In this article, we will take a look at the 15 stocks with consistent growth.
Growth companies and companies working on disruptive technologies were hit hardest by the market conditions as the cost of capital rose significantly in a short period of time. S&P 500 Growth Index, an index that tracks growth stocks from the S&P 500 Index, went down more than 30% in 2022. The index has since posted a recovery and was up 14.05% year-to-date as of October 31. The index, historically, has outperformed the overall S&P 500 index in the long term if we look at the annualized returns for the last 5 and 10 years. Top three holdings of the index currently include Apple Inc., Microsoft Corporation (NASDAQ:MSFT) and NVIDIA Corporation (NASDAQ:NVDA).
Similarly Catherine Wood’s ARK Innovation ETF (ARKK) that invests in domestic and foreign equity securities of companies that are working on “disruptive innovation”, lost nearly 67% of its value in 2022. The ETF has since picked up the slack and was up nearly 40% year-to-date as of November 20.
Tough macroeconomic and investment conditions typically have the most impact on growth stocks as these stocks offer prosperity at the risk of failure or loss, in the long run. High interest rates simply lower the value of a cash flow in the future, which, in effect, lowers the valuations of growth companies. The same can be said for the current market situation and the valuations of many of the growth stocks. Savvy investors load up on companies with good fundamentals and future prospects in these times. You can read more about some growth stocks that are trading cheaply, here.
Investors expect the Federal Reserve to maintain interest rates at the same level in the upcoming meeting in December, followed by significant interest rate cuts by the end of 2024. A return to low interest rates may bode well for the growth stocks.
If we take a long-term investment horizon, the outlook for growth stocks looks strong. If doubts around the economy clear and dark clouds of recession recede in the coming weeks, growth stocks could rebound in the coming months and years. You can read more about this in our recent article: 12 Best-Performing Growth Stocks in 2023.
Our list of 15 stocks with consistent growth is dominated by companies from the technology sector followed by the consumer cyclical. The list Elon Musk’s EV-maker Tesla, Inc. (NASDAQ:TSLA), Argentinian internet retailer Mercadolibre, Inc. (NASDAQ:MELI), and technology companies Zscaler, Inc. (NASDAQ:ZS), MongoDB, Inc. (NASDAQ:MDB), and Elastic N.V. (NYSE:ESTC), among others.
Photo by Joshua Mayo on Unsplash
Methodology
We used stock screeners to shortlist companies that showed more than 10% year-on-year revenue growth for each of the last 5 years. We removed stocks that had revenues of less than $50 million in any of these years and only retained stocks with positive analyst ratings. The remaining stocks were ranked based on their average revenue growth rate over the last 5 years to pick the 15 stocks with consistent growth. We have also provided hedge fund ownership data for these stocks for reference.
Stocks with Consistent Growth
15. Etsy, Inc. (NASDAQ:ETSY)
5-Year Average Sales Growth: 45.68%
Number of Hedge Fund Holders: 38
Brooklyn, New York-based Etsy, Inc. (NASDAQ:ETSY) operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. Its portfolio of brands includes Etsy, its primary marketplace focused on unique and creative goods, and Reverb, Depop, and Elo7. Its marketplaces boast 8.8 million active sellers and over 97 million active buyers.
On November 1, Etsy, Inc. released its financial results for Q3 2023. Its revenue increased by 7% y-o-y to $636 million and it reported a net income of $88 million. The company generated a normalized EPS of $1.08 which was $0.12 more than the consensus estimates.
Following the earnings release, Goldman Sachs analyst Alexandra Steiger lowered the price target for Etsy, Inc. shares to $84 from $96 but maintained an ‘Outperform’ rating. The target price represents a potential upside of 19.74% based on the share price on November 17.
14. Elastic N.V. (NYSE:ESTC)
5-Year Average Sales Growth: 47.05%
Number of Hedge Fund Holders: 45
San Francisco, California-based Elastic N.V. is a technology company providing a leading platform for search-powered solutions. It delivers complete, cloud-based, AI-powered solutions for enterprise security, observability and search built on the Elasticsearch platform.
On November 15, Elastic N.V. announced an agreement to acquire Opster, the creators of AutoOps, a platform that provides deep insight to automatically detect and resolve issues with cluster health, improve search performance, and reduce hardware costs. Terms of the transaction were not disclosed.
