In this article, we will be taking a look at the 16 best growth stocks to buy according to hedge funds. To skip our detailed analysis of the US markets today, you can go directly to see the 5 Best Growth Stocks To Buy According To Hedge Funds.
Is Now The Right Time To Invest?
Equity investors in American stocks today might be wondering when the right time to invest in US stocks will come around. With market volatility and economic conditions across the world making most investors and businesses cautious about major decisions involving larger sums of money, this line of thinking is becoming more commonplace than some might have expected. At this moment, one thing investors can do to ensure they make sound investment decisions is to remain apprised of not only current events in the US markets but also of expert opinions on how to approach the market at present.
On October 10, Paul Tudor Jones, the founder and Chief Investment Officer of Tudor Investment, joined CNBC’s ‘Squawk Box‘ to give his take on current market trends and more. Here are some of his comments:
“The United States is probably in its weakest fiscal position since, certainly, World War II, with debt-to-GDP at a 122%. So, it’s a really tough time for, I think, the moral voice of the world.”
Geopolitical Tensions As A Barrier To Investment
Jones sees the current geopolitical environment of the world as “the most threatening” and “challenging” environment he has ever seen, with the recent developments in the Israel-Palestine crisis and the ongoing Russo-Ukrainian crisis. Here’s what he had to say on these issues, alongside how they and US economic conditions are impacting equity investors in the US:
“It’s a really challenging time to wanna be an equity investor in US stocks right now, it’s really hard, because again you’ve got the geopolitical uncertainty, which we, I think, have come to live with to a certain extent. Equally as much of a problem is the fiscal situation that we’re facing in the United States, which is gonna require a completely different political mentality.”
All in all, Jones highlighted the existing barriers and challenges that may hinder equity investors in the US markets from taking part in the investment cycles. However, investors can still remain active in the markets by carefully picking out reliable stocks with high growth potential, especially those stocks that have lived up to their growth potential in the past. These include several companies such as Apple Inc. (NASDAQ:AAPL), The Walt Disney Company (NYSE:DIS), and Advanced Micro Devices, Inc. (NASDAQ:AMD), among others that are considered to be stellar growth stock options today. Considering this, we have compiled a list of some of the best growth stocks for the next 10 years, alongside stocks to invest in 2023 for beginners.
Source: pexels
Our Methodology
To select the stocks for our list, we picked names from the Vanguard Growth Index Fund Admiral Shares ETF. The fund invests in large US growth stocks. We selected the stocks based on the number of hedge funds holding stakes in them according to Insider Monkey’s hedge fund data for the second quarter. The stocks are ranked based on this metric, from the lowest to the highest number of hedge funds holding stakes in them.
Best Growth Stocks To Buy According To Hedge Funds
16. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 87
Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company based in Indianapolis, Indiana. It offers human pharmaceutical products for diabetes, non-small cell lung cancer, and a variety of other medical issues.
On October 9, Louise Chen at Cantor Fitzgerald reiterated an Overweight rating on Eli Lilly and Company (NYSE:LLY) shares alongside a $630 price target.
There were 87 hedge funds long Eli Lilly and Company (NYSE:LLY) in the second quarter. Their total stake value in the company was $5.1 billion.
Like Apple Inc. (NASDAQ:AAPL), The Walt Disney Company (NYSE:DIS), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Eli Lilly and Company (NYSE:LLY) is a growth stock many hedge funds are piling into today.
15. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 92
Citadel Investment Group was the most prominent shareholder in The Walt Disney Company (NYSE:DIS) at the end of the second quarter, holding 9.4 million shares in the company.
The Walt Disney Company (NYSE:DIS) is a communication services company based in Burbank, California. The company operates through two segments, Disney Media and Entertainment Distribution and Disney Parks, Experiences, and Products.
David Joyce at Seaport Global initiated coverage on The Walt Disney Company (NYSE:DIS) shares on October 6 with a Buy rating and a $93 price target.
The Walt Disney Company (NYSE:DIS) was spotted in the portfolios of 92 hedge funds in the second quarter, with a total stake value of $2.2 billion.
14. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 93
We saw 93 hedge funds long ServiceNow, Inc. (NYSE:NOW) in the second quarter. Their total stake value in the company was $3.9 billion.
ServiceNow, Inc. (NYSE:NOW) is a systems software company that provides enterprise cloud computing solutions. It is based in Santa Clara, California.
A Buy rating and a $640 price target were reiterated on ServiceNow, Inc. (NYSE:NOW) shares on October 3 by Brad Reback at Stifel.
