In this article, we discuss the 10 best growth stocks for 2022.
The optimism surrounding the global economic recovery has been dented by supply chain concerns and rising inflation. Ratings agency Moody’s estimates that advanced economies will collectively grow at a rate of 4.4% in 2022, down from 5.4% in 2021, but far ahead of the 3.2% contraction registered in 2020. In August, the estimated 2022 growth rate had stood at 4.5%. Market research firm IHS Markit has also echoed these predictions but expects the global GDP growth rate next year to hover around 4.2%. Overall, most analysts see growth slowing next year.
However, even as overall economic growth slows, the emerging conditions, such as easing supply pressures, slowing inflation, and improved confidence in the market due to the vaccine penetration, are likely to benefit certain sectors of the economy. A broad price correction is already underway in commodity markets. Consumer spending and industrial production are also registering robust gains, albeit with minor blips. Eurozone growth prospects are growing as well and the Chinese economy is rebounding.
Hedge funds and retail investors are loading up on growth stocks like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT). But in addition to these big names, we will take a look at some of the more affordable growth stocks with long-term growth prospects.
Our Methodology
These were picked based on upcoming growth catalysts, business fundamentals, and analyst ratings. The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Best Growth Stocks for 2022
10. Progyny, Inc. (NASDAQ:PGNY)
Number of Hedge Fund Holders: 28
Progyny, Inc. (NASDAQ:PGNY) provides fertility and family building solutions. The company has developed a solid relationship with doctors over the past few years and as delayed parenthood and egg freezing becomes more common, it looks set to benefit from increased consultancies.
Barclays analyst Sarah James recently raised the price target on Progyny, Inc. (NASDAQ:PGNY) stock to $72 from $64 and kept an Overweight rating on the shares, noting that the adoption curve for fertility benefits pointed to increased business for the firm in 2022.
At the end of the third quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $200 million in Progyny, Inc. (NASDAQ:PGNY), down from 39 in the previous quarter worth $290 million.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Progyny, Inc. (NASDAQ:PGNY) is one of the stocks attracting the interest of growth investors.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Progyny, Inc. (NASDAQ:PGNY) was one of them. Here is what the fund said:
“Two additional names in the health care sector in the quarter, partially funded with a sale, made strong contributions and helped push our relative exposure to the sector from underweight to overweight. We also added Progyny, a leading provider of fertility benefit management services to self-insured employers. This is an increasingly important, albeit relatively underpenetrated benefit for employers, particularly those seeking to improve access and support diversity, inclusion and equity initiatives.
Progyny realizes substantially better outcomes for patients (higher pregnancy rates, lower miscarriage rates and lower twins rates), which leads to significant cost savings for payers along with the obvious better outcomes for patients and families.
Progyny’s mission is to improve the employee experience around fertility issues in order to aid clients in employee recruitment and retention. The company offers a rare win-win-win for employers, employees and health systems, with clear savings and quality improvements. With the company still relatively underpenetrated in its total addressable market and with logical adjacencies (labs/diagnostics, return-to-work support) and demographic tailwinds (families getting started later leads to higher infertility risk), Progyny should sustain its elevated top-line growth profile.”
9. RAPT Therapeutics, Inc. (NASDAQ:RAPT)
Number of Hedge Fund Holders: 19
RAPT Therapeutics, Inc. (NASDAQ:RAPT) is a clinical-stage biopharma company that focuses on the development of oral molecule therapies. It recently announced positive topline results from a trial of RPT193, a drug under development for the treatment of atopic dermatitis.
In August, investment advisory SVB Leerink initiated coverage of RAPT Therapeutics, Inc. (NASDAQ:RAPT) stock with an Outperform rating and a price target of $49. Thomas Smith, an analyst at the advisory, issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Perceptive Advisors is a leading shareholder in RAPT Therapeutics, Inc. (NASDAQ:RAPT) with 2.9 million shares worth more than $90 million.
8. YETI Holdings, Inc. (NYSE:YETI)
Number of Hedge Fund Holders: 29
YETI Holdings, Inc. (NYSE:YETI) makes and sells leisure products. The company is growing revenue and margins. The stock has rallied 34% in the past two years, outperforming the S&P 500 by 11 percentage points. As the firm embarks on an aggressive expansion strategy, analysts predict that double-digits revenue growth will continue next year.
YETI Holdings, Inc. (NYSE:YETI) recently posted earnings for the third quarter, reporting earnings per share of $0.64, beating estimates by $0.04. The revenue over the period was $362 million, up 23% year-on-year and beating estimates by $5 million.
At the end of the third quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $255 million in YETI Holdings, Inc. (NYSE:YETI), down from 34 in the previous quarter worth $282 million.
