Growth Stock Portfolio: 15 Companies with At Least 30% Annual Growth Rates

Published on January 22, 2024 at 9:38 am by Sheryar Siddiq in Hedge Funds, News

In this article, we will take a look at the 15 stocks with at least 30% annual growth rates to consider for a growth stock portfolio. To skip our analysis of recent market trends, you can go directly to Growth Stock Portfolio: 5 Companies with At Least 30% Annual Growth Rates.

As the stock market enters the new year, it benefits from the momentum of a stellar 2023. The year concluded with the Nasdaq composite achieving its fifth-best annual performance. This rebound was especially welcomed after the index experienced a sharp 33.1% decline in 2022. Considering the remarkable 43.6% surge in 2020, the Nasdaq composite is poised to mark two of its best six years in history in the current decade. As 2024 unfolds, there is a clear indication that the upward momentum will likely intensify, supported by several positive factors. Notably, there are growing expectations that the Federal Reserve will commence interest rate cuts as early as the first half of the year. Despite stocks rallying even when the central bank hiked rates in 2022, the anticipation of rate cuts is seen as a significant catalyst that could further propel the upward momentum.

That said, the market showed a loss of momentum in the first two trading days of 2024, leading some analysts to express concerns about potentially inflated valuations after significant gains. The S&P 500’s price-to-earnings ratio was above 30 during that period, signaling one of the highest readings in history. There are worries that the overbought S&P 500 and Nasdaq composite could face challenges as investors consider profit-taking. Josh Brown, CEO at Ritholtz Wealth Management, explained on CNBC that the decline in tech stocks in the early weeks of 2024 is likely due to profit-taking after remarkable returns in 2023, particularly in the fourth quarter. Brown acknowledged the logic of taking profits after such a strong rally but emphasized that the decline doesn’t necessarily indicate a stumble for these companies.

Moreover, robust revenue growth rates and corporate earnings are contributing to the growing interest of investors in the market. High-growth stocks, including Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA), and Mercadolibre, Inc. (NASDAQ:MELI), have demonstrated remarkable revenue and earnings growth, benefiting from a resilient economy and strong consumer spending power, thus making them suitable for a growth stock portfolio.

Growth Stock Portfolio: 15 Companies with At Least 30% Annual Growth Rates

A large stock market board displaying the S&P 500 and S&P 500 Growth Index.

Our Methodology

We employed stock screeners to narrow down companies with over 30% year-on-year revenue growth in each of the past five years. These companies also demonstrated positive growth catalysts and received favorable analyst ratings. Subsequently, the selected stocks were ranked using hedge fund ownership data. Over the past decade, the top 10 consensus stock picks of hedge funds have outperformed the S&P 500 Index by more than 140 percentage points (see the details here). This is a significant outperformance, and it underscores the importance of closely monitoring this frequently overlooked indicator.

15. Coinbase Global, Inc. (NASDAQ:COIN)

5-Year Annual Sales Growth: 197.92%

Number of Hedge Fund Holders: 27

Coinbase Global, Inc. (NASDAQ:COIN) operates as a financial infrastructure and technology company, serving the global cryptocurrency sector. Its services include a financial platform for consumers, a marketplace for crypto asset transactions for institutions, and technology solutions for developers to create applications based on cryptocurrency and securely accept crypto payments.

On September 5, Coinbase Global, Inc. (NASDAQ:COIN) announced an expansion of the maximum amount of its outstanding 3.625% senior notes due in 2031 available for repurchase in its tender offer, increasing it from $150 million to $180 million.

According to Insider Monkey’s third-quarter database, 27 hedge funds maintained a bullish stance on Coinbase Global, Inc. (NASDAQ:COIN), consistent with the previous quarter. ARK Investment Management held the largest position in the company, with 10.6 million shares valued at $796.11 million.

Much like Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA), and Mercadolibre, Inc. (NASDAQ:MELI), Coinbase Global, Inc. (NASDAQ:COIN) is a decent option for a growth stock portfolio.

14. Etsy, Inc. (NASDAQ:ETSY)

5-Year Annual Sales Growth: 47.89%

Number of Hedge Fund Holders: 36

Etsy, Inc. (NASDAQ:ETSY), headquartered in Brooklyn, New York, operates two-sided online marketplaces connecting millions of creative buyers and sellers worldwide. Its primary marketplace, Etsy, focuses on unique and creative goods, and the company also oversees Reverb, Depop, and Elo7. Etsy’s marketplaces have 8.8 million active sellers and over 97 million active buyers.