Lakehouse Capital mentioned ServiceNow, Inc. (NYSE:NOW) in its July 2023 investor letter:
“US-based software company ServiceNow, Inc. (NYSE:NOW) delivered another impressive quarterly result that came in ahead of analysts expectations. Subscription revenues grew 25% year-on-year in constant currency terms to $2.1 billion and operating margins came in at 23.4%. Despite ongoing variability in the macro backdrop, ServiceNow continues to benefit from spend prioritisation within the IT tech stack as vendors look to consolidate back-office apps onto an integrated platform. The company’s operational metrics held firm, with remaining performance obligations growing 24% year-on-year to $14.2 billion and renewal rates ticking up to 99%. As we have mentioned before, the company’s renewal rates are noteworthy as not only are they best-in-class but they are also remarkably consistent, typically in the range of 97% to 99%. They speak to the mission critical nature of the platform and are a key driver of long term annuity value.
Investors were also excited to hear management speak to the burgeoning artificial intelligence (AI) opportunity. Things are moving fast and the company plans to release new premium offerings of their workflow products – across IT, customer service and human resources – towards the back end of 2023 that will have new Generative AI capabilities embedded into them. Management also mentioned that they anticipate these new offerings could deliver a “minimum” 60%-plus list price uplift relative to its current Pro versions as they provide meaningful productivity improvements for end users. Whilst it’s still early days, ServiceNow appears well placed to capitalise on the Generative-AI opportunity and we believe it could be a meaningful driver for the company’s next phase of growth.”
13. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 103
Patrick Donnelly at Citigroup reiterated a Buy rating and a $625 price target on shares of Thermo Fisher Scientific Inc. (NYSE:TMO) on October 2.
Based in Waltham, California, Thermo Fisher Scientific Inc. (NYSE:TMO) is a life sciences tools and services company. It offers analytical instruments, specialty diagnostics, laboratory products, and biopharma services in the US and internationally.
Thermo Fisher Scientific Inc. (NYSE:TMO) had 103 hedge funds long its stock in the second quarter, with a total stake value of $7.2 billion.
Weitz Investment Management said the following about Thermo Fisher Scientific Inc. (NYSE:TMO) in its second-quarter 2023 investor letter:
“Portfolio activity this quarter included opportunistically initiating a position in life sciences tool and equipment maker Thermo Fisher Scientific Inc. (NYSE:TMO), a long-time holding of other Weitz portfolios, at an attractive valuation.”
12. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 109
Citadel Investment Group was the largest shareholder in Adobe Inc. (NASDAQ:ADBE) at the end of the second quarter, holding 1.9 million shares in the company.
As of September 15, Deutsche Bank analyst Brad Zelnick holds a Buy rating and a 610 price target on Adobe Inc. (NASDAQ:ADBE) shares.
Adobe Inc. (NASDAQ:ADBE) is an application software company based in San Jose, California. The company operates through its Digital Media, Digital Experience, and Publishing and Advertising segments.
Our hedge fund data for the second quarter shows 109 hedge funds long Adobe Inc. (NASDAQ:ADBE). Their total stake value was $6.1 billion.
Here’s what Harding Loevner said about Adobe Inc. (NASDAQ:ADBE) in its second-quarter 2023 investor letter:
“Although the market initially feared that Adobe Inc. (NASDAQ:ADBE) would lose out to Al image-generating programs Dall-E, Midjourney, and Stable Diffusion, the design-software giant has since released its own generative Al model called Firefly. One feature of Firefly is that it can help designers generate ideas and create and manipulate images more quickly in Photoshop or Illustrator that can then be processed by other Adobe products for further development, fostering a seamless workflow. There’s more work involved when trying to manipulate images created by outside tools. Also, because Firefly is trained on Adobe’s vast inventory of stock images and other licensed content, it can generate professional-quality, commercially viable results, further setting it apart from generic models that are often trained on copyrighted content that isn’t properly licensed. These are just two examples of how Al enhances the Adobe suite, which should allow the company to raise subscription prices and upsell users.”
11. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 112
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company that offers x86 microprocessors and graphics processing units (GPUs). It is based in Santa Clara, California.
Advanced Micro Devices, Inc. (NASDAQ:AMD) was seen in the 13F holdings of 112 hedge funds in the second quarter, with a total stake value of $6.9 billion.
A Buy rating and a $145 price target were maintained on Advanced Micro Devices, Inc. (NASDAQ:AMD) shares on August 3 by Cody Acree at Benchmark.