As of Q2 2023, Elastic N.V. shares were held by 45 of the 910 prominent hedge funds tracked by Insider Monkey, with a total value of $937 million. Daniel Patrick Gibson’s Sylebra Capital Management was the largest hedge fund shareholder with ownership of 4.6 million shares valued at $294 million.
13. Smartsheet Inc. (NYSE:SMAR)
5-Year Average Sales Growth: 47.32%
Number of Hedge Fund Holders: 46
Smartsheet Inc. (NYSE:SMAR), based in Bellevue, Washington, is a leading cloud-based platform for work execution, enabling teams and organizations to plan, capture, manage, automate, and report on work at scale.
On October 23, Smartsheet Inc. announced plans to invest in an onshore data hosting based in Australia to better serve its customers in the Asia-Pacific-Japan region. The buildout is expected to begin in 2024.
On October 12, UBS analyst Taylor McGinnis initiated coverage of Smartsheet Inc. shares with $60 price target and a ‘Buy’ rating. The target price represents a potential upside of nearly 47% based on the share price on November 17.
12. Okta, Inc. (NASDAQ:OKTA)
5-Year Average Sales Growth: 48.70%
Number of Hedge Fund Holders: 57
Okta, Inc. (NASDAQ:OKTA) is a software company providing identity management and access management solutions through a cloud-based platform.
On October 4, Okta, Inc. announced its AI suite, Okta AI, with capabilities to power real-time Identity actions using the latest AI models. The company is working with Google Cloud and its AI platform, Vertex AI, on its AI suite.
As of Q2 2023, 57 of the 910 hedge funds tracked by Insider Monkey were long Okta, Inc. shares, for a total value of $905 million. Ricky Sandler’s Eminence Capital was the largest hedge fund shareholder with ownership of 1.5 million shares valued at $103 million.
11. Tesla, Inc. (NASDAQ:TSLA)
5-Year Average Sales Growth: 49.47%
Number of Hedge Fund Holders: 79
Based in Austin, Texas, Tesla, Inc., designs, develops, manufactures, sell and leases fully electric vehicles and energy generation and storage solutions. Its current portfolio of products includes Model 3 and Model S sedans, Model Y and Model X SUVs, while upcoming products include Cybertruck, Tesla Roadster and Tesla Semi – a light commercial vehicle.
Tesla, Inc. produced 430,488 vehicles in Q3 2023 and delivered more than 435,000 vehicles during the same period. The company has six large scale manufacturing facilities across the world, including its first plant in California, and gigafactories across Nevada, New York, Shanghai, Texas, and Berlin.
As per the Q2 2023 data, Tesla, Inc. ranks #1 on our list of 15 stocks with consistent growth based on the number of hedge fund shareholders. The shares of the EV company were owned by 79 prominent hedge funds, with the total shares held by them valued at $6.5 billion.
10. MongoDB, Inc. (NASDAQ:MDB)
5-Year Average Sales Growth: 50.74%
Number of Hedge Fund Holders: 62
New York-based MongoDB, Inc. is a software company that develops and provides commercial support for the source-available document database MongoDB which uses a JSON-like format to store documents. The database is popular for developing scalable applications with evolving data schemas.
On August 31, MongoDB, Inc. released its financial results for the quarter ended July 31, 2023. Its revenue increased by 40% y-o-y to $424 million while net loss shrunk by 68% y-o-y to $38 million. The company boasted more than 45,000 customers at the end of the quarter.
As of June 30, MongoDB, Inc. shares were held by 62 hedge funds with the total shares held by these hedge funds valued at $1.7 billion.
9. Tandem Diabetes Care, Inc. (NASDAQ:TNDM)
5-Year Average Sales Growth: 52.10%
Number of Hedge Fund Holders: 23
Tandem Diabetes Care, Inc. (NASDAQ:TNDM) is a global insulin delivery and diabetes technology company based in San Diego, California. It manufactures and sells the t:slim X2 insulin pump with Control-IQ technology.
On January 23, Tandem Diabetes Care, Inc. completed the acquisition of AMF Medical SA, a privately held Swiss developer of insulin patch pump. The transaction comprised a CHF 8 million strategic investment in Q3 2022, CHF 62.4 million paid at closing, and up to CHF 129.6 million in contingent earnout payments.
