We recently compiled a list of the 10 Best Revenue Growth Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Shopify Inc. (NYSE:SHOP) stands against the other revenue growth stocks.
Outlook for the Year 2025: A Positive Year for Equities?
Citigroup has forecasted 2025 to be a positive and strong year for global stocks. Citi expects a rally in global equities to extend into the year 2025 and estimates a 10% EPS growth for global equities which is slightly below analysts’ consensus of 13%.
The stance was that declining interest rates and easing inflation could help boost corporate earnings. The major world stock benchmark, MSCI All Country World Index Local, is expected to reach 1,140 points by the end of this year which signals a 10% increase from its previous close of 1,035.46. Citi added that the United States and emerging market regions could witness the most robust earnings per share growth of about 15%.
Citi remains ‘overweight’ on U.S. equities but believes that the new Trump administration brings a lot of uncertainty with potential tariffs, tax cuts, and deregulation resulting in a ‘complicated mix of favorable and adverse economic effects’. In 2024, the S&P 500 index rallied 24%, driven by the expected Fed rate cuts, optimism relating to Artificial Intelligence, and the potential deregulation under the new US President-elect. Regarding the effect of these drivers on 2025, Citigroup analysts stated:
“While AI is no longer expected to provide as much EPS growth advantage vs. the rest of the index, any continuation of USD strength and policy uncertainty on tariffs could extend its outperformance”
Our Methodology:
In order to compile a list of the 10 best revenue growth stocks to buy according to hedge funds, we first used a stock screener to screen stocks that have more than $2 billion market cap and at least 25% revenue growth over the past 5 years. Moving on, we shortlisted the top 10 stocks from our list which had the highest revenue growth and were the most popular among hedge funds. The 10 best revenue growth stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund sentiment, as of Q3.
At Insider Monkey we are obsessed with 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).
An enthusiastic customer completing a purchase and receiving an order confirmation via one of the companies online sales channels.
Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 56
5-Year Revenue Growth: 42.11%
Shopify Inc. (NYSE:SHOP) is a leading commerce technology company that offers essential internet infrastructure for commerce. SHOP powers millions of businesses in more than 175 countries globally through an all-in-one commerce platform to start, run, and grow a business.
With its unified commerce platform becoming the go-to choice for merchants of all sizes, the firm continues to position itself as a leader in powering commerce anywhere, anytime. The opportunity stands large and growing for the firm in a massive global market with accelerated e-commerce penetration. The firm is creating and expanding its total addressable market through more products, more geographies, and more merchant sizes.
Shopify Inc. (NYSE:SHOP) demonstrates the durability of its business in its financials. The company most recently closed its sixth consecutive quarter of over 25% revenue growth excluding logistics by posting a 26% revenue growth. Through the year 2024, it boosted its free cash flow margin sequentially each quarter. Since the firm has grown its Gross Merchandise Volume over the preceding 5 years, the story comes down to the fact that when merchants grow their sales, they tend to reinvest in their business eventually making Shopify more successful.
Overall SHOP ranks 10th on our list of the best revenue growth stocks to buy according to hedge funds. While we acknowledge the potential of SHOP as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than SHOP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
