In this article, we present 15 best growth stocks under $25. If you want to skip our discussion on the performance of growth stocks, head directly to 5 Best Growth Stocks Under $25.
The markets have rallied for the better part of the year at the back of the US Federal Reserve, hiking interest rates to 22-year highs. The push of the benchmark rate to between 5.25% and 5.50% has helped push inflation to lows of 3.1%. On the other hand, the hikes threaten to plunge the economy into recession amid slowing economic activities.
Nevertheless, investors have shunned the recession concerns, betting that the bull run will continue into 2024. The S&P 500 has rallied 26.3% for the year including dividend payments, with the Nasdaq 100 following suit with a nearly 54% gain.
Heading into 2024, there is a clear indication that the upward momentum will continue gathering pace amid a string of positive factors. Key among them is growing expectations that the Fed will start cutting interest rates as early as the first half of the year. While stocks rallied even as the central bank hiked in 2022, expectations are high that cuts would be a major catalyst that should fuel the upward momentum.
In addition, solid revenue growth rates and corporate earnings are other factors increasingly fueling investor’s interest rates in the market. High-growth stocks led by Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), NVIDIA Corp (NASDAQ:NVDA), and Microsoft Corp (NASDAQ:MSFT) have delivered impressive revenue and earnings growth supported by a resilient economy and solid consumer spending power.
The artificial intelligence frenzy has also helped strengthen investor interest in some equities. Semiconductor heavyweights led by Nvidia and Advanced Micro Devices have been some of the biggest beneficiaries amid growing demand for their chips to power the AI push. Likewise, companies like Salesforce and Palantir integrating AI tools into their solutions have also exploded as investors take note of the massive opportunities up for grabs.
While the stock market appears to lose its momentum during the first 2 trading days of 2024 as some analysts are already sounding warnings about valuations that appear to have gotten out of hand amid the blockbuster gains. The S&P 500 is priced above 30 times profits, one of the highest readings on record. There are already concerns that the overbought S&P 500 and the Nasdaq composite could face major headwinds as investors start to book profits.
The Bank of England has already issued warnings reiterating that US tech stocks and dollar-denominated corporate bands appear overstretched on the valuation front. “The overall risk environment continues to be challenging and near-term growth prospects remain subdued. Given the impact of higher interest rates, and uncertainties associated with inflation and growth, some risky asset valuations appear to be stretched,” the BoE’s Financial Policy Committee (FPC) said after a quarterly meeting.
A trader in an office, surrounded by financial charts and graphs, looking intently at a stock ticker.
The comments by the Bank of England come when many popular growth stocks are trading at a sharp premium to the S&P 500. The premium valuations come against the backdrop of rates sitting near record highs and fueling concerns of a potential slowdown next year. In addition, soaring geopolitical tensions also raise serious doubt about the market outlook heading into 2024.
Nevertheless, the best growth stocks to buy under $25 could be the answer for shrugging off the premium valuation concerns and riding the bull run into 2024. The fastest-growing quality stocks trading under $25 offer one of the best ways of diversifying an investment portfolio while eying high returns down the road.
The Fed hinting at possible rate cuts next year should be one of the catalysts likely to support the best growth stocks to buy under $25. Falling interest rates are expected to benefit such companies, given the expected reduction in borrowing costs that most companies need to support their research and development efforts. Some of the notable names likely to do well on a cut in interest rates from 22-year highs include Flywire Corp (NASDAQ:FLYW), Coursera Inc. (NYSE:COUR), and TAL Education Group (NYSE:TAL).
Our Methodology
Our list of the best stocks to buy under $25 includes stocks in several sectors that are expected to double their revenue over the next few years, therefore generating more shareholder value. We screened stocks under $25 with high P/E ratios (over 50) as of December 1 and picked the biggest ones in growing sectors like tech, e-commerce, solar, health information, and autos. We ranked these growth stocks by the number of hedge funds that own them, using Insider Monkey’s data of 910 top hedge funds as of Q3 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Growth Stocks to Buy Under $25
15. Quipt Home Medical Corp (NASDAQ:QIPT)
P/E Ratio: 125
Latest Share Price: $5.09
Number of Hedge Fund Holders: 8
Quipt Home Medical Corp. (NASDAQ:QIPT) is a healthcare company that provides durable home medical equipment and supplies in the US. Quipt Home Medical Corp. (NASDAQ:QIPT)’s product pipeline includes nebulizers, oxygen concentrators, CPAP and BiPAP units, traditional and non-traditional durable medical respiratory equipment, and services.
