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12 Best Growth Stocks Under $25

In this article, we discuss 12 best growth stocks under $25. If you want to skip our discussion on the performance of growth stocks, head directly to 5 Best Growth Stocks Under $25.

In 1992, Fama and French explained the principles of value and growth investing styles. Value stocks have high book-to-market-value ratios, which means they have low prices relative to their intrinsic value and are perceived as undervalued due to high dividend yields. On the other hand, Fama and French described growth stocks as having low book-to-market-value ratios, indicating their potential to grow cash flows over time and generate higher returns on assets, which might not be fully reflected in their present book value. In the post-pandemic era, value investing has risen to prominence after 15 years of underperformance due to firmer inflation, higher yields, and strong economic growth. Market experts believe this signals a prolonged period of value dominance. Goldman Sachs Asset Management noted that in the past 15 years, investors have largely preferred growth investing, as it consistently outperformed until 2020. However, considering the potential for frequent style leadership shifts and long-term secular megatrends across different regions, having a balanced mix of both growth and value in strategic portfolios could be beneficial.

David Kudla, chief executive officer and chief investment strategist at Mainstay Capital Management, joined Bloomberg TV on July 7, 2023. Kudla noted that growth stocks have performed well in the first half of the year, and despite the recent spike in yields causing some concern, the outlook for the second half remains positive, especially for technology stocks like the “Magnificent Seven.” Microsoft and Apple are doing well, and while valuations for some stocks like Nvidia are high, their earnings performance is crucial. There’s a possibility of a correction for these high-flying stocks, but their long-term growth potential in the technological revolution is strong, making them different from the dot com era, added Kudla. The market leadership is also broadening, with small caps performing better in June and overall breadth in the market expanding.

After being a popular choice in the market during 2022, the value trade is now losing its charm. JPMorgan forecasted on February 27, 2023 that investors might consider going “outright underweight value versus growth” in the upcoming month or two. JPMorgan analyst Mislav Matejka wrote in a note:

“Our core view is that in the second half, market will be moving back to the recession trade, but even if the opposite scenario gains traction, value might not be the best place to be.”

Keeping this market outlook in mind, some of the best growth stocks under $25 include Coupang, Inc. (NYSE:CPNG), ZoomInfo Technologies Inc. (NYSE:ZI), and Sunrun Inc. (NASDAQ:RUN). 

Our Methodology

For this list, we used a stock screener and filtered stocks with high P/E ratios (over 50) which were priced under $25 as of July 26. Then, we sorted them in descending order of market cap to access the biggest companies in that list. After that we manually selected the largest companies in growth-oriented industries such as tech, e-commerce, solar, health information services, and automobiles.

We then sorted the following growth stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. 

Photo by Adam Nowakowski on Unsplash

Best Growth Stocks Under $25

12. Sportradar Group AG (NASDAQ:SRAD)

Number of Hedge Fund Holders: 10

Share Price as of July 26: $15.14

P/E Ratio as of July 26: 756.75

Sportradar Group AG (NASDAQ:SRAD) offers sports data services for the sports betting and media industries worldwide. It operates under the Betradar and Sportradar Media Services brands, providing critical software, data, and content to sports leagues, betting operators, and media companies. On May 10, Sportradar Group AG (NASDAQ:SRAD) reported a Q1 GAAP EPS of €0.02 and a revenue of €207.56 million, up 23.6% on a year-over-year basis. Revenue from the U.S. segment experienced a 55% growth, and for the third consecutive quarter, it achieved positive Adjusted EBITDA. Sportradar Group AG (NASDAQ:SRAD) anticipates its fiscal 2023 revenue to range between €902.0 million and €920.0 million, indicating a growth rate of 24% to 26% compared to fiscal 2022.

According to Insider Monkey’s first quarter database, 10 hedge funds were bullish on Sportradar Group AG (NASDAQ:SRAD), compared to 9 funds in the prior quarter. Joe Milano’s Greenhouse Funds is the largest stakeholder of the company, with 3.4 million shares worth $39.8 million.

Like Coupang, Inc. (NYSE:CPNG), ZoomInfo Technologies Inc. (NYSE:ZI), and Sunrun Inc. (NASDAQ:RUN), Sportradar Group AG (NASDAQ:SRAD) is one of the best growth stocks to watch. 

11. Certara, Inc. (NASDAQ:CERT)

Number of Hedge Fund Holders: 11

Share Price as of July 26: $19.18

P/E Ratio as of July 26: 213.11

Certara, Inc. (NASDAQ:CERT) offer software products and technology-enabled services for biosimulation in different stages of drug development, including drug discovery, preclinical and clinical research, regulatory submissions, and market access. The company’s biosimulation solutions aim to transform the drug development process and improve patient access to medicines. Certara, Inc. (NASDAQ:CERT) is one of the best growth stocks to watch.

On May 8, Certara, Inc. (NASDAQ:CERT) reported a Q1 non-GAAP EPS of $0.12, in-line with market estimates. The revenue increased 10.7% year-over-year to $90.3 million. However, it fell short of Wall Street estimates by $0.99 million. Revenue for full year 2023 is expected to fall between $370 million to $385 million, compared to the consensus estimate of $378.83 million. The expected adjusted diluted earnings per share for the full year are projected to lie between $0.50 to $0.55, as opposed to the consensus estimate of $0.52.

