneously wins commercial customers in the US.
9. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 65
Annual Sales Growth Over the Past 5 Years: 47.52%
Shopify Inc. (NYSE:SHOP) is a leading provider of internet infrastructure for commerce, equipping businesses with the tools needed to launch, expand, and manage their retail operations across various scales. Shopify’s platform and services are utilized by millions of businesses in 175 countries, playing a crucial role in supporting a diverse range of enterprises.
Starting 2024 on a strong note, Shopify Inc. (NYSE:SHOP) reported a first-quarter revenue increase of over 25%, excluding logistics. The company’s dedication to merchant success is evident in the rollout of over 400 new features and updates over the past two years, enhancing engagement and product adoption. During the earnings call, Shopify Inc. (NYSE:SHOP) announced a Gross Merchandise Volume (GMV) of $60.9 billion, a 23% year-over-year increase, and revenue of $1.9 billion, also up 23% YoY, excluding logistics businesses.
The stock has received a surge of positive ratings from analysts recently. Evercore ISI upgraded Shopify Inc. (NYSE:SHOP) from In Line to Outperform on June 14, setting a new price target of $75.00. This upgrade follows a significant drop in Shopify’s stock price, which had fallen approximately 30% from its 52-week high. Evercore ISI highlighted Shopify’s financial prospects, projecting that its FCF margins, currently at 12%, could rise to high-teen levels by 2026, driven by ongoing profitability improvements.
Additionally, JPMorgan initiated coverage on Shopify Inc. (NYSE:SHOP) with an Overweight rating and a price target of $74.00 for December 2025. The firm emphasized Shopify’s significant presence in the e-commerce sector and forecasts a compounded annual revenue growth rate of 18% through 2026, as Shopify Inc. (NYSE:SHOP) continues to capitalize on the shift towards online commerce and expand its growth initiatives.
An analysis by Insider Monkey of 933 hedge fund holdings for Q1 2024 revealed 65 investments in Shopify Inc. (NYSE). The largest investor among them is GQG Partners, led by Rajiv Jain, holding 20.9 million shares valued at $1.61 billion.
8. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 65
Annual Sales Growth Over the Past 5 Years: 50.93%
Block, Inc. (NYSE:SQ), formerly known as Square Inc., is an American company founded in 2009 by Jack Dorsey and Jim McKelvey. Operating across various sectors of the financial technology industry, Block Inc. boasts a substantial presence with nearly 4 million merchants and 51 million users as of 2023.
In May 2024, Block, Inc. (NYSE:SQ) reported its first-quarter earnings, surpassing analyst expectations with revenue of $5.96 billion and an EPS of $0.85, against estimates of $5.89 billion and $0.71, respectively. The company’s announcement to reinvest its Bitcoin profits to purchase more Bitcoin further boosted investor confidence, leading to a 9% surge in share price following the results.
Following the first-quarter performance and updated full-year forecast, Deutsche Bank has increased its adjusted earnings per share estimates for Block, Inc. (NYSE:SQ) for fiscal years 2024, 2025, and 2026. The new projections raise the adjusted EPS by $0.20 to $3.67 for FY24, and by $0.31 and $0.23 to $4.77 and $5.81 for FY25 and FY26, respectively. This adjustment underscores a positive outlook on Block, Inc. (NYSE:SQ)’s financial future and its ability to achieve its Rule of 40 target, which balances growth and profitability. In addition, the Bank maintained a Buy rating and set a $90.00 price target for the stock.
An analysis of Q1 2024 hedge fund regulatory filings by Insider Monkey revealed that 65 funds held a stake in Block, Inc. (NYSE:SQ). Among them, Catherine D. Wood’s ARK Investment Management had one of the largest stakes, valued at $850 million.
7. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 73
Annual Sales Growth Over the Past 5 Years: 101.75%
Snowflake Inc. (NYSE:SNOW) kicked off the fiscal year on a positive note, surpassing revenue expectations for the first quarter. The company reported adjusted earnings per share of $0.14, which fell short of the analysts’ estimate of $0.17. Despite the EPS miss, investors were encouraged by the company’s strong revenue performance, driven by a 34% year-over-year increase in product revenue, amounting to nearly $790 million.
