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10 Best-Performing Growth Stocks in November 2022

In this article, we discuss the 10 best-performing growth stocks in November 2022. If you want to see more stocks in this selection, 5 Best-Performing Growth Stocks in November 2022

Stocks climbed on November 30 as Federal Reserve Chair Jerome Powell reassured investors and businesses that the aggressive rates policy by the central bank will be controlled. Resultantly, the Dow Jones Industrial Average climbed 1%, the tech-heavy Nasdaq rose 3.2%, and the benchmark S&P 500 gained 2%. Job openings declined in October, a promising sign for the Fed as it aims to control demand.

The three benchmark indices in the United States – The Dow Jones Industrial Average, Nasdaq Composite, and the S&P 500 have reported gains over the last month as of November 30, rising 4.54%, 2.84%, and 4.14%, respectively. While investors usually seek shelter in value plays during market downturns, it is prudent to focus on near-term share price appreciation provided by growth equities. 

Some of the best performing growth stocks over the month of November include JD.com, Inc. (NASDAQ:JD), Alibaba Group Holding Limited (NYSE:BABA), and Futu Holdings Limited (NASDAQ:FUTU). 

Our Methodology 

We selected growth stocks with a price-to-earnings ratio of more than 25 and 1-month share price gains of at least 35% as of November 30 for this analysis. The following growth stocks are ranked according to their share price gains over the last month. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. 

Best-Performing Growth Stocks in November 2022

10. American Eagle Outfitters, Inc. (NYSE:AEO)

Number of Hedge Fund Holders: 27

1-Month Share Price Gain as of November 30: 35.08%

American Eagle Outfitters, Inc. (NYSE:AEO) is a Pennsylvania-based specialty retailer that provides clothing, accessories, and personal care products under the American Eagle and Aerie brands. On November 22, American Eagle Outfitters, Inc. (NYSE:AEO) reported a Q3 GAAP EPS of $0.42 and a revenue of $1.24 billion, outperforming Wall Street estimates by $0.21 and $30 million, respectively. As of November 30, American Eagle Outfitters, Inc. (NYSE:AEO) stock has gained over 35% in the last month. 

On November 23, BMO Capital analyst Daniel Stroller raised the price target on American Eagle Outfitters, Inc. (NYSE:AEO) to $14 from $10 and kept a Market Perform rating on the shares. The analyst cited American Eagle Outfitters, Inc. (NYSE:AEO)’s “strong” Q3 earnings beat and “significant” margin improvement. However, he added that while the management is “clearly executing on controllables”, he remains neutral on the stock given the macro concerns, industry promotions, and inventory builds.

According to Insider Monkey’s data, 27 hedge funds were bullish on American Eagle Outfitters, Inc. (NYSE:AEO) at the end of Q3 2022, compared to 29 funds in the prior quarter. Gavin Baker’s Atreides Management is a prominent position holder in the company, with 3.7 million shares worth $36.7 million. 

Like JD.com, Inc. (NASDAQ:JD), Alibaba Group Holding Limited (NYSE:BABA), and Futu Holdings Limited (NASDAQ:FUTU), American Eagle Outfitters, Inc. (NYSE:AEO) is one of the best-performing growth stocks to watch. 

9. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 105

1-Month Share Price Gain as of November 30: 37.50%

Alibaba Group Holding Limited (NYSE:BABA), a Chinese technology conglomerate, was one of the best-performing growth stocks in November 2022. On November 17, Alibaba Group Holding Limited (NYSE:BABA) reported a Q2 non-GAAP EPADS of $1.82, beating estimates by $0.17. The revenue climbed 3% year-over-year to $29.12 billion. However, it fell short of Wall Street forecasts by $490 million. 

On November 18, UBS analyst Jerry Liu maintained a Buy rating on Alibaba Group Holding Limited (NYSE:BABA) but lowered the price target on the shares to $135 from $140 following its Q2 results. The company is one of multiple names in his coverage for macro improvement and represents a “value play” at 9-times expected forward earnings, but investors should expect that growth will slow in the December quarter before rallying next year, the analyst told investors.

