5 Junior Growth Stocks Jim Cramer is Talking About

In this article, we will be taking a look at 5 junior growth stocks Jim Cramer is talking about. If you want to explore similar stocks, you can take a look at 10 Junior Growth Stocks Jim Cramer is Talking About.

5. Wingstop Inc. (NASDAQ:WING)

Number of Hedge Fund Holders: 27

According to Cramer, if the “economics of franchising” and special dividends attract any investor, they should consider buying Wingstop Inc. (NASDAQ:WING), a company that makes enough money to harness true growth potential.

Nick Setyan, an analyst at Wedbush, holds an Outperform rating on Wingstop Inc. (NASDAQ:WING).

About 27 hedge funds disclosed holding stakes in Wingstop Inc. (NASDAQ:WING) in the first quarter. Their total stake value was $328 million.

Artisan Partners, an investment management company, said this about Wingstop Inc. (NASDAQ:WING) in its first-quarter 2023 investor letter:

“Wingstop Inc. (NASDAQ:WING) is a quick-service restaurant franchisor specializing in fresh, cooked-to-order chicken products including wings, sandwiches and side orders. The company is in the early stages of growing its store footprint domestically and internationally, which we believe is supported by attractive economics for franchisees and growing brand awareness in new and existing markets. Fourth quarter earnings results showed continued momentum for the company. Strong same-store sales momentum is being driven by the combined impact of several factors, including menu innovation, national branding efforts, integration of a second delivery provider (Uber Eats) and an ongoing value-based bundling strategy. Furthermore, this same-store sales increase was entirely traffic driven (rather than by rising prices), which stands in stark contrast to its competitors that have taken upward of double-digit pricing in some cases. Meanwhile, we continue to be optimistic about new store expansion potential in the periods ahead as strong unit-level returns are driving payback periods for the company’s “brand partners” (i.e., franchisees) that are less than two years.”

4. e.l.f. Beauty, Inc. (NYSE:ELF)

Number of Hedge Fund Holders: 30

Analysts at Truist hold a Buy rating on e.l.f. Beauty, Inc. (NYSE:ELF), alongside a $110 price target as of May 25.

e.l.f. Beauty, Inc. (NYSE:ELF) was found among the 13F holdings of 30 hedge funds in the first quarter, with a total stake value of $505 million.

Cramer admitted on Mad Money that while Estée Lauder may have been a club-favorite in the cosmetics industry, e.l.f. Beauty, Inc. (NYSE:ELF) seems to have “bested” it with its success.

Diamond Hill Capital made the following comment about e.l.f. Beauty, Inc. (NYSE:ELF) in its fourth-quarter 2022 investor letter:

“New positions initiated in Q4 included shorts International Business Machines (IBM), Acushnet Holdings (GOLF) and E.l.f. Beauty, Inc. (NYSE:ELF). Shares of value-oriented beauty brand ELF received a meaningful boost from normalizing beauty usage and spending in a post-COVID environment, which we believe has contributed to its premium multiple relative to competitors in the beauty space. As this temporary lift unwinds, we expect elf’s valuation to similarly return to a level better aligned with its product offerings.”

3. Five Below, Inc. (NASDAQ:FIVE)

Number of Hedge Fund Holders: 32

Cramer commented that Five Below, Inc.’s (NASDAQ:FIVE) “velocity to market distinguishes” the company from all of its competitors in the toy store market.

Cramer is not alone in being bullish on Five Below, Inc. (NASDAQ:FIVE), since analysts at Citigroup, too, have a Buy rating on the stock as of May 24.

Five Below, Inc. (NASDAQ:FIVE) was spotted in the portfolios of 32 hedge funds in the first quarter, with a total stake value of $712 million.

Here’s what Wasatch Global Investors, an asset management company, said about Five Below, Inc. (NASDAQ:FIVE) in its fourth-quarter 2022 investor letter:

“Another strong stock in the strategy was Five Below, Inc. (NASDAQ:FIVE). A specialty value retailer, the company offers a variety of merchandise at discounted prices. Five Below’s stock price rose sharply in early December after the company reported better-than-expected financial results and guided higher on revenues and earnings. The upbeat news cheered investors who had been concerned about Five Below’s ability to attract shoppers during the upcoming inflation-marred holiday season. We think the company’s debt-free balance sheet, substantial free cash flows, expanding store count and new Five Beyond format—in which prices can go as high as $25 in a designated section of the store—leave Five Below well-positioned for growth even in a potentially difficult retail environment.”

2. DraftKings Inc. (NASDAQ:DKNG)

Number of Hedge Fund Holders: 37

On May 22, analysts at UBS upgraded DraftKings Inc. (NASDAQ:DKNG) from Neutral to Buy while also raising their price target on the stock from $19 to $30.

