In this article, we discuss the 10 best up and coming stocks to invest in. You can skip our detailed analysis of these stocks and the current market situation, and go directly to 5 Best Up and Coming Stocks To Invest In.
With the first half of the year nearly in the books, investors on Wall Street are now facing new challenges that will test their patience and understanding of the market. Years of government payouts and supply chain disruptions have started to result in more inflation than the Fed is willing to accept, and the ramifications of stimulating the economy to offset the impact of the pandemic are starting to accumulate. The economy, especially in the United States, is dangerously close to a recession as all benchmark indexes are down year-to-date. The S&P 500 Index is down over 17.88% year-to-date, while the tech-friendly NASDAQ Composite has fallen approximately 27% since the start of the year, and 1,939 points since topping out in the third quarter of last year. In contrast to this, inflation in the U.S. hit a fresh 40-year record in March as consumer prices rose 8.5% from a year ago.
Under the threat of looming rate hikes, several investors and analysts have shifted their focus from tech stocks to growth stocks with actual revenues. As a result, a number of household names have been sold in an attempt to seek refuge from impending volatility. The sell-off in the technology sector reflects the investors’ anxiety within the current macro setup, forcing them to look toward higher-risk strategies to build wealth in the wake of a recession. With businesses tapping into new market opportunities, those who invest in emerging players often reap the highest rewards. While the analyst community expects market volatility to persevere in the near term, it also forecasts that stocks will rally this summer, even if it is only due to normal seasonal fluctuations.
In this regard, the best stocks to buy now are directly correlated to the Fed’s decisions around interest hikes. Consequently, the higher-rate environment won’t treat every company similarly, which means that the current economy will serve as a catalyst for some companies and an obstacle for many more. Given the changing market environment, some of the best up and coming stocks that investors should look out for include Northrop Grumman Corporation (NYSE:NOC), Coinbase Global, Inc. (NASDAQ:COIN), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD), among others listed below.
Photo by Mohamed Hadji on Unsplash
Our Methodology
In order to pick the 10 best up and coming stocks to invest in, we did a careful assessment of several high-quality growth stocks that have upside potential. We also took into account company financials, most recent quarterly results, and the analyst and sentiment around these stocks.
The hedge fund sentiment around each stock was derived from Insider Monkey’s database which tracks 912 hedge funds as of the first quarter of 2022.
10 Best Up and Coming Stocks To Invest In
10. Krispy Kreme, Inc. (NASDAQ:DNUT)
Number Of Hedge Fund Holders: 11
Krispy Kreme, Inc. (NASDAQ:DNUT) is an American multinational doughnut company and coffeehouse chain that operates in more than 1,000 locations throughout the U.S. and in about 25 other countries. On May 16, Krispy Kreme, Inc. (NASDAQ:DNUT) declared a $0.035 per share quarterly dividend, in line with the previous, with a forward yield of 0.97%.
For the fiscal first quarter of 2022, Krispy Kreme, Inc. (NASDAQ:DNUT) announced that its quarterly revenues came in at $372.53 million, outperforming the market by more than $3.85 million. The company also reported an EPS of $0.08, beating expert estimates by $0.01.
On May 12, Morgan Stanley analyst John Glass reiterated an Overweight rating on the shares of Krispy Kreme, Inc. (NASDAQ:DNUT) alongside a $17 price target after the company reported “surprisingly robust” Q1 results. According to the analyst, the company’s 10%-12% year-over-year organic revenue growth targets “appear conservative.”
According to the first quarter database of Insider Monkey, 11 hedge funds held long positions in Krispy Kreme, Inc. (NASDAQ:DNUT), compared to 13 funds in the previous quarter. The total stakes owned in Q1 amounted to $34.5 million. Richard Driehaus’ Driehaus Capital is the biggest shareholder in the company, with 860,863 shares worth approximately $12.78 million.
Much like Northrop Grumman Corporation (NYSE:NOC), Coinbase Global, Inc. (NASDAQ:COIN), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Krispy Kreme, Inc. (NASDAQ:DNUT) is a decent stock with plenty of upside potential.
9. Duolingo, Inc. (NASDAQ:DUOL)
Number Of Hedge Fund Holders: 14
Duolingo, Inc. (NASDAQ:DUOL) is an American language-learning website company that also operates a language learning application. The company provides digital language expertise tests based on written translation, reading and speaking comprehension, and short stories. Shares of the Pittsburgh-based online learning platform soared higher, marking gains of more than 17% at the pre-market highs on May 13.
Raymond James analyst Aaron Kessler upgraded Duolingo, Inc. (NASDAQ:DUOL) to Outperform from Market Perform with a $98 price target on May 13. Based on the analyst’s remarks, the company reported a strong Q1, with an acceleration in monthly active users, daily active users, and paid subscribers as product innovations drove increased user engagement, retention, and conversion.
According to Insider Monkey’s Q1 data, 14 hedge funds held long positions in Duolingo, Inc. (NASDAQ:DUOL), up from 12 funds in the last quarter. Henry Ellenbogen’s Durable Capital Partners held the largest stake in the company, consisting of 3.2 million shares worth about $309 million.