In its Q2 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and YETI Holdings, Inc. (NYSE:YETI) was one of them. Here is what the fund said:
“We started new investment campaigns in YETI. YETI is a manufacturer of premium outdoor recreation products, including coolers and equipment, drinkware, and brand apparel and accessories. The company got its start in 2006 selling premium coolers to the hunting and fishing communities which were frustrated with equipment unable to stand up to their needs. Years later, YETI expanded into premium drinkware. These two product categories make up nearly 90% of the company’s sales today, but we see opportunities for YETI to extend its brand into additional categories over time. In addition, we believe an opportunity to increase brand awareness both domestically and internationally makes for a compelling profit cycle ahead. We used the pullback in the quarter to initiate a GardenSM position.”
7. Inari Medical, Inc. (NASDAQ:NARI)
Number of Hedge Fund Holders: 23
Inari Medical, Inc. (NASDAQ:NARI) is a medical device company based in California. In late October, the company announced positive results from a trial of 500 patients treated with FlowTriever, a device for the treatment of artery blockage.
Inari Medical, Inc. (NASDAQ:NARI) recently smashed market expectations on earnings per share and revenue by $0.01 and $9.8 million respectively. The company has a market cap of $4 billion and was founded in 2011.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Darsana Capital Partners is a leading shareholder in Inari Medical, Inc. (NASDAQ:NARI) with 1.4 million shares worth more than $115 million.
In its Q2 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Inari Medical, Inc. (NASDAQ:NARI) was one of them. Here is what the fund said:
“Inari Medical, Inc. offers catheter-based devices to remove clots from venous thromboembolism (“VTE”), the third most common vascular condition in the U.S. after heart attacks and strokes, and which can be fatal if left untreated. Shares declined during the quarter as high-growth companies with high valuations sold off. We maintain conviction, as the VTE treatment space is still in the very early days of converting to device-based interventions, and we believe Inari is well positioned to benefit.”
6. Trex Company, Inc. (NYSE:TREX)
Number of Hedge Fund Holders: 21
Trex Company, Inc. (NYSE:TREX) operates in the building products industry. There are many names in the building industry that are poised to do well as housing demand rebounds next year but Trex is best positioned to benefit from the boom given the high use of recycled content.
Stephens analyst Trey Grooms recently upgraded Trex Company, Inc. (NYSE:TREX) stock to Overweight from Equal Weight and raised the price target to $120 from $111, noting that the long-term demand for the company remained strong heading into the new year.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Montanaro Asset Management is a leading shareholder in Trex Company, Inc. (NYSE:TREX) with 493,000 shares worth more than $50 million.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Trex Company, Inc. (NYSE:TREX) is one of the stocks on the radar of hedge funds.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Trex Company, Inc. (NYSE:TREX) was one of them. Here is what the fund said:
“Just as the new home market has been hopping amid low interest rates and the greater need for space, the market for home improvement has also been robust for similar reasons. Decks have been perfect places for safe social gatherings during the pandemic, and ClearBridge portfolio holding Trex has been meeting demand with its composite decking made from recycled wood fibers and plastic waste.
Trex’s high-performance decking portfolio is made using more than 95% recycled content. Trex uses locally sourced reclaimed wood that would otherwise end up in landfills and so avoids cutting down trees to make its products. The recycled plastic film it uses comes from a variety of sources, including industrial shrink wrap, agricultural plastic sheeting and household plastic such as grocery and shopping bags. With the average 500-square foot composite Trex deck containing 140,000 recycled plastic bags, Trex is one of the largest plastic bag recyclers in the U.S. The company has also innovated ways of recycling dirtier plastics more likely to end up in landfills.
Trex has seen already strong demand get stronger during the pandemic; the company was sold out during much of 2020 and began expanding capacity across the U.S. to meet heightened demand. With lumber prices soaring amid the strong housing market, Trex’s composite decks are increasingly gaining share, especially in price-sensitive areas of the market, which bodes well for both the environment and shareholders.”
5. Sprout Social, Inc. (NASDAQ:SPT)
Number of Hedge Fund Holders: 29
Sprout Social, Inc. (NASDAQ:SPT) makes and sells web-based social media management tools. The company recently announced that it would be bringing social messaging app WhatsApp into the Sprout product suite. This will enable the firm to offer personalized customer service to enterprise clients. WhatsApp has over 2.5 billion active users globally.