Tandem Diabetes Care, Inc. released its financial results for Q3 2023 on November 1. It generated a revenue of $186 million and a net loss of $32 million. Its worldwide installed base increased 11% y-o-y to approximately 444,000 in-warranty customers.
8. Zscaler, Inc. (NASDAQ:ZS)
5-Year Average Sales Growth: 53.60%
Number of Hedge Fund Holders: 45
Based in San Jose, California, Zscaler, Inc. operates the world’s largest cloud security platform, protecting thousands of enterprises and government agencies from cyberattacks and data loss. Its flagship services, Zscaler Internet Access, and Zscaler Private Access, create fast, secure connections between users and applications.
On September 5, Zscaler, Inc. released its financial results for three months ended July 31, 2023. Its revenue increased by 43% y-o-y to $455 million and it reported a net loss of $31 million. The company generated a normalized EPS of $0.64 which was $0.15 more than the consensus estimates.
On November 16, Rosenblatt analyst Catharine Trebnick raised the price target for Zscaler, Inc. shares to $225 from $185 and maintained a ‘Buy’ rating. The price target represents a potential upside of 20.85% based on the share price on November 17.
As of Q2 2023, Zscaler, Inc. shares were held by 45 prominent hedge funds with the total value of shares held by hedge funds valued at $1.0 billion. Two Sigma Advisors was the largest hedge fund shareholder on record with ownership of 1.4 million shares valued at $211 million.
7. EXACT Sciences Corporation (NASDAQ:EXAS)
5-Year Average Sales Growth: 54.06%
Number of Hedge Fund Holders: 45
EXACT Sciences Corporation (NASDAQ:EXAS) is a leading provider of cancer screening and diagnostic tests with a focus on early detection and prevention of colorectal cancer. It launched Cologuard, a screening test for the early detection of colorectal cancer and pre-cancer, in 2014.
On November 3, Goldman Sachs analyst Matthew Sykes lowered the price target on EXACT Sciences Corporation shares to $90 from $100 but maintained a ‘Buy’ rating for the shares. The target price represents a potential upside of 47.13% based on the share price on November 17.
As of Q2 2023, EXACT Sciences Corporation shares were held by 45 prominent hedge funds with the total value of shares held by hedge funds valued at $1.0 billion. Cathie Wood’s ARK Investment Management was the largest hedge fund shareholder on record with ownership of 7.2 million shares valued at $672 million.
In its Q2 2023 “Baron Health Care Fund” investor letter, Baron Funds, an investment management company, made the following comments about EXACT Sciences Corporation:
“Exact Sciences Corporation is a cancer diagnostics company whose flagship product is Cologuard, a stool-based screening test for colon cancer. The stock declined because financial results did not satisfy lofty expectations and there was a broader sell-off in the diagnostics stocks. We retain conviction in the investment, though we reduced the position size to manage risk ahead of privately held company Freenome’s clinical trial readout of a potentially competing blood-based screening test for colorectal cancer. We believe the screening market for colon cancer is vast, and management continues to build optionality by moving several liquid biopsy programs of their own through the pipeline.”
6. Mercadolibre, Inc. (NASDAQ:MELI)
5-Year Average Sales Growth: 55.57%
Number of Hedge Fund Holders: 77
Founded in 1999, Buenos Aires, Argentina-based Mercadolibre, Inc. is Latin America’s leading e-commerce technology company operating through its primary platforms, MercadoLibre.com and MercadoPago.com. It provides solutions to individuals and companies buying, selling, advertising, and paying for goods online.
On November 2, Wedbush analyst Scott Devitt reiterated an ‘Outperform’ rating for Mercadolibre, Inc. shares and maintained a price target of $1500.
As of Q2 2023, Mercadolibre, Inc. shares were held by 77 prominent hedge funds, valued at more than $3.3 billion, according to Insider Monkey data on 910 hedge funds. Generation Investment Management was the largest hedge fund shareholder with ownership of 0.6 million shares valued at $687 million.
