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 MicroStrategy Incorporated (NASDAQ:MSTR) 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).
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MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 44
Upside Potential as of February 19: 66.13%
MicroStrategy Incorporated (NASDAQ:MSTR), doing business as Strategy, specializes in AI-powered enterprise analytics software and services. It enables organizations globally to derive actionable insights from their data. Through its MicroStrategy ONE platform and specialized services like MicroStrategy Cloud for Government, it empowers users across many industries and government sectors to make data-driven decisions.
However, the company’s core business revolves around its Bitcoin Treasury Strategy, making it the world’s largest corporate holder of Bitcoin. As of February 2, it held 471,107 Bitcoins, having acquired 258,320 in 2024 alone for $22.1 billion. This accumulation is funded through capital market activities, including equity and debt offerings. Its financial strategy is marked by significant capital raising, including the “21/21 Plan” to secure $42 billion for Bitcoin purchases. It already raised $18.8 billion through equity and $6.2 billion through convertible notes.
Its focus on Bitcoin has led to the development of new KPIs like BTC Gain and BTC Dollar Gain, which showcase the performance of its Bitcoin holdings. In 2024, the BTC Gain was 140,538 Bitcoins, which translated to a $13.1 billion BTC Dollar Gain. Moving forward, MicroStrategy Inc. (NASDAQ:MSTR) targets a minimum 15% BTC Yield and a $10 billion BTC Dollar Gain for 2025.
Overall, MSTR ranks 1st on our list of best growth stocks to invest in according to analysts. While we acknowledge the growth potential of MSTR, 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 MSTR 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.