On November 1, Etsy, Inc. (NASDAQ:ETSY) reported its financial results for Q3 2023. The company’s revenue increased by 7% year-over-year to $636 million, and it posted a net income of $88 million. The normalized earnings per share (EPS) stood at $1.08, exceeding consensus estimates by $0.12. Following the earnings release, Goldman Sachs analyst Alexandra Steiger lowered the price target for Etsy, Inc. (NASDAQ:ETSY) shares to $84 from $96 while maintaining an ‘Outperform’ rating. The target price represents a potential upside of 19.74% based on the share price on November 17.

As of Q3 2023, shares of Etsy, Inc. (NASDAQ:ETSY) were held by 36 prominent hedge funds, totaling a collective valuation of $705.36 million. Brian Bares’ Bares Capital Management emerged as the leading hedge fund shareholder for the quarter.

13. Elastic N.V. (NYSE:ESTC)

5-Year Annual Sales Growth: 47.05%

Number of Hedge Fund Holders: 41

Elastic N.V. (NYSE:ESTC), based in San Francisco, California, is a technology company that provides a leading platform for search-powered solutions. The company delivers complete, cloud-based, AI-powered solutions for enterprise security, observability, and search, built on the Elasticsearch platform.

On November 15, Elastic N.V. (NYSE:ESTC) announced an agreement to acquire Opster, the creators of AutoOps, a platform that offers deep insights to automatically detect and resolve issues with cluster health, improve search performance, and reduce hardware costs.

As of Q3 2023, Elastic N.V. (NYSE:ESTC) shares were held by 41 out of the 910 prominent hedge funds tracked by Insider Monkey, with a total value of $1.23 billion. Sylebra Capital Management, led by Daniel Patrick Gibson, was the largest hedge fund shareholder with ownership of 3.92 million shares valued at $318.8 million.

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Elastic N.V. (NYSE:ESTC) in its Q3 2023 investor letter:

“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. Turning to positives, Elastic N.V. (NYSE:ESTC) is a data analytics company, engaged in open-source search and analytics engine services. Its shares jumped 27% on strong fiscal first quarter results with beats across billings, revenues, and earnings. Management noted they are benefiting from the trend of vendor consolidation.”

12. Twilio Inc. (NYSE:TWLO)

5-Year Annual Sales Growth: 56.44%

Number of Hedge Fund Holders: 43

Twilio Inc. (NYSE:TWLO), based in San Francisco, California, is an American company that offers programmable communication tools. The company facilitates making and receiving phone calls, sending and receiving text messages, and performing various communication functions through its web service APIs.

On November 8, Twilio Inc. (NYSE:TWLO) reported its financial results for Q3 2023, showing a 5% year-over-year revenue increase to $1.0 billion, accompanied by a significant 71% year-over-year reduction in net loss to $140 million. The company achieved a normalized EPS of $0.58, surpassing consensus estimates by $0.22. Following the earnings announcement, JMP Securities analyst Patrick Walravens reaffirmed a ‘Market Outperform’ rating for Twilio Inc. (NYSE:TWLO) shares, maintaining an unchanged target price of $110, indicating a 78.72% upside potential based on the share price.

Insider Monkey’s third-quarter 2023 survey, covering 910 hedge funds, revealed 43 Twilio Inc. (NYSE:TWLO) investors. The largest shareholder during Q3 2023 was Generation Investment Management, led by David Blood and Al Gore, with a $505.6 million stake.

11. Sarepta Therapeutics, Inc. (NASDAQ:SRPT)

5-Year Annual Sales Growth: 32.80%

Number of Hedge Fund Holders: 50

Sarepta Therapeutics, Inc. (NASDAQ:SRPT) is a global biotechnology company specializing in the development of precision genetic medicine for rare diseases. Leveraging its multi-platform precision genetic engine, the company maintains a pipeline with over 40 programs in different stages of development, targeting Duchenne muscular dystrophy (DMD), limb-girdle muscular dystrophies (LGMDs), and other rare diseases.

In early January, Citi initiated coverage on Sarepta Therapeutics Inc (NASDAQ:SRPT) with a Buy rating. Citi expressed a positive view on Sarepta Therapeutics Inc’s (NASDAQ:SRPT) risk/reward profile in anticipation of the FDA’s review of Sarepta’s drug Elevidys for full approval in the treatment of Duchenne muscular dystrophy.

A total of 50 hedge funds tracked by Insider Monkey had stakes in Sarepta Therapeutics Inc (NASDAQ:SRPT). The most significant stakeholder of Sarepta Therapeutics Inc (NASDAQ:SRPT) was Kurt Von Emster’s VenBio Select Advisor which owns a $488 million stake in Sarepta Therapeutics Inc (NASDAQ:SRPT).

