In this article, we discuss the 10 best cheap growth stocks to buy now.
Two fundamental investment techniques are growth investing and value investing. Growth stocks are shares of companies that are expected to grow at a significantly faster rate than the rest of the market. Growth stocks usually do not pay dividends as the growth strategy requires reinvestments of profits in the business to generate higher returns.
In the past decade, some growth stocks outperformed the market, particularly in the technology sector. Unfortunately for growth stock investors, the rapid rise in interest rates by the Federal Reserve in 2022 has resulted in some movement out of growth stocks. Given the headwinds investors face in this macroeconomic backdrop, stocks could continue to decline if economic data fails to meet expectations. As such, it could be a good idea to diversify across different stocks and sectors. There could also be an opportunity for long term investors to buy high quality stocks given the lower valuations.
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Our Methodology:
To find cheap growth stocks, we took stocks with the next 5 year annual EPS growth estimates of over 20% according to Finviz as of September 26 that also trade for below the average analyst target price according to Finviz by a substantial margin.
We then ranked 10 of those stocks based on the number of hedge funds in our database that held shares in the same stocks at the end of Q2 2022.
Best Cheap Growth Stocks To Buy Now
10. M&T Bank Corporation (NYSE:MTB)
Number of hedge fund holders: 39
Based in New York, M&T Bank Corporation (NYSE:MTB) offers retail and business banking services.
Although banks aren’t usually considered growth stocks, M&T Bank Corporation (NYSE:MTB) has a next 5 year expected EPS growth rate of 22.31% according to Finviz. If that occurs, M&T Bank Corporation (NYSE:MTB) could grow its earnings per share faster than what’s expected for the market.
M&T Bank Corporation (NYSE:MTB) could also be a cheap stock given that the average analysts’ target price for M&T Bank Corporation (NYSE:MTB) is $206.74, which is higher than its current price.
Our hedge fund data shows that M&T Bank Corporation (NYSE:MTB) was held by 39 hedge funds in the second quarter, with a total stake value of $1 billion. Citadel Investment Group was the largest stakeholder in the company, holding 1.93 million shares worth $309.07 million.
Alongside NVIDIA Corporation (NASDAQ:NVDA), Booking Holdings Inc. (NASDAQ:BKNG), and Amazon.com, Inc. (NASDAQ:AMZN), M&T Bank Corporation (NYSE:MTB) is a cheap growth stock that many hedge funds in our database owned at the end of Q2 2022.
9. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of hedge fund holders: 39
With over 3000 restaurants Chipotle Mexican Grill, Inc. (NYSE:CMG) is a global food chain. Although it’s already a big company, analysts expect Chipotle Mexican Grill, Inc. (NYSE:CMG) to grow EPS by an average annual rate of 26.11% over the next 5 years.
In July 2022, the company announced its Q2 results, reporting $2.21 billion in revenue with a normalized EPS of $9.30, which beat the estimate by $0.26. Analysts have a price target of $1,798.79 per share, which makes the stock cheap to some investors given the price at the end of September 29 of $1,543.35.
At the end of the second quarter of 2022, 39 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in Chipotle Mexican Grill, Inc. (NYSE:CMG), compared to 38 in the preceding quarter worth $2.95 billion. Pershing Square was the largest stakeholder in the company, holding 1.10 million shares worth $1.44 billion.
8. ASML Holding N.V. (NASDAQ:ASML)
Number of hedge fund holders: 47
ASML Holding N.V. (NASDAQ:ASML) operates in the semiconductors industry. The company specializes in advanced semiconductor equipment systems.
In July the company posted earnings for the second fiscal quarter of 2022, reporting normalized EPS of $3.60, beating analyst expectations by $0.06. The revenue over the period was $5.53 billion, beating market estimates by $148.55 million.
Although ASML Holding N.V. (NASDAQ:ASML) already is a huge company, the company also has a next 5 year expected EPS growth rate of 29.80%.
As of September, analysts have an average stock price target of $682.30, which makes the stock cheap to some investors given the current price.
At the end of Q2 2022, 47 hedge funds tracked by Insider Monkey owned stakes in ASML Holding N.V. (NASDAQ:ASML). These stakes hold a collective value of roughly $3.65 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q2.
7. General Electric Company (NYSE:GE)
Number of hedge fund holders: 49
General Electric Company (NYSE:GE) is a multinational that predominately operates in the energy sector, but has a foothold in numerous industries. These include aviation, healthcare, renewable energy, and power generation.
Although it’s already a huge company, General Electric Company (NYSE:GE) has a next 5 year expected EPS growth rate of 45.9%. Given its forward P/E ratio of 14.01 as of September 26, the stock is considered cheap by some investors.
At the end of the second quarter of 2022, 49 hedge funds in the database of Insider Monkey held stakes worth $3.80 billion in General Electric Company (NYSE:GE). Among these hedge funds, Eagle Capital Management was the company’s leading stakeholder.
6. Lululemon Athletica Inc. (NASDAQ:LULU)
Number of hedge fund holders: 50
Based in Canada, Lululemon Athletica Inc. (NASDAQ:LULU) is an athletic apparel retailer.
In September 2022, JPMorgan analyst Matthew Boss raised the price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $464 from $396 and kept an Overweight rating on the shares. The average analyst price target of the stock is $384.48.
Lululemon Athletica Inc. (NASDAQ:LULU) also is expected to grow earnings per share by an average of 21.73% per year over the next five years.