8. Monday.com Ltd. (NASDAQ:MNDY)
Number Of Hedge Fund Holders: 24
Based in Tel Aviv, Israel, Monday.com Ltd. (NASDAQ:MNDY) is a systems software firm that allows users to create their own applications and work management software. In the first quarter of the fiscal year 2022, monday.com Ltd. (NASDAQ:MNDY) reported revenues of $108.5 million, up 84% compared to the year-ago period.
Earlier this May, Cowen analyst J. Derrick Wood lowered the price target on Monday.com Ltd (NASDAQ:MNDY) to $200 from $240 and maintained an Outperform rating on the shares. According to Wood, the company’s metrics were all very strong. Based on his notes to investors, Monday.com Ltd. (NASDAQ:MNDY) had a raised revenue growth guidance and he sees plenty of upside potential in the company.
At the end of the first quarter of 2022, 24 hedge funds in the database of Insider Monkey held stakes worth $681.3 million in Monday.com Ltd. (NASDAQ:MNDY), compared to 25 in the preceding quarter. Chase Coleman and Feroz Dewan’s Tiger Global Management LLC is a leading shareholder in monday.com Ltd. (NASDAQ:MNDY) with 2.07 million shares worth more than $328.12 million.
7. Opendoor Technologies Inc. (NASDAQ:OPEN)
Number Of Hedge Fund Holders: 35
Opendoor Technologies Inc. (NASDAQ:OPEN) is an online company for transacting in residential real estate. Headquartered in San Francisco, the company makes instant cash offers on homes through an online process, makes repairs on the properties it purchases, and relists them for sale. The company purchased nearly 37,000 homes in 2021, up almost 500% on a year-over-year basis, and sold nearly 22,000 of them by year-end.
Earlier this March, BTIG analyst Jake Fuller upgraded Opendoor Technologies Inc. (NASDAQ:OPEN) to Buy from Neutral with a $15 price target. The analyst states that despite the tight housing inventory and investor concern around how the iBuyer model may fare, he continues to see robust demand for Opendoor Technologies Inc. (NASDAQ:OPEN) on both the sell-side and buy-side with triple-digit mid-funnel traffic growth so far in Q1.
In the first quarter of 2022, 35 hedge funds reported owning stakes in Opendoor Technologies Inc. (NASDAQ:OPEN) according to Insider Monkey’s records, collectively worth approximately $1.04 billion. Sylebra Capital Management held a prominent position in the company, with 24.8 million shares valued at $214.8 million.
Baron Opportunity Fund published its second-quarter investor letter and mentioned Opendoor Technologies Inc. (NASDAQ:OPEN). Here is what the fund said:
“Opendoor Technologies Inc. operates a digital platform for home purchases and sales on which buyers can tour homes, make offers, and secure financing, and sellers can receive next-day cash offers with flexible close dates. Shares were down in the quarter given rising mortgage rates and the potential knock-on effects to the housing environment. Despite investor concerns, the housing market remains robust. As the iBuying industry leader disrupting an enormous and highly inefficient industry, we believe Opendoor will grow regardless of the housing market environment.”
6. Teladoc Health, Inc. (NYSE:TDOC)
Number Of Hedge Fund Holders: 36
Teladoc Health, Inc. (NYSE:TDOC) is a multinational telemedicine and virtual healthcare company that provides telehealth, medical opinions, AI and analytics, telehealth devices, and licensable platform services. A global leader in whole-person virtual care, the company’s first quarter revenue grew 25% year-over-year to $565.4 million.
On May 13, Piper Sandler analyst Jessica Tassan raised her price target on Teladoc Health, Inc. (NYSE:TDOC) to $42 from $21 and kept an Overweight rating on the shares. The analyst tweaked her BetterHelp and Chronic Condition estimates based on an evaluation of the direct-to-consumer behavioral healthcare market, interim app data, and a conversation with the company.
According to Insider Monkey’s database, Teladoc Health, Inc. (NYSE:TDOC) was spotted on 36 investment portfolios by the end of the first quarter of 2022. The total stakes of these funds in the company amounted to approximately $1.96 billion. Catherine D. Wood’s ARK Investment Management is the most prominent investor in Teladoc Health, Inc. (NYSE:TDOC) with stakes worth approximately $1.4 billion in the company.
Similar to Northrop Grumman Corporation (NYSE:NOC), Coinbase Global, Inc. (NASDAQ:COIN), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Teladoc Health, Inc. (NYSE:TDOC) is a stock investors should pay attention to.
Investment firm RiverPark Funds talked about Teladoc Health, Inc. (NYSE:TDOC) in its Q1 2022 investor letter. Here is what they said:
“Teladoc is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and TDOC is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling).
Although the company has been growing steadily for well over a decade, the business has transformed over the past few years as the COVID pandemic caused a significant increase in the demand for virtual healthcare. In addition, the company’s 2020 acquisitions of Livongo, the leader in virtual chronic condition management, and InTouch a competitive telehealth platform, materially broadened the company’s product offerings. At its recent analyst day, management guided to 25-30% top line growth for each of the next three years, exiting 2024 with more than $4 billion in annual revenue. The company also anticipates expanding margins by 100-150 basis points per year in each of the next three years, while still accelerating its investments in marketing and R&D. As with many of our recent purchases, we took advantage of the decline in the company’s shares (down a breathtaking 70% from its 2021 high of almost $300 per share) to establish a small position in Teladoc.”
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Disclosure. None. 10 Best Up and Coming Stocks To Invest In is originally published on Insider Monkey.
