We recently published a list of 12 Best Growth Stocks to Invest In According to Analysts. In this article, we are going to take a look at where Manhattan Associates, Inc. (NASDAQ:MANH) stands against other best growth stocks to invest in according to analysts.
Companies experiencing above-average earnings growth, which is often fueled by innovations and market expansions, are known as growth stocks. However, investing in them requires more than just chasing their rising share prices. These companies typically command higher valuations than their peers, which reflects investor confidence in their future potential. While they offer the prospect of substantial returns, they also come with heightened volatility and are susceptible to economic pressures like inflation and supply chain disruptions. Despite recent market fluctuations, periods of decline can present strategic entry points for long-term investors.
On February 20, Adam Crisafulli, Vital Knowledge founder, and Ryan Detrick, Carson Group chief market strategist, joined ‘Closing Bell Overtime’ on CNBC to discuss the state of the market. Detrick addressed the broadening nature of the market and the lack of panic following recent Fed minutes. He noted that all 11 sectors have increased year-to-date, with 7 sectors outperforming the S&P 500. Detrick highlighted that after two consecutive years of over 20% gains, the market has continued its upward trajectory, showing an increase of over 4%, almost 5%, so far this year. He emphasized that surprises in a bull market typically lean towards positive outcomes and reiterated that the ongoing rotation among sectors is beneficial for investors because it allows for a diversified portfolio.
Crisafulli then shifted the focus to specific companies which are set to report earnings. He connected these companies to trends in digital payments and marketing, emphasizing the role of data in driving customer loyalty and business growth in a modern economy. He discussed a broader theme of valuation reversion among high-multiple stocks and suggested that cheaper segments of the market are starting to catch up in terms of valuation expansion. Detrick added to this by discussing record highs for major indexes such as the S&P 500 and NASDAQ 100, as well as European indices like the DAX and Stoxx Europe 600. He also mentioned gold trading at record levels and questioned whether it is wise to invest at these heights or if the opportunity has passed. Detrick explained that they incorporated gold into their tactical models back in March 2023, adding more during a pullback post-election when the dollar rose sharply. He attributed gold’s rise to central bank indecision and suggested that the US dollar may have peaked. He advocated for including gold in a diversified portfolio, particularly within a 60-40 asset allocation model.
The overall discussion underscored the importance of diversification in investment strategies amidst changing market dynamics.
Methodology
We used stock screeners to compile a list of the top growth stocks. We then selected 12 stocks that had high average upside potential of over 30% and were the most popular among elite hedge funds. The stocks are ranked in ascending order of their average upside potential. We’ve also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A woman and man in formal attire in a meeting room discussing the latest enterprise solutions technology from the company.
Manhattan Associates, Inc. (NASDAQ:MANH)
Number of Hedge Fund Holders: 34
Upside Potential as of February 19: 46.63%
Manhattan Associates, Inc. (NASDAQ:MANH) provides software solutions that empower businesses to optimize supply chain, inventory, and omni-channel operations. It offers products like warehouse and transportation management systems, alongside omnichannel and inventory optimization tools. It serves diverse industries worldwide, enabling them to navigate the complexities of modern commerce.
In Q4 2024, the company’s cloud subscription revenue surged by 26% year-over-year. It grew by 32% for the full year 2024. The company anticipates maintaining a 20%+ cloud subscription revenue growth rate over the next several years, with projections indicating that cloud revenue will likely outpace services revenue by the end of 2026. This growth comes from the acquisition of new customers, the transition of existing on-premise customers to cloud-based solutions, and the successful cross-selling of its expanding product portfolio. With over 80% of on-premise customers yet to migrate, there’s an opportunity for continued cloud growth. Furthermore, a pipeline of potential new customers, representing ~35% of demand, supports this upward trajectory.
The company is heavily invested in innovation, allocating $138 million to R&D in 2024. This investment is driving the development of advanced cloud-native solutions, such as Manhattan Active Supply Chain Planning and enhanced PoS systems, which are broadening its market reach. For 2025, Manhattan Associates, Inc. (NASDAQ:MANH) is forecasting cloud revenue to be between $405 and $410 million.
Baird Mid Cap Growth Equity Strategy stated the following regarding Manhattan Associates, Inc. (NASDAQ:MANH) in its Q2 2024 investor letter:
“We made several adjustments to our technology sector mix. We also added Manhattan Associates, Inc. (NASDAQ:MANH) and Vertiv Holdings. Manhattan Associates provides enterprise grade warehouse management software. As a market leader, we believe Manhattan will benefit from a continuation of legacy software upgrades.”
Overall, MANH ranks 7th on our list of best growth stocks to invest in according to analysts. While we acknowledge the growth potential of MANH, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MANH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