5. Enphase Energy, Inc. (NASDAQ:ENPH)
5-Year Average Sales Growth: 55.82%
Number of Hedge Fund Holders: 50
Enphase Energy, Inc. (NASDAQ:ENPH), based in Fremont, California, is a global energy technology company and the world’s leading supplier of microinverter-based solar and battery systems.
On October 30, Goldman Sachs analyst Brian Lee lowered the price target for Enphase Energy, Inc. shares to $158 from $180 but maintained a ‘Buy’ rating. The target price represents a potential upside of 74.26% based on the share price on November 17.
As of Q2 2023, Enphase Energy, Inc. shares were held by 50 of the 910 hedge funds tracked by Insider Monkey, valued at more than $773 million. Philippe Laffont’s Coatue Management was the largest hedge fund shareholder with ownership of 0.6 million shares valued at $687 million.
4. Callon Petroleum Company (NYSE:CPE)
5-Year Average Sales Growth: 56.88%
Number of Hedge Fund Holders: 19
Houston, Texas-based Callon Petroleum Company (NYSE:CPE) is an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in the leading oil plays of West and South Texas.
On July 5, Callon Petroleum Company announced the closing of previously announced acquisition of Delaware Basin assets from Percussion Petroleum Operating II, LLC for a cash consideration of $249 million and 6.3 million shares of the company. It also announced the divestment of its Eagle Ford assets to Ridgemar Energy Operating, LLC and received $551 million in cash at closing. After the closing of the transactions, a $300 million share repurchase program has become effective for the next two years.
3. Twilio Inc. (NYSE:TWLO)
5-Year Average Sales Growth: 57.73%
Number of Hedge Fund Holders: 49
Founded in 2008, San Francisco, California-based Twilio Inc. (NYSE:TWLO) is a technology company that provides a Customer Engagement Platform which enables companies to use communications and data to add intelligence and security to every step of the customer journey.
On November 8, Twilio Inc. released its financial results for Q3 2023. Its revenue increased by 5% y-o-y to $1.0 billion while net loss shrunk by 71% y-o-y to $140 million. The company generated a normalized EPS of $0.58 which was $0.22 more than the consensus estimates.
Following the earnings release, JMP Securities analyst Patrick Walravens reiterated a ‘Market Outperform’ rating for Twilio Inc. shares with an unchanged target price of $110. The target price represents an upside potential of 78.72% based on the share price on November 17.
2. New Fortress Energy LLC (NASDAQ:NFE)
5-Year Average Sales Growth: 98.92%
Number of Hedge Fund Holders: 25
New York-based New Fortress Energy LLC (NASDAQ:NFE) is a global energy infrastructure company that develops, finances, and operates natural gas facilities, power plants and logistics solutions to deliver fully integrated, turnkey energy solutions.
On November 7, New Fortress Energy LLC announced the close of up to $575 million in financings to complete construction of its 630 MW Barcarena power plant, which is approximately 37% completed pursuant to a fixed-price, date-certain EPC contract with Mitsubishi and Toyo Setal.
New Fortress Energy LLC is working on a deleveraging plan to strengthen the financial position of the company and has identified non-core assets for potential sale that can bring in nearly $1.0 billion. The divestitures are expected to be undertaken in the next 12 months, according to the company.
1. eXp World Holdings, Inc. (NASDAQ:EXPI)
5-Year Average Sales Growth: 106.29%
Number of Hedge Fund Holders: 10
Bellingham, Washington-based EXp World Holdings, Inc. (NASDAQ:EXPI) offers a full suite of brokerage and real estate tech solutions, including its innovative residential and commercial brokerage model, professional services, collaborative tools, and personal development. The holding company provides these services through its businesses eXp Realty®, Virbela and SUCCESS® Enterprises.
On November 2, EXp World Holdings, Inc. released its financial results for Q3 2023. Its revenue declined by 2% y-o-y to $1.2 billion while it reported a net income of $1.3 million. The normalized EPS for the quarter was in-line with consensus estimates at $0.06.
As of Q2 2023, EXp World Holdings, Inc. shares were owned by 22 of the 910 hedge funds tracked by Insider Monkey, with a total value of $161 million. Notable hedge fund investors included Point72 Asset Management, Avidity Partners Management, and Renaissance Technologies, among others.
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This article is originally published at Insider Monkey.