While Quipt Home Medical Corp. (NASDAQ:QIPT) is up by about 8% for the year, it remains one of the best growth stocks to buy under $25 for investors looking to diversify their portfolio in the healthcare sector, more so in the medical devices segment.
Eight of the 910 hedge funds polled by Insider Monkey for their Q3 2023 shareholdings had held Quipt Home Medical Corp. (NASDAQ:QIPT)’s shares. Adam Morgan’s Velan Capital is the biggest shareholder, with a stake of $5.6 million.
14. VTEX (NYSE:VTEX)
P/E Ratio: 71.94
Latest Share Price: $6.88
Number of Hedge Fund Holders: 10
Headquartered in London, the United Kingdom, VTEX (NYSE:VTEX) is a technology company providing software as a digital commerce platform service for enterprise brands and retailers. VTEX (NYSE:VTEX) offers a platform that allows customers to execute commerce strategies, including building online stores and integrating and managing orders across channels.
VTEX (NYSE:VTEX) has nearly doubled in value by a 78% year-to-date gain. VTEX (NYSE:VTEX) delivered a 23.7% increase in revenue in the recent quarter to $47.9 million as total gross merchandise volume across its platform rose 23.4% to $3.8 billion.
Among the hedge funds tracked by Insider Monkey, Israel Englander’s Millennium Management is the largest VTEX (NYSE:VTEX) stakeholder, with 2.37 million shares worth $11.88 million. Overall, ten hedge funds were bullish on VTEX (NYSE:VTEX) in Q3 2023, with stakes valued at $24.23 million.
13. Clearwater Analytics Holdings, Inc. (NYSE:CWAN)
P/E Ratio: 52.63
Latest Share Price: $20.03
Number of Hedge Fund Holders: 12
Clearwater Analytics Holdings, Inc. (NYSE:CWAN) is a technology company that develops and provides software as a service solution that enables automated investment data aggregation, reconciliation, and accounting. Clearwater Analytics Holdings, Inc. (NYSE:CWAN) offers investment accounting and reporting, performance measurement, compliance monitoring, and risk analytics solutions.
Clearwater Analytics Holdings, Inc. (NYSE:CWAN) delivered 2023 results above expectations with both revenue and adjusted EBITDA. In addition, management raised its guidance modestly higher, signaling expected growth. The guidance includes a 20% to 21% growth in total revenues and EBITDA growth of 23%.
Insider Monkey examined the holdings of 910 hedge funds for their September quarter of 2023 portfolios and identified 12 stakeholders in Clearwater Analytics Holdings, Inc. (NYSE:CWAN). Henry Ellenbogen’s Durable Capital Partners was the firm’s biggest shareholder among these as it owned a $122.85 million stake.
12. Agilon Health Inc. (NYSE:AGL)
P/E Ratio: 69.93
Latest Share Price: $12.55
Number of Hedge Fund Holders: 19
Austin, Texas, Texas-based Agilon Health Inc. (NYSE:AGL) specializes in offering healthcare services for seniors through primary care physicians. As one of the best growth stocks to buy under $25, Agilon Health Inc. (NYSE:AGL) continues to experience momentum across its core business, driven by the power of the physician network and platform for improving patient outcomes.
Agilon Health Inc. (NYSE:AGL) delivered a 75% year-over-year increase in revenue in Q3 as gross profit came in at $30 million from $26 million a year ago. Membership on Agilon Health Inc. (NYSE:AGL) platform soared to 508,000, including 420,300 Medicare Advantage members.
There were 19 hedge funds in our database that held stakes in Agilon Health Inc. (NYSE:AGL)’s at the end of the third quarter, compared to 24 funds in Q2 2023. The company’s most notable stakeholder is Rock Springs Capital Management, with 8.29 million shares worth $147.27 million.
