In this article, we discuss the 12 best low risk high growth stocks to invest in.
In the past few days, the reintroduction of tariffs by the US government has been a significant factor influencing market dynamics. A 25% tariff on goods from Canada and Mexico, along with a 10% levy on Chinese imports, has heightened concerns about potential trade wars. These measures have led to increased market volatility, as investors assess the implications for global supply chains and corporate earnings. According to a report by news agency Reuters, based on data gathered by investment bank Goldman Sachs, hedge funds have been reducing their exposure to US equities, marking the fifth consecutive week of net selling. This trend indicates a defensive posture, with funds anticipating potential economic slowdowns resulting from the new tariffs. Conversely, retail investors have shown resilience, injecting significant capital into the market, possibly betting on a resolution to trade tensions.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
Meanwhile, another report by Reuters, based on a survey carried out by investment bank Barclays, reveals that investors are shifting away from traditional hedge fund strategies that rely on broad market movements due to concerns over market volatility in 2025. The Barclays survey of 325 hedge fund investors managing nearly $9 trillion found they want hedge funds to reduce beta exposure to as low as 5% or even zero. The report highlights that traditional hedge fund approaches like long/short stock picking, credit, and activism are losing favor. Instead, investors prefer funds using algorithmic trading and merger-arbitrage strategies. Multi-manager hedge funds, which operate multiple trading strategies under one firm, are now in high demand, returning 56% of investment share in 2024.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
To compile our list of the best low risk, high growth stocks, we made a list of firms with a beta of less than 1 and positive earnings per share growth over the past five years. The companies with the highest number of hedge fund investors during Q3 2024 were picked as the best low risk, high growth stocks. 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).
A financial adviser looking over a portfolio of securities and stocks.
Best Low Risk High Growth Stocks to Invest In
12. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Holders: 29
Five9, Inc. (NASDAQ:FIVN) provides cloud software for contact centers. In November last year, the company reported a 15% increase in third-quarter revenue, reaching a record $264.2 million, up from $230.1 million the year before. This growth reflects strong demand for products and the ability to capitalize on market trends. The company’s optimized production efficiency is reflected in its GAAP gross margin of 53.8% for the third quarter of 2024, an increase from 51.7% the previous year. In December last year, the firm updated its Microsoft Teams UC Integration to include a bi-directional presence. This enhances agent-expert communication and accelerates resolutions for more complex customer requests.
11. Lantheus Holdings, Inc. (NASDAQ:LNTH)
Number of Hedge Fund Holders: 35
Lantheus Holdings, Inc. (NASDAQ:LNTH) is a radiopharmaceutical company that specializes in the development and distribution of precision diagnostic and therapeutic products. The firm’s third-quarter earnings signal strong business expansion, driven by higher demand and increased market share, with worldwide revenue reaching $378.7 million, an 18.4% increase from the previous year. On January 28, the company announced a definitive agreement to acquire Evergreen Theragnostics in an all-cash deal, which includes an upfront payment of $250 million and up to $752.5 million in potential milestone payments. Brian Markison, CEO of Lantheus, said on this occasion that this acquisition would expand the oncology radiopharmaceutical pipeline with multiple clinical and pre-clinical theranostic pairs.
10. Atlassian Corporation (NASDAQ:TEAM)
Number of Hedge Fund Holders: 44
Atlassian Corporation (NASDAQ:TEAM) is an application software firm. On January 30, the company reported its financial earnings for the second quarter, with revenue reaching $1.29 billion, a 21% increase from the same quarter of the prior year, reflecting the company’s ability to leverage strong market conditions and rising demand. In December 2024, the company announced a multi-year strategic collaboration agreement with Amazon to expedite cloud transformation and deliver advanced AI and security capabilities to enterprise customers. This transition will gradually move millions of enterprise users from Atlassian’s $1 billion-a-year Data Center business to Atlassian Cloud.
9. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 46
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) develops and publishes interactive entertainment content. The earnings for the second quarter of the fiscal year 2025 show that the net bookings for the firm reached $1.47 billion, at the top of the guidance range, driven by the continued success of the Grand Theft Auto and Borderlands franchises. On January 28, the company announced that WWE 2K25, the latest installment of the WWE video game franchise, will be released in March for PS5, PS4, Xbox Series X|S, Xbox One, and PC via Steam. The game will have the largest WWE 2K roster ever with over 300 Superstars, Legends, and Hall of Famers. Players on PS5 and Xbox Series X|S can experience The Island, a new online interactive world.
8. Neurocrine Biosciences, Inc. (NASDAQ:NBIX)
Number of Hedge Fund Holders: 49
Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is a biopharmaceutical company that discovers, develops, and markets neurological drugs. In earnings for the third quarter, the company reported strong financial growth as net product sales of INGREZZA (valbenazine) totaled $613 million, underscoring a 26% year-over-year increase. This demonstrates effective marketing and solidifies INGREZZA as a key revenue driver, reinforcing its leadership in treating tardive dyskinesia. On January 28, the company launched a Phase 3 registrational study to assess the efficacy, safety, and tolerability of osavampator, an investigational drug being developed as an additional treatment to antidepressants for major depressive disorder (MDD). Eiry Roberts, a senior officer at Neurocrine Biosciences, has stated that osavampator has the potential to become a first-in-class treatment for MDD, a disorder affecting more than 21 million people in the United States.