According to Insider Monkey’s first quarter database, 11 hedge funds were bullish on Certara, Inc. (NASDAQ:CERT), compared to 15 funds in the preceding quarter. Alkeon Capital Management is the largest position holder in the company.

Baron Discovery Fund made the following comment about Certara, Inc. (NASDAQ:CERT) in its Q1 2023 investor letter:

“We established a position in Certara, Inc. (NASDAQ:CERT), a leading bio-simulation company that accelerates the development of new pharmaceuticals by using its proprietary software, technology, and services to model and predict how drugs will behave in individual humans. Certara’s computer-aided mathematical modeling of biological processes and systems is used by drug developers to optimize the lengthy and expensive process of drug development, when the average time and cost to bring a new drug to market is a staggering 10 years and $2 billion, respectively. Certara helps its blue-chip customer base, spanning large biopharmaceutical to small biotechnology companies to make more timely go/no go decisions, inform appropriate clinical trial protocols, optimize dosing, and target statistically relevant patient populations, all of which are critical inputs to timely and cost-effective drug development.

The company, which generated $335 million in revenue in 2022, is a market leader, providing an integrated end-to-end platform used by over 2,300 biopharmaceutical companies and academic institutions across 70 countries. Since 2014, Certara customers have received over 90% of all of the new drug approvals by the FDA. Furthermore, 17 global regulatory authorities, including the FDA, Europe’s EMA, Health Canada, Japan’s PMDA, and China’s NMPA use Certara’s bio-simulation software to independently analyze, verify, and review regulatory submissions…” (Click here to read the full text)

10. Millicom International Cellular S.A. (NASDAQ:TIGO)

Number of Hedge Fund Holders: 12

Share Price as of July 26: $16.80

P/E Ratio as of July 26: 64.62

Millicom International Cellular S.A. (NASDAQ:TIGO) is a telecommunications company that provides cable and mobile services in Latin America and Africa. The company’s offerings include mobile data and voice services, SMS, and mobile financial services like payments, money transfers, international remittances, savings, real-time loans, and micro-insurance. It is one of the best growth stocks to watch. On June 29, Scotiabank analyst Andres Coello maintained an Outperform rating on Millicom International Cellular S.A. (NASDAQ:TIGO) but trimmed the price target on the shares from $20.40 to $17.90. 

According to Insider Monkey’s first quarter database, 12 hedge funds were bullish on Millicom International Cellular S.A. (NASDAQ:TIGO), compared to 10 funds in the prior quarter. Mario Gabelli’s GAMCO Investors is the biggest stakeholder of the company, with 1 million shares worth $19.4 million.

Longleaf Partners Global Fund made the following comment about Millicom International Cellular S.A. (NASDAQ:TIGO) in its first quarter 2023 investor letter:

“Millicom International Cellular S.A. (NASDAQ:TIGO) – Latin American wireless and cable company Millicom was also a top contributor in the quarter after being a top detractor in 2021/2022. Millicom returned almost 50% in the quarter amid news of two interested third parties. In January, rumors broke (and were later substantiated) that Apollo Global Management and former SoftBank executive Marcelo Claure were exploring a potential acquisition. Separately, French billionaire Xavier Niel, founder of French broadband Internet provider Iliad, built a 21% ownership stake over the last several months via his investment vehicle Atlas Investissement. As a long-term, large, potentially anchor holder, he took a seat on the Nomination Committee, where Southeastern also has a seat. The Nomination Committee’s primary responsibilities are to identify potential board members, propose the compensation for all directors and present proposals on the election and compensation of the statutory auditor. Niel is asking for multiple board seats as well, highlighting his active interest in the business. Millicom sells for an incredibly low multiple of discretionary cash flow before cable and fiber growth capital expenditure. We believe Millicom offers significant potential upside from today’s still overly discounted price.”

9. CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS)

Number of Hedge Fund Holders: 16

Share Price as of July 26: $10.84

P/E Ratio as of July 26: 270.88

CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) offers cloud, mobile, AI, telematics, and hyperscale technologies along with applications for the property and casualty insurance industry. On May 2, CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) reported a Q1 GAAP EPS of $0.00, in-line with market estimates. Revenue for the period increased 9.7% year-over-year to $204.92 million, exceeding Wall Street estimates by $1.89 million. It is one of the best growth stocks to invest in.

According to Insider Monkey’s first quarter database, 16 hedge funds were bullish on CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS), compared to 13 funds in the prior quarter. David Zorub’s Parsifal Capital Management is the largest stakeholder of the company, with 3.5 million shares worth $31.3 million.

