In this article, we discuss the 10 best up and coming stocks to invest in. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Up and Coming Stocks to Invest In.
The COVID-19 pandemic has transformed so many facets of life. Technology has played a key part in this change and firms working in the tech sector have naturally gained a lot in this process. This technology-enabled disruption is not new, but has been steadily chipping away at several industries for years. In the past decade, growth stocks – usually synonymous with the tech world – have outperformed value offerings. One indicator of this is the returns offered by the Russell 2000 Growth ETF that has gained 105% in the last five years.
This represents a 49 percentage points margin over the Russell 2000 Value ETF over the same time period. Tech firms are constantly evolving and this is one reason they never stop growing. It is also one of the reasons why there is a lot of competition in the sector, with startups constantly vying for relevance alongside industry giants. Some of the tech firms that investors should monitor in the coming months include Zendesk, Inc. (NYSE: ZEN), Five Below, Inc. (NASDAQ: FIVE), and Take-Two Interactive Software, Inc. (NASDAQ: TTWO), among others.
These firms have a competitive edge over peers in the marketplace they seek to serve, are future-focused, and have varied revenue streams that will stand them in good stead as the uncertainties associated with the Delta variant of the coronavirus unfold. They have also beaten market estimates on revenue and earnings per share and are expected to continue on an accelerated growth trajectory. More details about these companies and others like them are discussed in detail below.
Technology has affected the finance world as well. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 29th 2021 our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 best up and coming stocks to invest in. These were ranked keeping in mind analyst ratings, business fundamentals, and hedge fund sentiment.
Best Up And Coming Stocks to Invest In
10. Boxlight Corporation (NASDAQ: BOXL)
Number of Hedge Fund Holders: 3
Boxlight Corporation (NASDAQ: BOXL) is placed tenth on our list of 10 best up and coming stocks to invest in. The company’s shares have returned 28% to investors over the past six months. The firm is based in Georgia and markets education technology services. In earnings results for the first quarter, posted on May 13, the firm posted earnings per share of -$0.09, just missing estimates by $0.01. The revenue over the period was more than $33 million, up over 480% year-on-year and beating estimates by $2 million.
On July 1, investment advisory Alliance Global maintained a Buy rating on Boxlight Corporation (NASDAQ: BOXL) stock and raised the price target to $6 from $5.5, underlining that the firm was benefiting from a federal stimulus on education technology.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Boxlight Corporation (NASDAQ: BOXL) with 121,107 shares worth more than $306,000.
Just like Zendesk, Inc. (NYSE: ZEN), Five Below, Inc. (NASDAQ: FIVE), and Take-Two Interactive Software, Inc. (NASDAQ: TTWO), Boxlight Corporation (NASDAQ: BOXL) is one of the best up and coming stocks to invest in.
9. J & J Snack Foods Corp. (NASDAQ: JJSF)
Number of Hedge Fund Holders: 15
J & J Snack Foods Corp. (NASDAQ: JJSF) stock has returned 32% to investors over the past year. It is ranked ninth on our list of 10 best up and coming stocks to invest in. The firm is headquartered in New Jersey and markets nutritional snacks and beverages. On July 26, the firm posted earnings for the third quarter, reporting earnings per share of $1.52, beating market predictions by $0.74. The revenue over the period was $324 million, up more than 50% year-on-year and beating estimates by $13 million.
In earnings results for the third fiscal quarter, posted on July 26, J & J Snack Foods Corp. (NASDAQ: JJSF) reported earnings per share of $1.52, beating market predictions by $0.74. The revenue over the period was $324 million, up 51% year-on-year.
At the end of the first quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $69 million in J & J Snack Foods Corp. (NASDAQ: JJSF), the same as in the previous quarter worth $76 million.
Alongside Zendesk, Inc. (NYSE: ZEN), Five Below, Inc. (NASDAQ: FIVE), and Take-Two Interactive Software, Inc. (NASDAQ: TTWO), J & J Snack Foods Corp. (NASDAQ: JJSF) is one of the best up and coming stocks to invest in.
8. Redfin Corporation (NASDAQ: RDFN)
Number of Hedge Fund Holders: 18
Redfin Corporation (NASDAQ: RDFN) is a Washington-based real estate brokerage firm. It is placed eighth on our list of 10 best up and coming stocks to invest in. The company’s shares have returned 46% to investors over the past year. On June 11, Glenn Kelman, head of the company, said that the housing market in the United States would continue to feel the impact of a live-from-anywhere mentality following the COVID pandemic and a migration to low-tax, lower-cost parts of the country.