DraftKings Inc. (NASDAQ:DKNG) seems to have begun dominating “the online sports book industry overnight,” according to Cramer. He believes that the company is “about to explode” in light of its continued success.

There were 37 hedge funds long DraftKings Inc. (NASDAQ:DKNG) in the first quarter. Their total stake value was $1.1 billion.

In the first quarter, DraftKings Inc. (NASDAQ:DKNG) generated revenues of $769.65 million, up by 84.57% year-over-year.

DraftKings Inc. (NASDAQ:DKNG) was mentioned in Baron Funds’ first-quarter 2023 investor letter:

“We re-initiated a position in former Fund holding DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook, digital casino, and daily fantasy sports operator. DraftKings’ mobile applications offer consumers the ability to wager on a wide variety of sporting events and play hundreds of real-money casino games. The company has spent the past three years building a proprietary technology stack that improves the customer experience and delivers best-in-class breadth of bet types (such as parlays, same-game parlays, and player props). State-level online sports betting (OSB) and iCasino legalization, along with a multi-year consumer adoption timeline in active states, has supported a 90% revenue growth rate for DraftKings since 2020. The opportunity for OSB legalization remains significant, with under 50% of the U.S. population currently having legal mobile sports betting. We expect 65% to 80% of the population will eventually have access to OSB. ICasino is currently legal in just seven states representing roughly 13% of the population. ICasino product adoption in legalized states has been robust, with the average user spending twice as much as a sports bettor. While the pace of legalization for iCasino has been slower, we believe additional states will pass regulation in the coming years.

As U.S. states began to legalize sports betting, the DraftKings management team moved quickly to build widespread brand awareness. DraftKings is the #2 operator in both OSB and iCasino by a wide margin, and has demonstrated improving market share trends across almost all states. When a new state legalizes sports betting, DraftKings has a first mover advantage as many of its customers are converted from the DraftKings daily fantasy sports offering. The quality of their sportsbook product along with increasingly targeted promotional spending results in strong customer retention and high lifetime values. In states where iCasino is legal, DraftKings can cross-sell OSB customers. DraftKings’ scale and product advantages are creating a flywheel that will enable the company to continue to out-invest the competition in acquisition marketing, retention, and research and development. The high barriers to entry are resulting in a consolidated industry that will eventually lead to a highly profitable business. This is evidenced by older-vintage state contribution margins that are already approaching 40%. Longer term, we believe DraftKings can generate EBITDA margins between 20% and 30% with strong free-cash-flow conversion.”

1. Lululemon Athletica Inc. (NASDAQ:LULU)

Number of Hedge Fund Holders: 64

Lululemon Athletica Inc. (NASDAQ:LULU) is the only stock on Cramer’s list that is a “senior-growth stock,” but it’s one he could not help but include. He called the company “a lifestyle choice” instead of a simple apparel company; one that “people are choosing all over the world.”

TD Cowen analysts have kept an Outperform rating on the shares as of April 27, alongside raising their price target from $500 to $525.

Our hedge fund data shows 64 elite hedge funds long Lululemon Athletica Inc. (NASDAQ:LULU) in the first quarter, with a total stake value of $3.5 billion.

RiverPark Advisors made the following comment about Lululemon Athletica Inc. (NASDAQ:LULU) in its first-quarter 2023 investor letter:

“Lululemon Athletica Inc. (NASDAQ:LULU): We initiated a position in athletic apparel company Lululemon in the quarter. COVID-related supply chain bottlenecks led to over buying in 2022 resulting in a short-term inventory glut. This temporary issue gave us an opportunity to buy LULU’s stock at a historically low valuation.

LULU is a vertically integrated athletic apparel vendor focused on living a healthy and mindful lifestyle. The company, through its 655 stores and strong online presence (40% of sales), caters to affluent customers searching for both function and fashion. LULU has been a consistent innovator since its founding as a yoga brand in 1998 and currently offers an extensive array of men’s and women’s clothing options as well as yoga and fitness-related accessories. We believe that continued growth in the core women’s fitness category coupled with store growth, international expansion, and increased men’s sales can drive mid-teens revenue growth for the foreseeable future. The company’s vertical integration allows it to manage all aspects of the product cycle from design to manufacturing to sales, including when and how to discount excess inventory, which is a current focus. This vertical orientation also yields some of the best margins and free cash flow in the industry. We believe LULU can double revenue in the coming five years, which should lead to 150% EPS and free cash flow growth.”

You can also take a look at 14 Stocks “About To Pop” According To Jim Cramer and 10 Cheap Jim Cramer Stocks to Buy.