At the end of the second quarter of 2022, 50 hedge funds in the database of Insider Monkey held stakes worth $1.26 billion in Lululemon Athletica Inc. (NASDAQ:LULU). Citadel Investment Group was the largest stakeholder in the company, with shares worth $290.49 million.
Like Lululemon Athletica Inc. (NASDAQ:LULU), NVIDIA Corporation (NASDAQ:NVDA), Booking Holdings Inc. (NASDAQ:BKNG), and Amazon.com, Inc. (NASDAQ:AMZN) are cheap growth stocks that many hedge funds in our database own at the end of Q2 2022.
5. Autodesk, Inc. (NASDAQ:ADSK)
Number of hedge fund holders: 53
Autodesk, Inc. (NASDAQ:ADSK) is a 3D design, engineering, and entertainment software developer company.
Although it is already a huge company, the company has a next 5 year expected EPS growth rate of 23.35%. Analysts also have an average price target of $256.8 per share.
In September 2022 Autodesk, Inc. (NASDAQ:ADSK) formed a strategic partnership with Epic Games to accelerate innovative development.
Insider Monkey found 53 hedge funds having stakes in Autodesk, Inc. (NASDAQ:ADSK) at the end of Q2 2022. The total value of these stakes amounted to $95 million, up from $1.41 billion. As of September 16, Impax Asset Management is the largest shareholder in Autodesk, Inc. (NASDAQ:ADSK) and owns shares worth $221.23 million. The investment covers 1.07% of the fund’s 13F portfolio.
4. Charter Communications, Inc. (NASDAQ:CHTR)
Number of hedge fund holders: 68
Charter Communications, Inc. (NASDAQ:CHTR) is a broadband service and cable operating company in the US that operates in residential as well as commercial industries.
On July 29, the company released earnings for the fiscal second quarter of 2022. The company generated revenue of $13.60 billion. The normalized EPS reported was $8.80. The company has a next 5 year expected EPS growth rate of 29.27%.
On 28 September 2022, analyst Douglas Mitchelson of Credit Suisse maintained an Outperform rating on Charter Communications, Inc. (NASDAQ:CHTR) and lowered the firm’s price target from $676 to $551. Analysts have an average price target of $565.03 per share.
At the end of the second quarter of 2022, 68 hedge funds in the database of Insider Monkey held stakes worth $5.7 billion in Charter Communications, Inc. (NASDAQ:CHTR). Harris Associates is the largest shareholder in Charter Communications, Inc. (NASDAQ:CHTR) and owns shares worth $1.95 Billion. The investment covers 3.1% of the fund’s 13F portfolio.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund holders: 84
NVIDIA Corporation (NASDAQ:NVDA) offers solutions for graphics, computing, and networking. Given the demand for GPUs, the company’s earnings are expected to grow by an average annual rate of 23.4% over the next 5 years. In the Q2 2022, the company also reported $6.70 billion in revenue and reported normalized EPS of $0.51.
In September, analyst Ambrish Srivastava of BMO Capital decreased the firm’s price target from $230 to $210 while maintaining an Outperform rating on the stock. Analysts have an average price target of $196.99.
Ken Griffin’s Citadel Investment Group is NVIDIA Corporation (NASDAQ:NVDA)’s largest investor. It owns 17.17 million shares that are worth $2.68 billion. At the end of the second quarter of 2022, 84 hedge funds in the database of Insider Monkey held stakes worth $3.31 billion in NVIDIA Corporation (NASDAQ:NVDA).
2. Booking Holdings Inc. (NASDAQ:BKNG)
Number of hedge fund holders: 93
Booking Holdings Inc. (NASDAQ:BKNG) provides travel and restaurant online reservations and related services worldwide.
Analysts expect the company to grow earnings by an average annual rate of 48.81% over the next five years.
On September 12, 2022, Tom White, an analyst with DA Davidson, decreased the company’s price target for Booking Holdings from $2,300 to $2,150 while maintaining a Neutral rating on the stock. The average analyst price target for the stock is $2397.46.
As of Q2 2022, 93 of the 895 hedge funds tracked by Insider Monkey have positions in Booking Holdings Inc. (NASDAQ:BKNG), worth $5.5 billion. Its largest shareholder is Ken Griffin’s Citadel Investment Group with ownership of 761,500 shares valued at $1.3 billion.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of hedge fund holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) is a multinational which focuses on retail sales of consumer products and subscriptions.
Even though it is one of the largest companies in the world already, the stock is expected to grow earnings per share by an average annual rate of 33.25% over the next 5 years. Analysts also have an average price target of $171.18 per share for the stock.
As of Q2 2022, 252 of the 895 hedge funds tracked by Insider Monkey have positions in Amazon.com, Inc. (NASDAQ:AMZN), worth $30.07 billion. Its largest shareholder is Ken Griffin’s Citadel Investment Group with shares worth $7.01 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
Amazon.com, Inc.(NASDAQ:AMZN) is the world’s largest retailer and cloud services provider. Shares of Amazon declined 35% in the quarter due to weaker-than-expected profits resulting from an overcapacity of resources coming out of COVID. We expect Amazon to grow into its retail capacity in the quarters to come, which would enable it to improve profitability accordingly. Amazon remains one of our largest holdings due to its durable competitive advantages with a leading position in multiple trillion-dollar markets with a long runway for growth
You can also take a look at Simon Sadler’s Segantii Capital is Bullish on These 10 Stocks and 10 Best Stocks to Buy Now According to Billionaire Andreas Halvorsen.
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Disclosure. None. 10 Best Cheap Growth Stocks To Buy Now is originally published on Insider Monkey.
