We recently compiled the list of the 10 Best Fast Growth Stocks To Buy according to the hedge funds using the latest sentiment data. In this article, we are going to take a look at where Sarepta Therapeutics, Inc. (NASDAQ:SRPT) stands against the other fast growth stocks. Sarepta Therapeutics recently beat earnings expectations. They are the leader in gene therapy for Duchenne muscular dystrophy. They recently submitted a BLA supplement to expand the labeled population for their Duchenne gene therapy. The FDA recently informed Sarepta that they will imminently provide a draft label.
Growth stocks are those that are either growing their revenue in mid to high double or triple digit percentages or those who trade at significantly higher prices when compared to their earnings. Using a high P/E ratio is the more commonly accepted definition of growth stocks, and sometimes, investors are richly rewarded for their faith.
While we’ll get to the specifics later, there are several stock indexes and exchange traded funds that track growth stocks. Some of the more popular growth stock indexes and ETFs are Vanguard Growth Index Fund Admiral Shares (VIGAX) ETF and the S&P 500 Pure Growth stock index. The performance of these ETFs and indexes depends, for most part, on the economic climate. A well known investment principle is that growth stocks perform well when interest rates are low and consumers and businesses are able to comfortably splurge for pricey products and services.
Year to date, the Vanguard Growth Index Fund Admiral Shares (VIGAX) and the S&P 500 Pure Growth index are up by 15% and 12%, respectively. This allows the S&P stock index to match the benchmark index in performance, while the Vanguard Fund has gained more since the S&P is up by roughly 12% year to date.
Over the past twelve months, a period characterized by high but stable interest rates, easing inflation, robust economic growth, and the AI boom, the S&P 500 has gained 27.7%. The index bottomed in October 2023 and so did our ETF and index. The Vanguard ETF is up by 34.9% over the year, and the S&P Pure Growth index has lagged the broader index through its 24% gains. Compare these all around rosy figures with the 32% that the index lost between January 2022 and June 2022 and the additional 32% bled by the ETF and you’ll see how growth stocks are sensitive to high rates and inflation.
Therefore, trying to see where interest rates are heading would also serve one well when talking about fast growth stocks. On this front, one ‘proxy’ that can be used to gauge investor sentiment is the Russel 2000 index. This is a small cap stock index, and if investors become optimistic about lighter rates, then the shares rise since smaller firms are often more at risk from higher rates than corporate titans.
The Russell 2000 has been relatively flat year to date by having registered an unimpressive 2% in gains. This is unsurprising as the year has seen Wall Street progressively tone down rate cut expectations. However, from mid April to late May, the Russell 2000 has gained 6%, so perhaps the winds are changing for interest rates. However, this hasn’t been the case, since two of its strongest performing stocks have posted 100%+ in gains. One of these is a fast growth stock when compared to the broader benchmark multiple.
This stock is none other than the rather infamous Super Micro. If you’re unaware, Super Micro has been caught in the market’s artificial intelligence surge too since it is a semiconductor stock. It has a trailing twelve month price to earnings ratio of 49.27 which is high compared to the commonly accepted definition of a growth stock. However, Super Micro’s P/E ratio is lower than the semiconductor sector average of 82.75. The market trailing P/E for this data set is 52.28, and it represents 94 sectors. Within these sectors, 26 have a higher trailing P/E ratio than the market ratio, and among these, nearly half have a higher trailing P/E ratio than the semiconductor industry. However, the higher value for semiconductors is a clear example of how artificial intelligence has transformed the market.
Yet, even before AI was a part of daily media coverage, semiconductor stocks had already given us a historic growth story. This comes in the form of the chip designer AMD. AMD’s shares are up by a whopping 506% over the past five years, while the S&P 500 has gained 92% during the time period. Despite this stunning growth, the AI onset has led AMD to have a trailing P/E ratio of a whopping 232.51 (forward P/E is 45.66, which is precisely in tune with the sector’s 45.77). Between 2010 and 2025, AMD’s profitability trend started in 2018, and saw the P/E ratio jump to 515 in early 2023 when earnings took a hit from a glut in the semiconductor industry. AMD’s eight cents of EPS in the third quarter of 2023 also meant that as the market bumped its valuation due to AI, the P/E ratio soared 1,285 – making it a classic example of a fast growth stock. If you are looking for an AI stock that is more promising than AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
A laboratory technician in a white coat holding a microscope and examining a vial of biopharmaceuticals.
Our Methodology
To make our list of the best fast growth stocks, we first narrowed down the 20 stocks that had the highest trailing P/E ratios and five year and quarter over quarter revenue growth greater than 30%. These were ranked through the number of hedge funds that had bought the shares in Q1 2024 according to Insider Monkey’s data of hedge fund holdings. Moreover, for each of these stocks, we looked at how many hedge funds from our database held shares according to the last round of 13F filings. 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).
9. Sarepta Therapeutics, Inc. (NASDAQ:SRPT)
Number of Hedge Fund Investors In Q1 2024: 46
TTM P/E Ratio: 287.12
Sarepta Therapeutics, Inc. (NASDAQ:SRPT) is a classic fast growth stock since it belongs to the biotechnology industry. It’s also highly rated, with the average of 20 one year analyst share price targets being $169 and accompanied with a Strong Buy rating. Investment bank Morgan Stanley continued to share optimism for Sarepta Therapeutics, Inc. (NASDAQ:SRPT)’s muscular dystrophy treatments in March 2024, and the stock soared by 13% in less than two weeks in February after regulators decided to review an application for the treatment. Duchenne muscular dystrophy is a rare but severe genetic disorder, affecting mainly boys and leading to progressive muscle degeneration and weakness. Bullish hedge funds believe that Sarepta’s therapies have a sizable addressable market and potential for significant revenue growth, especially considering the lack of effective treatment options for DMD patients.
As of Q1 2024 end, 46 hedge funds part of Insider Monkey’s database had held a stake in Sarepta Therapeutics, Inc. (NASDAQ:SRPT). One of the largest stakes was worth $562 million and it was held by Kurt Von Emster’s VenBio Select Advisor.
Overall, Sarepta Therapeutics, Inc. (NASDAQ:SRPT) ranks ninth on our list of the best fast growth stocks. Click to see the 10 Best Fast Growth Stocks To Buy Now.
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Disclosure: None. This article is originally published at Insider Monkey.