Polen Capital made the following comment about CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) in its Q4 2022 investor letter:

“CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) is a provider of cloud-based software solutions to the property & casualty insurance industry with a focus on the automotive insurance ecosystem. The company created the Direct Repair Program (DRP) more than 30 years ago, a network connecting auto insurers with collision repair shops. CCC’s large platform helps drive cost savings in the expensive and time-consuming processing workflow for insurance carriers while driving revenue growth for repair shops through lead generation, scheduling, parts availability/throughput, and quality of the repair. As a result of this scale, the company has benefitted from network effects. This, in turn, has contributed to strong customer retention (70% of revenue from customers with >10-year relationship) over time. We believe CCC is an attractive holding in part due to a uniquely narrower range of outcomes with a proven track record for durable growth.”

8. ADT Inc. (NYSE:ADT)

Number of Hedge Fund Holders: 20

Share Price as of July 26: $6.46

P/E Ratio as of July 26: 215.33

ADT Inc. (NYSE:ADT) offers security, automation, and smart home solutions to both consumer and business customers. It operates in three segments – Consumer and Small Business, Commercial, and Solar. ADT Inc. (NYSE:ADT) is one of the best growth stocks to buy. On May 2, the company reported a Q1 non-GAAP EPS of $0.12, beating market estimates by $0.04. However, the revenue of $1.61 billion missed Wall Street consensus by $40 million. Morgan Stanley analyst Toni Kaplan reiterated an Equal Weight rating on ADT Inc. (NYSE:ADT) with a price target of $8 on July 12.

According to Insider Monkey’s first quarter database, 20 hedge funds were bullish on ADT Inc. (NYSE:ADT), compared to 23 funds in the preceding quarter. John W. Rogers’ Ariel Investments is the leading stakeholder of the company, with 18.75 million shares worth $135.6 million.

Ariel Fund made the following comment about ADT Inc. (NYSE:ADT) in its Q1 2023 investor letter:

“Alternatively, several positions weighed on performance. Leading provider of automated security solutions ADT Inc. (NYSE:ADT) underperformed in the period. Although ADT reported solid quarterly earnings results, with revenue and EBITDA ahead of consensus as well as the solar segment returning to profitability, management provided a disappointing financial outlook for 2023. Longer-term, we believe ADT’s industry-leading brand and national presence, coupled with its Google and State Farm strategic partnerships, position the company to be a prime beneficiary of growing demand for smart home technologies, including fully monitored residential security.”

7. EngageSmart, Inc. (NYSE:ESMT)

Number of Hedge Fund Holders: 23

Share Price as of July 26: $18.31

P/E Ratio as of July 26: 140.85

EngageSmart, Inc. (NYSE:ESMT) specializes in customer engagement and integrated payment solutions that are tailored to specific industries. The company operates through two segments – Enterprise Solutions and SMB Solutions. EngageSmart, Inc. (NYSE:ESMT) is one of the top growth stocks to monitor. On May 4, the company reported a Q1 GAAP EPS of $0.02, in line with market consensus. The revenue increased 31.2% year-over-year to $88.4 million, topping Wall Street estimates by $1.73 million.

According to Insider Monkey’s first quarter database, EngageSmart, Inc. (NYSE:ESMT) was part of 23 hedge fund portfolios, compared to 19 in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 2.70 million shares worth $52 million. 

6. Full Truck Alliance Co. Ltd. (NYSE:YMM)

Number of Hedge Fund Holders: 25

Share Price as of July 26: $7.20

P/E Ratio as of July 26: 51.46

Full Truck Alliance Co. Ltd. (NYSE:YMM) runs a digital freight platform in China, connecting shippers with truckers for seamless transportation of goods across different distances, cargo weights, and product categories. On May 22, Full Truck Alliance Co. Ltd. (NYSE:YMM) reported a Q1 non-GAAP EPS of $0.07 and $247.9 million in revenue, which increased 27.7% compared to the prior-year quarter. Morgan Stanley analyst Eddy Wang initiated coverage of Full Truck Alliance Co. Ltd. (NYSE:YMM) on July 5 with an Overweight rating and a price target of $9.

According to Insider Monkey’s first quarter database, 25 hedge funds were bullish on Full Truck Alliance Co. Ltd. (NYSE:YMM), compared to 19 funds in the earlier quarter. Thomas Steyer’s Farallon Capital is the leading stakeholder of the company, with a position worth $333.35 million.

In addition to Coupang, Inc. (NYSE:CPNG), ZoomInfo Technologies Inc. (NYSE:ZI), and Sunrun Inc. (NASDAQ:RUN), Full Truck Alliance Co. Ltd. (NYSE:YMM) is one of the top growth stocks to monitor.

Here is what Baron Funds specifically said about Full Truck Alliance Co. Ltd. (NYSE:YMM) in its Q2 2022 investor letter:

“Full Truck Alliance Co. Ltd. (NYSE:YMM) is the largest digital freight platform in the world. Shares of the China-based company rallied after a cybersecurity review greenlighted the use of its Apps to add new user registrations. We remain investors. Digital platform penetration into China’s four trillion RMB full truck-load market is still just in the single digits. We see major upside based on the expected rollout of transaction commissions to truckers from the current 6% market penetration and less than 1% take rate, and we expect revenue to grow at 50% CAGR over the next five years.”

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Disclosure: None. 12 Best Growth Stocks Under $25 is originally published on Insider Monkey.

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