According to Insider Monkey’s data, 105 hedge funds were long Alibaba Group Holding Limited (NYSE:BABA) at the end of Q3 2022, compared to 106 funds in the last quarter. David Blood and Al Gore’s Generation Investment Management is a significant stakeholder of the company, with 4.50 million shares worth $360.7 million. 

Polen Capital made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its October investor letter:

“Alibaba Group Holding Limited (NYSE:BABA) is the leading e-commerce company in China. The stock was weak over the quarter as they reported a quarterly revenue decline. The company has been heavily impacted by the continued covid-19 lockdowns throughout China and the aggressive rate increases and deteriorating outlook for China’s economy have weighed heavily on the stock. The share price has also been under pressure due to the U.S. Securities and Exchange Commission’s plans to delist Chinese tech stocks in 2024 if they do not provide access to audit files.”

8. Sunrun Inc. (NASDAQ:RUN)

Number of Hedge Fund Holders: 47

1-Month Share Price Gain as of November 30: 37.72%

Sunrun Inc. (NASDAQ:RUN) is a California-based company engaged in the design, development, installation, and maintenance of residential solar energy systems in the United States. On November 2, the company reported a Q3 GAAP EPS of $0.96 and a revenue of $631.91 million, topping Wall Street consensus by $1.01 and $63.28 million, respectively. Revenue for the period climbed 44% year-over-year. Sunrun Inc. (NASDAQ:RUN) reported customer additions of 35,760 in Q3 2022, bringing total customers to 759,937, representing a 21% year-over-year growth. 

On November 14, Deutsche Bank analyst Corinne Blanchard assumed coverage of Sunrun Inc. (NASDAQ:RUN) with a Buy rating and a $36 price target. The analyst’s bullish outlook on the solar space is “underpinned by considerable growth opportunities” for the U.S. residential sector and the “most powerful and positive regulatory environment the industry has ever seen.” Tailwinds will “outshine any short-lived negatives,” the analyst told investors. The analyst “favors quality names that look well set to benefit from a growing untapped market” and higher solar demand in the U.S. and in primary international markets. She said Sunrun Inc. (NASDAQ:RUN) is well positioned to take advantage from the present positive policy momentum for residential solar.

Among the hedge funds tracked by Insider Monkey, 47 funds were long Sunrun Inc. (NASDAQ:RUN) at the end of September 2022, compared to 36 funds in the prior quarter. William B. Gray’s Orbis Investment Management is the biggest position holder in the company, with 12.2 million shares worth $337 million. 

Here is what Horizon Kinetics had to say about Sunrun Inc. (NASDAQ:RUN) in its Q2 2021 investor letter:

“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business on the table is Sunrun. Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.

To start at the top of the income statement, Sunrun shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.

Let’s simply accept that investors have correctly anticipated Sunrun’s future success and make that the starting point for a valuation exercise.

If, 10 years from now, Sunrun is ultimately valued at 25x net income, and if today’s $9.5 billion valuation is appropriate, that would require $380 million of net income ($9,500 million ÷ 25).

Let’s say Sunrun will have the same net profit margin as the average S&P 500 company, which is 10%. That means it would need $3,800 million of sales to generate that level of earnings ($380 mill ÷ 10%).

Since sales are now $920 million, they would have to rise by 4.1x in the next 10 years. That would require annual sales growth of 15.2%.

You see how neatly that all works: investors accept the company’s 10-year, 15% annual sales growth projections, and if a 10% net profit margin and a P/E of 25x earnings are reasonable, then the company will have a $9.5 billion market cap at that time. Except that is the current price. That means a 10-year return of zero.

In order to get a 10% annualized return from the stock, Sunrun would need to be priced at a P/E of 65x its earnings 10 years from now, if at a 10% net margin. Or it would have to have some combination of lower P/E and higher growth and/or higher profit margin.

In the meantime, this is Sunrun’s recent pattern of revenue growth and profitability (the company did recently increase its estimate of installed-capacity growth in 2021 from 20-25% to a new estimate of 25% to 30%).