For the second quarter, Snowflake Inc. (NYSE:SNOW) has projected product revenue between $805 million and $810 million, reflecting a year-over-year growth of 26-27%. Looking ahead to 2025, the company has raised its product revenue forecast to $3.30 billion from the previous $3.25 billion. The first quarter also saw Snowflake’s net revenue retention rate at an impressive 128%, indicating high levels of customer satisfaction.
Snowflake Inc. has been the subject of numerous analyst reviews, particularly in light of a reported security incident, strategic developments, and financial outlooks. Citi maintained its Buy rating on Snowflake Inc. (NYSE:SNOW) with a steady price target of $236.00. This endorsement came after extensive discussions at the recent Snowflake Summit event, where Citi engaged with over 20 customers and partners. Feedback from the summit highlighted strong reception for new products such as Cortex and Iceberg, with customer enthusiasm pointing to potential growth drivers. The event also revealed a strategic shift from migration projects to exploring use cases for Generation AI (GenAI), which could drive further expansion for Snowflake Inc. (NYSE:SNOW).
As of the first quarter of 2024, Snowflake Inc. (NYSE:SNOW) was included in the portfolios of 73 hedge funds, with a total stake value of $4.21 billion. Altimeter Capital Management emerged as the largest shareholder, holding a position worth $1.66 billion.
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 74
Annual Sales Growth Over the Past 5 Years: 36.73%
Tesla, Inc. (NASDAQ:TSLA), headquartered in Austin, Texas, is a prominent American clean energy company, renowned for its electric vehicles. Tesla not only designs, manufactures, and sells electric vehicles (EVs), but also offers energy storage solutions, solar panels, and solar shingles.
The EV giant is set to further enhance its product lineup with the anticipated launches of the Cybertruck and Tesla Semi this year. The company’s energy division reported significant achievements in the first quarter of 2024, with margins reaching a record high of 24.6%. Energy storage deployments are projected to increase by at least 75% in 2024 compared to the previous year.
Morgan Stanley recently reiterated its Overweight rating on the TSLA stock, maintaining a price target of $310.00. Investors are keenly anticipating continued leadership from Elon Musk, who is expected to participate in the upcoming second-quarter conference call and host a robotaxi event on August 8th in Austin. Despite potential legal challenges, Musk’s influence over Tesla, Inc. (NASDAQ:TSLA) remains substantial, though he has yet to secure the 25% blocking minority voting power he aims for. Morgan Stanley suggests that further purchases or strategic financial mechanisms might be required to achieve this goal, with the firm also highlighting Musk’s considerable personal wealth, estimated at over $100 billion, which could serve as collateral for future transactions to increase his stake in Tesla, Inc. (NASDAQ:TSLA).
One of the top high growth stocks to buy, Tesla, Inc. (NASDAQ:TSLA), is held by 74 hedge funds as of Q1 2024.
Here’s what Baron Funds said about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2024 investor letter:
“The vast majority of the Fund’s underperformance this quarter stemmed from the Fund’s 10-year investment in Tesla, Inc. (NASDAQ:TSLA). Tesla’s shares fell 29.3% during the period and detracted 13.41% from the Fund’s first quarter results. Although Tesla has contributed importantly to the Fund’s performance since 2014, on occasion it has detracted from quarterly performance. In previous instances when Tesla shares have underperformed during a discrete period, they have shortly afterwards reflected the strong growth of the underlying business and the stock has appreciated considerably. We believe that will be the case again, although cannot guarantee it.
A significant decline also occurred at the end of 2022. In that instance, investors had become concerned about a host of external factors. Investors believed the company founder, visionary, and CEO Elon Musk was distracted by his acquisition of Twitter. They also believed a weak Chinese economy emerging from COVID and U.S. government policies would curtail the purchases of Tesla vehicles. These fears proved to be overblown. As the company achieved milestones in the succeeding year, the stock subsequently doubled over the next 12 months…” (Click here to read the full text)