Bronte Capital Amalthea Fund made the following comment about Sarepta Therapeutics, Inc. (NASDAQ:SRPT) in its Q3 2023 investor letter:

“The FDA is widely considered to be the world’s foremost regulator of drug products, with a stringent and rigorous process for evaluating new marketing applications. Disagreements between the FDA and regulators in other developed markets (such as the European Medicines Agency or the Australian Therapeutic Goods Administration (TGA)) are rare, and when they do occur, it is usually because the FDA has taken a more critical view of the applicant’s evidence.

For a drug to be approved in the US, it must meet the statutory requirement of “substantial evidence of effectiveness” under the Federal Food, Drug, and Cosmetic Act. There are essentially three ways to meet this requirement. Normally, the FDA expects the sponsor to succeed in two “adequate and well-controlled studies”. Alternatively, the sponsor can rely on success from a single study if the results from that study are “very persuasive”, or if they are combined with some sort of independent confirmatory evidence. For the most part lobbying from the cohort of patients, the “patient voice”, has played a relatively minor role in the FDA’s decision-making process and the agency has been prepared to make tough but rational decisions when the “substantial evidence” standard is clearly not met.

However, this was not the case in 2016 when the FDA famously overruled its own review team and external advisory committee to approve Sarepta Therapeutics, Inc.’s (NASDAQ:SRPT) controversial drug for Duchenne muscular dystrophy (Exondys 51). At the time, Sarepta had completed a single phase 2 trial in just 12 patients which, per the FDA Commissioner (Robert Califf) himself, had “major flaws” in both its design and conduct. Ellis Unger, director of the Office of Drug Evaluation at the FDA, declared that the drug was a “scientifically elegant placebo”, and that patients and their families were taking on unknown risks for likely non-existent benefits…” (Click here to read the full text)

10. DraftKings Inc. (NASDAQ:DKNG)

5-Year Annual Sales Growth: 91.26%

Number of Hedge Fund Holders: 51

DraftKings Inc. (NASDAQ:DKNG) operates as a digital sports entertainment and gaming company, providing online sports betting and casino services, daily fantasy sports, media content, and various consumer products in the United States and internationally.

In the third fiscal quarter of 2023, DraftKings Inc. (NASDAQ:DKNG) reported revenues of $790.0 million, marking a 57% year-over-year increase in top-line growth. The company also saw a substantial narrowing of net losses and adjusted EBITDA losses, with adjusted EBITDA losses decreasing by 55% in the first nine months of the year compared to the same period in the previous year, totaling $302.1 million.

As of the close of Q3 2023, 51 hedge funds tracked by Insider Monkey had stakes in DraftKings Inc. (NASDAQ:DKNG), reflecting an increase from the previous quarter’s 40 hedge funds. The combined value of these stakes is over $2.08 billion, with Cathie Wood’s ARK Invest being a leading shareholder, holding a stake valued at $430.64 million.

DraftKings Inc. (NASDAQ:DKNG), in addition to Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA), and Mercadolibre, Inc. (NASDAQ:MELI), is suitable for a growth stock portfolio.

9. Neurocrine Biosciences, Inc. (NASDAQ:NBIX)

5-Year Annual Sales Growth: 36.77%

Number of Hedge Fund Holders: 55

San Diego, California-based Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is a neuroscience-focused biopharmaceutical company. It is dedicated to discovering and developing life-changing treatments for patients with under-addressed neurological, neuroendocrine, and neuropsychiatric disorders. The company’s portfolio includes FDA-approved treatments for conditions such as tardive dyskinesia, chorea associated with Huntington’s disease, Parkinson’s disease, endometriosis, and uterine fibroids.

Out of the 55 hedge funds that reported having stakes in the biotech company Neurocrine Biosciences, Inc (NASDAQ:NBIX), Steve Cohen’s Point72 Asset Management had the biggest stake in Neurocrine Biosciences, Inc (NASDAQ:NBIX) with about 2.6 million shares.

Harding Loevner Global Small Companies Equity Strategy made the following comment about Neurocrine Biosciences, Inc. (NASDAQ:NBIX) in its Q3 2023 investor letter:

“By sector, our returns in Health Care were positive but this was more than offset by poor Industrials stocks. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) reported positive late-stage clinical study data for its treatment of congenital adrenal hyperplasia, a condition which causes the body to not produce enough cortisol, increasing the probability that the company can address a new estimated $1 billion market opportunity.”

8. Block, Inc. (NYSE:SQ)

5-Year Annual Sales Growth: 57.41%

Number of Hedge Fund Holders: 60

Founded in 2009 by Jack Dorsey and Jim McKelvey, Block Inc. (NYSE:SQ) is an American public company. Originally named Square Inc., the company operates diverse businesses within the financial technology sector. As of 2023, Block’s service network boasts nearly 4 million merchants and 51 million users.