For the time being, Sunrun loses an extraordinary amount of money, an amount that has been getting larger. Perhaps there are economies of scale that will manifest in the future,so that it will attain profitability. Perhaps from the roughly one-half of Sunrun’s revenues that are from long-term customer service agreements that run up to 25 years. For now, though, the company would seem to require a lot of external financing, and that is one of the greatest business risks.”

7. Lattice Semiconductor Corporation (NASDAQ:LSCC)

Number of Hedge Fund Holders: 35

1-Month Share Price Gain as of November 30: 41.04%

Lattice Semiconductor Corporation (NASDAQ:LSCC) is one of the best-performing growth stocks as of November 2022. Lattice Semiconductor Corporation (NASDAQ:LSCC) is an Oregon-based company that develops and sells semiconductor products in Asia, Europe, and the Americas. On October 31, the company reported a Q3 non-GAAP EPS of $0.48 and a revenue of $172.5 million, outperforming Wall Street forecasts by $0.04 and $6.23 million, respectively. Revenue for the fourth quarter of 2022 is expected to be between $170 million and $180 million, versus a $169.5 million consensus. 

Susquehanna analyst Christopher Rolland on November 15 raised the price target on Lattice Semiconductor Corporation (NASDAQ:LSCC) to $75 from $72 and maintained a Positive rating on the shares. The analyst found the management to be more upbeat than peers, perhaps due to the newer greenfield opportunities such as Avant, PC, and the Nexus ramp.

According to the third quarter database of Insider Monkey, 35 hedge funds were bullish on Lattice Semiconductor Corporation (NASDAQ:LSCC), compared to 33 funds in the earlier quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital is the largest stakeholder of the company, with 2.5 million shares worth about $126 million. 

Here is what Artisan Partners specifically said about Lattice Semiconductor Corporation (NASDAQ:LSCC) in its Q2 2022 investor letter:

“Lattice Semiconductor Corporation (NASDAQ:LSCC) recently reported +30% revenue growth and +600bps of margin expansion. We believe multiple product and program launches throughout the remainder of the year will sustain the company’s solid fundamental momentum. Longer-term, Lattice is well-positioned to provide FPGA chips to data centers, new 5G infrastructure and to tap into low power/reprogrammable chips as well as the industrial and automotive end markets. In addition, its solid pipeline of new chips should expand its addressable market and margins.”

6. Pinduoduo Inc. (NASDAQ:PDD)

Number of Hedge Fund Holders: 54

1-Month Share Price Gain as of November 30: 45.85%

Pinduoduo Inc. (NASDAQ:PDD) is a Shanghai-based company that operates an e-commerce platform in the People’s Republic of China. On November 28, Pinduoduo Inc. (NASDAQ:PDD) reported a Q3 non-GAAP EPADS of $1.21 and a revenue of $4.99 billion, topping analysts’ estimates by $0.49 and $690 million, respectively. 

On November 30, Barclays analyst Jiong Shao raised the price target on Pinduoduo Inc. (NASDAQ:PDD) to $84 from $70 and kept an Overweight rating on the shares. Following 36% year-over-year revenue growth in Q2 after the largely restrictive two-month lockdown in Shanghai, Pinduoduo Inc. (NASDAQ:PDD) posted 65% year-over-year revenue growth for Q3 “when some of its larger peers delivered quite modest growth, at best,” the analyst told investors. 

According to Insider Monkey’s data, 54 hedge funds were bullish on Pinduoduo Inc. (NASDAQ:PDD) at the end of September 2022, up from 41 funds in the earlier quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 5.20 million shares worth nearly $326 million. 

In addition to JD.com, Inc. (NASDAQ:JD), Alibaba Group Holding Limited (NYSE:BABA), and Futu Holdings Limited (NASDAQ:FUTU), Pinduoduo Inc. (NASDAQ:PDD) is one of the growth stocks backed by smart investors. 

Here is what Tao Value has to say about Pinduoduo Inc. (NASDAQ:PDD) in its Q4 2021 investor letter:

“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue to grow with such a team with a strong culture.”

Click to continue reading and see 5 Best-Performing Growth Stocks in November 2022

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Disclosure: None. 10 Best-Performing Growth Stocks in November 2022 is originally published on Insider Monkey.

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