This is what Artisan Partners said about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its second-quarter 2023 investor letter:
“Among our top contributors were Advanced Micro Devices, Inc. (NASDAQ:AMD), NU Holdings and Netflix. AMD’s data center CPUs are used in the cloud service provider (CSP) servers. In addition to the broader secular tailwind from cloud adoption, the company has a performance and pricing advantage over Intel, which we believe will enable it to continue capturing market share. However, the recent stock price rally was due to growing excitement around the company’s AI exposure. It will launch its new MI300 graphics processing unit (GPU) chip later this year to compete against the dominant market leader NVIDIA. Similar to its approach that won market share from Intel within the CPU market, AMD’s product will aim to provide similar performance at a more attractive price. AMD is already working with Microsoft and Meta, while Amazon publicly stated that it is evaluating AMD’s inferencing chips. Using assumptions around the total GPU market size, potential market share gains and price points, our research indicates this could be a $20 billion opportunity for AMD. That would nearly double its revenue. While the company has not historically missed many deadlines, there is execution risk as it works to manufacture and distribute these complex chips at scale, which, combined with an elevated valuation after the stock’s strong performance run, led us to trim the position.”
10. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 114
Seaport Global analyst David Joyce initiated coverage on Netflix, Inc. (NASDAQ:NFLX) shares with a Buy rating and a $482 price target on October 6.
A total of 114 hedge funds were long Netflix, Inc. (NASDAQ:NFLX) in the second quarter, with a total stake value of $8.4 billion.
Netflix, Inc. (NASDAQ:NFLX) is a movies and entertainment company based in Los Gatos, California. The company offers TV series, documentaries, feature films, and more on its online streaming platform.
Citadel Investment Group was the largest shareholder in Netflix, Inc. (NASDAQ:NFLX) at the end of the second quarter, holding 5.9 million shares in the company.
9. salesforce.com, inc. (NYSE:CRM)
Number of Hedge Fund Holders: 122
In total, 122 hedge funds were long salesforce.com, inc. (NYSE:CRM) in the second quarter. Their total stake value was $7.2 billion.
Truist Securities analyst Terry Tillman reiterated a Buy rating and a $275 price target on salesforce.com, inc. (NYSE:CRM) shares on October 4.
Based in San Francisco, California, salesforce.com, inc. (NYSE:CRM) is an application software company. It provides Customer Relationship Management (CRM) technology.
Harding Loevner said the following about salesforce.com, inc. (NYSE:CRM) in its second-quarter 2023 investor letter:
“Salesforce, Inc. (NYSE:CRM), a company we’ve owned since 2019, recently added ChatGPT-like capabilities onto its existing Al module, Einstein, to support its internal sales efforts and customer-facing software. For example, Einstein GPT can help generate marketing emails tailored to specific clients by using Salesforce’s customer database and past email correspondence to learn the most effective approach for each client. Einstein GPT is also different from off-the-shelf LLMS in three important ways: It keeps personal identifiable information private and secure, compared with external tools that retain anything a user enters. It employs the latest data in Salesforce’s system, as opposed to the sometimes-stale public data that train generic models. And generative Al capabilities can be integrated with other Salesforce offerings; the company has already introduced Slack GPT and Tableau GPT, Al-equipped versions of its workplace collaboration and analytics tools.”
8. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) is a technology hardware, storage, and peripherals company based in Cupertino, California. The company manufactures smartphones, personal computers, tablets, wearables, and more.
Amit Daryanani at Evercore ISI Group reiterated an Outperform rating and a $210 price target on Apple Inc. (NASDAQ:AAPL) shares on September 28.
In the second quarter, 135 hedge funds were long Apple Inc. (NASDAQ:AAPL), with a total stake value of $193.9 billion.
Berkshire Hathaway was the most prominent shareholder in Apple Inc. (NASDAQ:AAPL) at the end of the second quarter, holding 915.6 million shares in the company.
7. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 139
Our hedge fund data for the second quarter shows 139 hedge funds long Mastercard Incorporated (NYSE:MA). Their total stake value was $14.7 billion.
Mastercard Incorporated (NYSE:MA) is a transaction and payment processing services company based in Purchase, New York. The company facilitates the processing of payment transactions and also offers integrated products and value-added services.
JPMorgan’s Tien-Tsin Huang maintains an Overweight rating and a $496 price target on Mastercard Incorporated (NYSE:MA) shares as of October 9.
6. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 171
Visa Inc. (NYSE:V) is another transaction and payment processing services company on our list. It is based in San Francisco, California, and operates VisaNet, a transaction processing network.
Visa Inc. (NYSE:V) had 171 hedge funds long its stock in the second quarter, with a total stake value of $24.9 billion.
As of October 9, JPMorgan’s Tien-Tsin Huang maintains an Overweight rating and a $293 price target on shares of Visa Inc. (NYSE:V).
Like Apple Inc. (NASDAQ:AAPL), The Walt Disney Company (NYSE:DIS), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Visa Inc. (NYSE:V) is a highly popular growth stock among hedge funds today.
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Disclosure: None. 16 Best Growth Stocks To Buy According To Hedge Funds is originally published on Insider Monkey.