By the end of the third quarter of this year, 60 out of the 910 hedge funds surveyed by Insider Monkey held shares of Block, Inc. (NYSE:SQ). Andreas Halvorsen’s Viking Global owned 12.3 million shares valued at $545 million, making it the largest investor among them.

Here is what Baron FinTech Fund has to say about Block, Inc. (NYSE:SQ) in its Q3 2023 investor letter:

“Block, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to a confluence of factors, including slowing growth, a brief system outage, and the departure of a key executive who ran the Square business segment. Ongoing investor concerns over consumer spending and a recession did not help sentiment. Nevertheless, Block reported strong quarterly results with 27% gross profit growth and adjusted EBITDA more than doubling. We believe Block’s businesses are resilient, and greater management focus on cost discipline should drive further margin expansion. We continue to own the stock due to Block’s long runway for growth, durable competitive advantages, and track record of innovation.”

7. PDD Holdings Inc. (NASDAQ:PDD)

5-Year Annual Sales Growth: 79.93%

Number of Hedge Fund Holders: 66

Shanghai, China-based PDD Holdings Inc. (NASDAQ:PDD) is a multinational commerce group that owns and operates a portfolio of businesses. It has established a network of sourcing, logistics, and fulfillment capabilities to support its underlying businesses. Pinduoduo, one of its prominent platforms, is a mobile-only marketplace that facilitates connections between millions of agricultural producers and consumers throughout China.

Morgan Stanley designated PDD Holdings Inc. (NASDAQ:PDD) as its top Chinese pick for 2024 in December. The firm anticipates that PDD Holdings Inc’s. (NASDAQ:PDD) business model and shifts in consumer behavior in China will lead to an increase in market share for the company.

As of the end of the third quarter of 2023, 66 hedge funds out of the 910 funds tracked by Insider Monkey held stakes in PDD Holdings Inc. (NASDAQ:PDD). The largest hedge fund stakeholder of PDD Holdings Inc. (NASDAQ:PDD) was Lei Zhang’s Hillhouse Capital Management, which owns a $721 million stake in the company.

PDD Holdings Inc. (NASDAQ:PDD) joins the ranks of Advanced Micro Devices, Inc. (NASDAQ:AMD), Tesla, Inc. (NASDAQ:TSLA), and Mercadolibre, Inc. (NASDAQ:MELI), as a decent candidate for a growth stock portfolio.

6. Shopify Inc. (NYSE:SHOP)

5-Year Annual Sales Growth: 52.88%

Number of Hedge Fund Holders: 69

Shopify Inc. (NYSE:SHOP) is a leading provider of internet infrastructure for commerce, offering tools that empower businesses to initiate, expand, market, and oversee retail operations of any scale. Widely used by millions of businesses across 175 countries, its platform and services play a crucial role in supporting diverse enterprises.

In its third-quarter earnings report, Shopify Inc. (NYSE:SHOP) experienced a significant 25% surge in total revenue, reaching $1.7 billion compared to the previous year. Monthly recurring revenue showed robust growth, with a 32% increase, reaching $141 million, driven by sustained growth across all of Shopify’s subscription plans. Additionally, the company reported an operating income of $122 million, marking a substantial improvement from the $346 million loss reported a year ago.

As of Q3 2023, 69 out of the 910 hedge funds tracked by Insider Monkey owned shares of Shopify Inc. (NYSE:SHOP), valued at $3.9 billion. Cathie Wood’s hedge fund reported owning a stake worth $379.54 million by the end of the quarter.

Here is what Baron Global Advantage Fund has to say about Shopify Inc. (NYSE:SHOP) in its Q3 2023 investor letter:

“Shopify Inc. is a cloud-based software provider for multi-channel commerce. Shares gave back some of their strong performance from the first half of 2023, declining 15.5% on the back of rising concerns related to the health of the consumer and the expansion of TikTok and Temu into the U.S. While we are cognizant of these near-term risks, we believe that Shopify will continue to benefit from its position as the commerce operating system for its merchants. Rather than replacing Shopify, various selling channels, including TikTok, are managed within the platform, which should enable Shopify to maintain its competitive advantage over the long term. During the quarter, Shopify announced an agreement with Amazon that will allow merchants to offer Buy with Prime within the Shopify ecosystem, enabling Shopify to act as the payments provider for these transactions and alleviating a key concern. Lastly, the company also reported strong financial results, including 17% year-over-year gross merchandise volume growth, 31% revenue growth, and consensus-beating non-GAAP operating income that outpaced estimates by over $90 million. We remain shareholders due to Shopify’s strong competitive positioning, innovative culture, and long runway for growth, as it still holds less than a 2% share of the global commerce market.”

Click to continue reading and see the Growth Stock Portfolio: 5 Companies with At Least 30% Annual Growth Rates.