7. LPL Financial Holdings Inc. (NASDAQ:LPLA)
Number of Hedge Fund Holders: 51
LPL Financial Holdings Inc. (NASDAQ:LPLA) offers retail finance advisory and independent broker-dealer solutions. The company’s fourth quarter 2024 earnings reported a net income of $1.1 billion and diluted EPS of $14.03, reflecting steady profit growth with a 2% year-over-year increase in earnings. On January 28, the company announced that Wintrust Financial Corporation had shifted the support of its wealth management business at Wintrust Investments and certain private client services at Great Lakes Advisors to LPL Financial through its Institution Services platform. This strategic relationship reflects the value LPL brings to help financial institutions scale their wealth management businesses and deliver personalized experiences for their clients.
6. Interactive Brokers Group, Inc. (NASDAQ:IBKR)
Number of Hedge Fund Holders: 52
Interactive Brokers Group, Inc. (NASDAQ:IBKR) is an automated electronic broker. The firm’s fourth-quarter earnings reported a 37% increase in commission revenue to $477 million, driven by higher customer trading volumes, reflecting the company’s expansion in product offerings. The company also reported an 11% increase in net interest income to $807 million, resulting from higher average customer margin loans and credit balances. In December last year, the firm introduced significant enhancements to its web-based Advisor Portal, bringing advanced trading and portfolio management tools to financial advisors worldwide. These updates streamline client account management and trading by integrating powerful features from the company’s flagship desktop platform into its web-based offering.
5. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 55
Equinix, Inc. (NASDAQ:EQIX) is a digital infrastructure company. In earnings for the third quarter, the company reported a 7% increase in quarterly revenue, reaching $2.2 billion. This growth reflects better cost management, higher productivity, and effective growth strategies. In October last year, the firm signed a joint venture worth over $15 billion with the Canada Pension Plan Investment Board and Singapore’s GIC to develop new data centers. This investment will triple the capital in the xScale data center portfolio, keeping the company ahead in the AI infrastructure race. In December last year, Equinix announced a private AI solution that enables businesses to train AI models efficiently across public and private clouds. This solution ensures enhanced control, security and low-latency deployment on-premises.
4. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cloud-delivered protection across endpoints and cloud workloads, identity, and data. On January 15, the company launched CrowdStrike Insider Risk Services, a comprehensive set of offerings designed to help organizations detect and prevent insider threats from negligent employees, malicious insiders and sophisticated adversaries. With CrowdStrike’s new services, organizations can proactively address vulnerabilities, strengthen defenses and mitigate insider risks before they escalate. The earnings for the third quarter of fiscal year 2025 signaled strong business expansion driven by higher customer demand, with total revenue reaching $1,010.2 million, a 29% increase from $786 million in the third quarter of the previous fiscal year.
3. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 74
The Charles Schwab Corporation (NYSE:SCHW) provides wealth management and other financial services. On January 21, the company reported net income for the fourth quarter totaling $1.8 billion, or $.94 earnings per share, excluding $177 million of pre-tax transaction-related and restructuring costs. Adjusted net income and earnings per share equaled $2 billion and $1.01, respectively. On January 13, the company announced the launch of the Schwab Core Bond ETF. It is the business’s second actively managed fixed-income ETF after the launch in August 2024 of the Schwab Ultra-Short Income ETF, which would provide investors with access to the company’s portfolio management team’s expertise, along with the inherent features of an ETF.
2. PDD Holdings Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 78
PDD Holdings Inc. (NASDAQ:PDD) operates as a multinational commerce group that owns and operates a portfolio of businesses. The company’s earnings for the third quarter of 2024 reflect strong financial growth, with total revenues of $14,157.9 million, a 44% increase from the same quarter last year. Operating profit for the quarter was $3,461.6 million, a 46% increase from the same quarter of 2023, which demonstrates the efficient conversion of higher sales into stronger bottom-line performance. CNBC reported in December of the prior year that the company’s impressive revenue and earnings growth is driven by its discount e-commerce platform Temu, which is among the most downloaded apps among Gen Z users in the US.
1. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 95
The Progressive Corporation (NYSE:PGR) is a company that provides personal and commercial automobile insurance and other specialty property-casualty insurance products and related services. The earnings for the fourth quarter reported strong growth in key metrics compared to the previous year, with net premiums for December increasing by 22% to $5.964 billion, while net premiums earned rose by 26% to $6.717 billion. The strong earnings of the firm are attracting investor attention because, per a report by news agency Reuters, insurance spending has remained resilient, as businesses and individuals prioritize coverage to protect against risks. This has helped insurers attract and retain customers, despite rising costs for policies. However, increased frequency of severe weather events such as hurricanes, wildfires and other natural calamities are eating into profit margins, leading to a hike in premium prices.
While we acknowledge the potential of The Progressive Corporation (NYSE:PGR) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than The Progressive Corporation (NYSE:PGR) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