Needham analyst Scott Berg recently raised the price target on Sprout Social, Inc. (NASDAQ:SPT) stock to $160 from $110 and kept a Buy rating on the shares, noting that there was confidence in the ability of the firm to deliver 30%+ revenue growth for the coming years.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Zevenbergen Capital Investments is a leading shareholder in Sprout Social, Inc. (NASDAQ:SPT) with 1.2 million shares worth more than $153 million.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Sprout Social, Inc. (NASDAQ:SPT) was one of them. Here is what the fund said:
“Sprout Social (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”
4. Lattice Semiconductor Corporation (NASDAQ:LSCC)
Number of Hedge Fund Holders: 19
Lattice Semiconductor Corporation (NASDAQ:LSCC) is a semiconductor manufacturing company based in Oregon. The firm is well poised to benefit from the increased government spending on American chipmakers in 2022 as supply chain pressures bite.
Lattice Semiconductor Corporation (NASDAQ:LSCC) posted earnings for the third quarter on November 2, reporting earnings per share of $0.28, beating estimates by $0.04. The revenue over the period was $131 million up 28% year-on-year.
At the end of the third quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $366 million in Lattice Semiconductor Corporation (NASDAQ:LSCC), down from 24 in the preceding quarter worth $306 million.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Lattice Semiconductor Corporation (NASDAQ:LSCC) was one of them. Here is what the fund said:
“Lattice Semiconductor is a vendor of field programmable gate array (FPGA) chips used in personal computers, 5G infrastructure, routers and switches, and servers, to name a few. The company now has a new board and management team—the current CEO joined from leading microprocessor provider Advanced Micro Devices in late 2018—which have embarked on a product-transformation journey. The company has refreshed its FPGA products in the small/low power segment of the market—making it more focused on addressing high return-on-investment use cases centered around power-efficient applications—carving itself a niche behind the two market leaders focused on high-end, Xilinx and Intel Corporation. In addition to providing FPGA chips to data centers and new 5G infrastructure— particularly compelling opportunities given these end markets are and will likely continue benefiting from strong secular tailwinds—we believe the company is well positioned to tap into lowpower/reprogrammable chips as well as industrial and automotive end markets.”
3. Varonis Systems, Inc. (NASDAQ:VRNS)
Number of Hedge Fund Holders: 27
Varonis Systems, Inc. (NASDAQ:VRNS) markets software products and related services. As enterprise spending on cybersecurity soars, Varonis could benefit from an expanding product suite in the area. In September, the company launched Data Classification Clouds, a solution that monitors and protects data across multiple apps.
In August, investment advisory Wolfe Research initiated coverage of Varonis Systems, Inc. (NASDAQ:VRNS) stock with an Outperform rating and a price target of $80. Analyst Alex Zukin identified the firm as “one of the best growth stories” in his coverage.
Among the hedge funds being tracked by Insider Monkey, Massachusetts-based firm Matrix Capital Management is a leading shareholder in Varonis Systems, Inc. (NASDAQ:VRNS) with 1.2 million shares worth more than $75 million.
2. TopBuild Corp. (NYSE:BLD)
Number of Hedge Fund Holders: 17
TopBuild Corp. (NYSE:BLD) is a Florida-based homebuilding company. It recently acquired Tonks Insulation and Shepherds Insulation, two homebuilding firms that have robust pipelines and generated over $6 million in revenue last year. The purchase adds to the specialty distribution capabilities of TopBuild ahead of 2022.
Truist analyst Keith Hughes recently raised the price target on TopBuild Corp. (NYSE:BLD) stock to $300 from $253 and kept a Buy rating on the shares, noting that the firm was showing good margin growth going into 2022.
At the end of the third quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $93 million in TopBuild Corp. (NYSE:BLD).
1. Trupanion, Inc. (NASDAQ:TRUP)
Number of Hedge Fund Holders: 16
Trupanion, Inc. (NASDAQ:TRUP) provides medical insurance for pets. The insurance industry has a compound annual growth rate of around 23% and Trupanion is one of the largest players in the sector. It has also built trust and confidence among customers that provides the company with a solid foundation for growth heading into 2022.
Trupanion, Inc. (NASDAQ:TRUP) smashed market expectations on earnings per share and revenue for the third quarter by $0.01 and $3.8 million respectively. The company has a market cap of $5 billion and was founded in 2000.
At the end of the third quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $259 million in Trupanion, Inc. (NASDAQ:TRUP).
In its Q3 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Trupanion, Inc. (NASDAQ:TRUP) was one of them. Here is what the fund said:
“Trupanion reported mixed earnings results, mostly due to higher-than-expected costs of new pet acquisition. The increased spending is intended to drive future growth. We continue to believe Trupanion’s long-term growth prospects and competitive positioning remain compelling in an underpenetrated U.S. pet insurance market.”
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Disclosure. None. 10 Best Growth Stocks for 2022 is originally published on Insider Monkey.