11. Rover Group, Inc. (NASDAQ:ROVR)
P/E Ratio: 99.01
Latest Share Price: $10.88
Number of Hedge Fund Holders: 21
Rover Group, Inc. (NASDAQ:ROVR) is a communication services company operating an online pet care marketplace worldwide. Rover Group, Inc. (NASDAQ:ROVR) connects pet parents with pet providers that offer overnight service, including boarding and in-home pet sitting.
Rover Group, Inc. (NASDAQ:ROVR) has been in explosive form in 2023, rallying by more than 190%, and investors are impressed by the company’s long-term prospects and growth metrics. Rover Group, Inc. (NASDAQ:ROVR) has been moving higher after delivering third-quarter earnings that beat estimates. Revenues were up 30% to $66.2 million as gross booking increased 25% to $266.4 million.
A total of 21 hedge funds tracked by Insider Monkey had stakes in Rover Group, Inc. (NASDAQ:ROVR) as of the end of the third quarter of 2023. The most significant hedge fund stakeholder of Rover Group, Inc. (NASDAQ:ROVR) was David Zorub’s Parsifal Capital Management, which owns a $51.39 million stake in the company.
Here is what White Falcon Capital Management said about Rover Group, Inc. (NASDAQ:ROVR) in its Q3 2023 investor letter:
“Rover Group, Inc. (NASDAQ:ROVR) has surpassed Tech Resources to become a top 5 position in the portfolio. Rover, a pet care marketplace, is a prime example of a business that’s poised for success in virtually any economic environment. It reported a set of fantastic earnings due to which its stock gained 50% and has not given up much of that gain in the recent pullback. This is a position that has been in the portfolio since September 2022 but we added to the position as we gained conviction in the thesis.
Operating as a marketplace, Rover earns a “take rate” or a kind of “toll” on every transaction occurring within its platform. In the face of inflation, as pet sitters request higher prices for their services, Rover’s revenues naturally grow because its share of the transaction value increases. In addition, Rover is a category disrupter due to which its revenue growth is likely to be much higher than the average stock – it is taking share from friends and family as well as kennels. Finally, networks like Rover get more valuable over time due to which they have to spend less to attract more users on their platform. This results in operating leverage due to which its earnings are poised to grow even faster than revenues.… ” (Click here to read the full text)
10. Coursera, Inc. (NYSE:COUR)
P/E Ratio: 370.37
Latest Share Price: $19.37
Number of Hedge Fund Holders: 23
Coursera, Inc. (NYSE:COUR) is a consumer defensive company that operates as an online educational content platform. Coursera, Inc. (NYSE:COUR) connects learners, educators, organizations, and institutions while offering online courses, including data science, business, computer science, and engineering.
Coursera, Inc. (NYSE:COUR) is up by about 58%, outperforming the S&P 500 and affirming why it is one of the best growth stocks to buy under $25. Its total revenue in Q3 was up 21% to $165.5 million as gross profit increased 50% to $83.3 million.
Hedge funds are bullish on Coursera, Inc. (NYSE:COUR). As of the end of the third quarter, 23 hedge funds tracked by Insider Monkey reported having stakes in Coursera, Inc. (NYSE:COUR). The total value of these shares was $133.27 million. The biggest stakeholder of Coursera, Inc. (NYSE:COUR) at the end of September 2023 was Paul Marshall and Ian Wace’s Marshall Wace LLP, which had a $32.80 million stake in Coursera, Inc. (NYSE:COUR).
9. TAL Education Group (NYSE:TAL)
P/E Ratio: 58.48
Latest Share Price: $12.63
Number of Hedge Fund Holders: 25
TAL Education Group (NYSE:TAL) is a consumer defensive company that provides K-12 after-school tutoring services in China. TAL Education Group (NYSE:TAL) offers tutoring services across various academic subjects, including mathematics, physics, chemistry, biology, and history.
TAL Education Group (NYSE:TAL)’s fortunes have improved significantly, depicted by the stock rallying 74% year to date, affirming why it is one of the best growth stocks to buy under $25. The rally has come on the opening of the Chinese economy in the aftermath of the COVID-19-triggered slowdown.