On June 3, investment advisory Stephens upgraded Redfin Corporation (NASDAQ: RDFN) stock to Overweight from Equal Weight with a price target of $71, appreciating the future-focused business model of the company.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $434 million in Redfin Corporation (NASDAQ: RDFN), down from 21 the preceding quarter worth $209 million.
In addition to Zendesk, Inc. (NYSE: ZEN), Five Below, Inc. (NASDAQ: FIVE), and Take-Two Interactive Software, Inc. (NASDAQ: TTWO), Redfin Corporation (NASDAQ: RDFN) is one of the best up and coming stocks to invest in.
7. Editas Medicine, Inc. (NASDAQ: EDIT)
Number of Hedge Fund Holders: 24
Editas Medicine, Inc. (NASDAQ: EDIT) is ranked seventh on our list of 10 best up and coming stocks to invest in. The stock has offered investors returns exceeding 38% over the course of the past year. The firm operates as a clinical stage genome editing firm. It is based in Cambridge. In earnings results for the first quarter, posted on May 5, the firm reported earnings per share of -$0.86 and a revenue of $6.5 million. The revenue was up 13% year-on-year and beat market predictions by $0.22 million.
On June 3, investment advisory Baird initiated coverage of Editas Medicine, Inc. (NASDAQ: EDIT) stock with an Outperform rating and a price target of $44, highlighting positive new developments for the firm as it seeks to get new drugs approved by the FDA.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Editas Medicine, Inc. (NASDAQ: EDIT) with 8.7 million shares worth more than $367 million.
Zendesk, Inc. (NYSE: ZEN), Five Below, Inc. (NASDAQ: FIVE), and Take-Two Interactive Software, Inc. (NASDAQ: TTWO) are some of the best up and coming stocks to invest in, just like Editas Medicine, Inc. (NASDAQ: EDIT).
6. Magnite, Inc. (NASDAQ: MGNI)
Number of Hedge Fund Holders: 25
Magnite, Inc. (NASDAQ: MGNI) is a California-based independent advertising platform. It is placed sixth on our list of 10 best up and coming stocks to invest in. The company’s shares have offered investors returns exceeding 431% over the course of the past twelve months. On June 7, the share price of the firm jumped close to 11% after investment advisory Truist upgraded the stock to Buy from Hold with a price target of $37, implying an upside potential of close to 16% for the shares.
On June 11, investment advisory Stephens maintained a Buy rating on Magnite, Inc. (NASDAQ: MGNI) stock with a price target of $48, underlining that the partnerships made by the firm could accelerate the spending towards the connected TV segment.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in Magnite, Inc. (NASDAQ: MGNI) with 2 million shares worth more than $84 million.
Zendesk, Inc. (NYSE: ZEN), Five Below, Inc. (NASDAQ: FIVE), and Take-Two Interactive Software, Inc. (NASDAQ: TTWO) are some of the best up and coming stocks to invest in, alongside Magnite, Inc. (NASDAQ: MGNI).
In its Q1 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and Magnite, Inc. (NASDAQ: MGNI) was one of them. Here is what the fund said:
“Magnite, Inc. was among the top contributors to performance. Magnite is an advertising technology company serving as a supply side platform for publishers. The platform helps publishers such as network television stations or cable news providers automate the sale of digital advertising inventory across different formats and channels, like desktop, mobile, video, audio, connected TV and over-the-top TV. Publishers monetize their digital advertising inventory by using Magnite’s platform to access a global market of ad buyers, including advertising agencies that use supply side platforms. Magnite also helps sellers decrease costs and protect their brands and user experience.
Magnite receives ad inventory from sellers and optimizes publishers’ revenue yields by processing the highest buyer bids. Currently, Magnite keeps approximately 14% of ad spend as revenue (i.e. take rate) and passes on the remainder of the ad spend to publishers. Magnite’s clients include many of the world’s leading publishers of websites and mobile applications and the company believes that its platform reaches approximately 1 billion individuals globally. Shares of Magnite outperformed in the first quarter due to stronger-than-expected fourth quarter results driven by a rapid recovery in digital advertising. Additionally, the company acquired SpotX, its largest competitor in connected TV. The combination makes Magnite the industry’s largest independent supply side platform and a much larger connected TV player. We believe connected TV is the most exciting part of the digital ad market and is in the early days of growth, including capturing market share from linear TV.”
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Disclose. None. 10 Best Up and Coming Stocks to Invest In is originally published on Insider Monkey.
