In this article, we will take a look at the 5 best-performing growth stocks in 2023. To see more such companies, go directly to 12 Best-Performing Growth Stocks in 2023.
5. DraftKings Inc. (NASDAQ:DKNG)
YTD Performance Through November 13: +207.55%
DraftKings Inc. (NASDAQ:DKNG) shares jumped earlier this month on the back of a strong Q3 earnings report and an upbeat guidance. DraftKings Inc. (NASDAQ:DKNG)’s EPS in the September quarter came in at -$0.61, beating estimates by $0.09. Revenue in the quarter increased by about 57.4% year over year.
Baron Discovery Fund made the following comment about DraftKings Inc. (NASDAQ:DKNG) in its Q1 2023 investor letter:
“We re-initiated a position in former Fund holding DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook, digital casino, and daily fantasy sports operator. DraftKings’ mobile applications offer consumers the ability to wager on a wide variety of sporting events and play hundreds of real-money casino games. The company has spent the past three years building a proprietary technology stack that improves the customer experience and delivers best-in-class breadth of bet types (such as parlays, same-game parlays, and player props). State-level online sports betting (OSB) and iCasino legalization, along with a multi-year consumer adoption timeline in active states, has supported a 90% revenue growth rate for DraftKings since 2020. The opportunity for OSB legalization remains significant, with under 50% of the U.S. population currently having legal mobile sports betting. We expect 65% to 80% of the population will eventually have access to OSB. ICasino is currently legal in just seven states representing roughly 13% of the population. ICasino product adoption in legalized states has been robust, with the average user spending twice as much as a sports bettor. While the pace of legalization for iCasino has been slower, we believe additional states will pass regulation in the coming years.
As U.S. states began to legalize sports betting, the DraftKings management team moved quickly to build widespread brand awareness. DraftKings is the #2 operator in both OSB and iCasino by a wide margin, and has demonstrated improving market share trends across almost all states. When a new state legalizes sports betting, DraftKings has a first mover advantage as many of its customers are converted from the DraftKings daily fantasy sports offering. The quality of their sportsbook product along with increasingly targeted promotional spending results in strong customer retention and high lifetime values. In states where iCasino is legal, DraftKings can cross-sell OSB customers. DraftKings’ scale and product advantages are creating a flywheel that will enable the company to continue to out-invest the competition in acquisition marketing, retention, and research and development. The high barriers to entry are resulting in a consolidated industry that will eventually lead to a highly profitable business. This is evidenced by older-vintage state contribution margins that are already approaching 40%. Longer term, we believe DraftKings can generate EBITDA margins between 20% and 30% with strong free-cash-flow conversion.”
4. NVIDIA Corporation (NASDAQ:NVDA)
YTD Performance Through November 13: +230.74%
Thanks to the AI-led rally, NVIDIA Corporation (NASDAQ:NVDA) is one of the best-performing stocks of 2023 as it enjoys a near dominance in the AI chips industry for now. NVIDIA Corporation (NASDAQ:NVDA) has gained about 230% in the year through November 13.
Recently, analysts at Barclays said they see more AI-related upside in NVIDIA Corporation (NASDAQ:NVDA) shares. As of the end of the second quarter of 2023, 175 hedge funds had stakes in NVIDIA Corporation (NASDAQ:NVDA). The biggest stakeholder of NVIDIA Corporation (NASDAQ:NVDA) was Rajiv Jain’s GQG Partners which owns a stake worth about $6 billion in the company.
Here is what Baron Global Advantage Fund has to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2023 investor letter:
“At the portfolio level, the positive fundamental trends we noticed in the second quarter continued into the third quarter as well – many of our companies are reporting stability or slight improvement in business trends. Weighted average 2023 revenue growth expectations for the portfolio were up 3.8% during the third quarter or up 0.8% if we exclude NVIDIA. We wrote at length about NVIDIA earlier this year, but it is worth mentioning that the company has continued to exceed its own projections and the Street’s most optimistic expectations. After raising its revenue and EPS guidance for 2023 by 40% and 69%, respectively, following its last quarter, NVIDIA increased it further by 26% and 35%, respectively, after reporting the most recent one. Consensus expectations now call for revenues to grow 94% this year, while earnings per share are expected to increase by 192%. You may have seen these kinds of growth rates before, but we doubt you saw them from a company generating $50 billion in revenues. The skeptics who continue to question and doubt the accelerating demand for Generative artificial intelligence forgot to tell NVIDIA about it. But we digress…back to the portfolio…profit expectations have risen even faster than revenues and were up 11% during the third quarter (or up 7.8% ex-NVIDIA) with margin expectations up 149bps (107bps ex-NVIDIA). So, broadly speaking, our companies are seeing improvement in overall business trends, which flow through to their bottom lines, driving higher margins. We are also starting to see the benefits of leaner cost structures and more disciplined capital allocation compared to two or three years ago when capital was both cheaper and more readily available.”
3. Augmedix, Inc. (NASDAQ:AUGX)
YTD Performance Through November 13: +240.38%
Medical documentation solutions company Augmedix, Inc. (NASDAQ:AUGX) ranks 3rd in our list of the best-performing growth stocks in 2023. Augmedix, Inc. (NASDAQ:AUGX) has gained about 240% year to date through November 13.
In a latest earnings call, Augmedix, Inc. (NASDAQ:AUGX) talked in detail about how generative AI helps its business:
“Generative AI supports our Live, Notes and especially our Go products. During the quarter, we hosted our inaugural AI Advisory Council meeting. This group includes distinguished academics, governance experts and customers and is already providing invaluable insight and guidance as we advance the development and use of generative AI in Augmedix’ solutions. Our AI Council recognizes the unique and delicate balance Augmedix has forged between technology and human within our particular field. Generative AI, in its current state, does a good job of summarizing the transcript of the patient encounter. However, comprehensive and accurate medical documentation requires historical patient data, physician preferences, structured data sets and independently derived models that service guardrails to supplement it.
And for more complex encounters, it may be necessary to provide the higher leverage of service inherent in our Live and Notes offerings. We believe this portfolio of solutions, all of which utilize the best generative AI can offer will be a winning formula in the burgeoning medical documentation market. At the same time, regulatory requirements and our customers demand compliant with rigorous data security standards. Augmedix recently achieved certified status by the HITRUST Alliance for information security. HITRUST’s Champion programs safeguard sensitive information and managed information risk for global organizations across all industries and throughout the third-party supply chain. This prestigious certification validates Augmedix’ commitment to safeguard sensitive patient information data.”
Read the full earnings call transcript here.
As of the end of the second quarter of 2023, 8 hedge funds had stakes in Augmedix, Inc. (NASDAQ:AUGX), as per Insider Monkey’s database of 910 hedge funds.
2. Bit Digital, Inc. (NASDAQ:BTBT)
YTD Performance Through November 13: +248.33%
Bit Digital, Inc. (NASDAQ:BTBT) shares have gained about 240% since the start of the year, thanks to an overall optimism in the crypto industry. Earlier this month Bit Digital, Inc. (NASDAQ:BTBT) said it produced 111.6 bitcoins in October, a 14% decrease compared to the prior month.
1. Myomo, Inc. (NYSE:MYO)
YTD Performance Through November 13: +316.50%
Wearable medical robotics company Myomo, Inc. (NYSE:MYO) shares have shot up about 300% since the start of the year through November 13. Earlier this month Myomo, Inc. (NYSE:MYO) posted strong Q3 results.
GAAP EPS in the third quarter came in at -$0.06, beating estimates by $0.03. Revenue jumped about 28.5% year over year to $5.1 million, beating estimates by $0.95 million.
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