According to Insider Monkey’s third-quarter database, 25 hedge funds were bullish on TAL Education Group (NYSE:TAL), compared to 16 funds in the earlier quarter. Tiger Pacific Capital held the leading stake in the company, comprising 9.81 million shares worth $89.40 million.
8. Privia Health Group, Inc. (NASDAQ:PRVA)
P/E Ratio: 82.64
Latest Share Price: $23.03
Number of Hedge Fund Holders: 25
Privia Health Group, Inc. (NASDAQ:PRVA) is a physician enablement healthcare company. It collaborates with medical groups, health plans, and health systems to optimize physician practices. Privia Health Group, Inc. (NASDAQ:PRVA) also offers technology and population health tools to enhance workflows in the sector.
As one of the best growth stocks to buy under $25 for exposure in the healthcare sector, Privia Health Group, Inc. (NASDAQ:PRVA) delivered a 21% increase in Q3 2023 revenue to $417.28 million as EPS increased by about 400% to $0.05 a share. While the stock trades for less than $25, it is up by 14% for the year.
According to Insider Monkey’s Q3 data, 25 hedge funds were long Privia Health Group, Inc. (NASDAQ:PRVA), compared to 28 funds in the prior quarter.
7. indie Semiconductor, Inc. (NASDAQ:INDI)
P/E Ratio: 400
Latest Share Price: $8.11
Number of Hedge Fund Holders: 25
Amid the electric vehicle revolution and increased focus on self-driving cars, indie Semiconductor, Inc. (NASDAQ:INDI) remains the best growth stock to buy under $25 and ride the wave. indie Semiconductor, Inc. (NASDAQ:INDI) is a software and semiconductor company that develops technology for self-driving cars, driver safety systems, and vehicle electrification.
indie Semiconductor, Inc. (NASDAQ:INDI) has gained 36% year to date, outperforming the 24% gain for the S&P 500. The stellar performance stems from an increased focus on self-driving and electric cars, fuelling strong demand for the company’s solutions and products.
According to Insider Monkey’s third-quarter database, 25 hedge funds were bullish on indie Semiconductor, Inc. (NASDAQ:INDI), compared to 24 funds in the prior quarter. George Soros’ Soros Fund Management is the most significant stakeholder in the company, with 5.52 million shares worth $34.77 million.
Here is what ClearBridge Small Cap Strategy said about indie Semiconductor, Inc. (NASDAQ:INDI) in its Q2 2023 investor letter:
“We also added indie Semiconductor, Inc. (NASDAQ:INDI), in the IT sector, which provides automotive semiconductor solutions for a variety of applications. The company is in the early innings of a rapid revenue ramp with a huge backlog to come as the company rapidly takes share in a growing market. We believe the market underestimates the long-term potential for this business as the company continues to sign high-profile contracts with major auto manufacturers and their suppliers.”
6. Amicus Therapeutics, Inc. (NASDAQ:FOLD)
P/E Ratio: 76.92
Latest Share Price: $14.19
Number of Hedge Fund Holders: 26
Headquartered in Philadelphia, Pennsylvania, Amicus Therapeutics, Inc. (NASDAQ:FOLD) is a biotechnology company that discovers, develops, and delivers medicines for rare diseases. Its lead product is Galafold, an oral precision medicine for the treatment of Fabry disease.
Up by 15% for the year, Amicus Therapeutics, Inc. (NASDAQ:FOLD) remains one of the best growth stocks to buy under $25, going by its long-term prospects. The company has been firing on all cylinders, going by the 27% increase in revenue in Q3 2023 to $103.5 million. Amicus Therapeutics, Inc. (NASDAQ:FOLD) has launched new products, Pombiliti and Opfolda, which are expected to strengthen its revenue base further.
Amicus Therapeutics, Inc. (NASDAQ:FOLD) was held by 26 hedge funds at the end of Q3 2023. Joseph Edelman’s Perceptive Advisors is the biggest hedge fund holder of Amicus Therapeutics, Inc. (NASDAQ:FOLD) stock, with a stake valued at $336.75 million as of Q3 2023.
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Disclosure: None. 15 Best Growth Stocks to Buy Under $25 is originally published on Insider Monkey.