In this article, we will take a look at the 12 most promising growth stocks according to analysts.
Which stocks perform better? Growth or value? This age-old growth versus value debate has been around ever since people started investing in the stock markets. However, there are some interesting data points available which can give some clues to beginner investors about the past trends seen in the market.
According to a report by Value Line Funds, from 2002 through 2006, the S&P 500 Value Index outperformed the S&P 500 Growth Index. In 2007, the market saw a broader rotation and growth stocks took over the dominant position. In the 13-year period starting from 2007 through 2019-end, growth stocks outperformed value stocks in 10 years.
Within the growth investing world, there are several styles and categories. For example, the Value Line report said that aggressive growth investing tends to focus on companies that are growing extremely fast. These stocks have high-risk, high-reward dynamics with a lot of volatility. On the other hand, the “steady growth” side of the space promises lower volatility but at the same time misses on huge upside potentials.
The 2022 stock market crash hammered growth stocks as investors fled these risky equities towards more safer value plays. But was this growth stock rout based on rising interest rates justified? A report by GMO titled “ Growth Investing Ain’t About The Rates” presents an interesting argument on this. The report said that instead of valuing companies based on constant growth rates, a more realistic approach is to use fair value multiples on a relative basis for valuations.
“Of course cash flows in the distant future are worth a lot less if you discount them at a higher rate. $100 in 30 years is worth $30.83 discounted at 4% and $5.73 discounted at 10%, a full 80% less at the higher rate. But there is no company we know for which we would project growth rates 30 years in the future with a straight face. We are skeptical that anyone owns a crystal ball that clear; assumptions of perpetual growth rates are doomed to disappoint.”
Talking about the fall of growth stocks after the Fed’s interest rate hikes, the report says:
“Equity investors took rising rates seriously! Or perhaps it was more important that many growth stocks were no bargain in late 2021; they had run up immensely as rates had trended down over the previous decade.”
Photo by Ruben Sukatendel on Unsplash
Our Methodology
For this article, we used the Finviz stock screener to identify stocks from the broader technology sector that meet the following conditions:
Have sales growth of 25% quarter over quarter.
Have positive sales growth over the past 5 years.
Have consensus Buy or better recommendations from analysts on average
Have average analyst price targets which are over 50% from the current stock prices
After applying the above checks, we got a long list of stocks. We then sorted the list on descending order of market cap and picked the top 12 names.
Most Promising Growth Stocks According to Analysts
12. OMNIQ Corp. (NASDAQ:OMQS)
Number of Hedge Fund Holders: N/A
Average Price Target by Analysts: $12.00
OMNIQ Corp. (NASDAQ:OMQS) is an AI services provider. Because it has the “AI” tag on its business, OMNIQ Corp. (NASDAQ:OMQS) is getting a lot of attention as AI mania prevailed since the start of the year amid the launch of ChatGPT and AI wars between Microsoft and Google. OMNIQ Corp. (NASDAQ:OMQS) has gained about 24% year to date through February 16. During the third quarter OMNIQ Corp. (NASDAQ:OMQS)’s revenue increased by about 32% on a YoY basis to reach $27.01 million.
11. Ondas Holdings Inc. (NASDAQ:ONDS)
Number of Hedge Fund Holders: 1
Average Price Target by Analysts: $3.50
Ondas Holdings Inc. (NASDAQ:ONDS) is a Massachusetts-based connectivity solutions company. During the third quarter Ondas Holdings Inc. (NASDAQ:ONDS)’s revenue jumped about 125% on a YoY basis. Earlier this month Ondas Holdings Inc. (NASDAQ:ONDS) announced that it expects its Q4 revenue to come in at around $2.1 million, versus the consensus estimate of $1.56 million. For fiscal 2022, adjusted EBITDA loss was estimated to come in at about $39.5 million to $40.5 million. Ondas Holdings Inc. (NASDAQ:ONDS) had $29.8 million of cash at the end of 2022.
Ondas Holdings Inc. (NASDAQ:ONDS) recently announced that its subsidiary Airobotics received an order for continued services from one of the world’s largest and innovative semiconductor chip manufacturers.
Ric Dillon’s Diamond Hill Capital upped its stake in the company by 88% in the third quarter, ending the period with a $192,000 stake in Ondas Holdings Inc. (NASDAQ:ONDS).
10. SurgePays, Inc. (NASDAQ:SURG)
Number of Hedge Fund Holders: 1
Average Price Target by Analysts: $12.00
Tennessee-based broadband company SurgePays, Inc. (NASDAQ:SURG) is one of the most promising growth stocks according to analysts. SurgePays, Inc. (NASDAQ:SURG) has doubled in value over the past 12 months. However, its average analyst price target of $12 still presents a huge upside from current levels. In October, SurgePays, Inc. (NASDAQ:SURG) announced that it surpassed 200,000 subscribers in its mobile broadband subscriber business SurgePhone Wireless.
During the third quarter, SurgePays, Inc. (NASDAQ:SURG)’s revenue increased by 149% on a YoY basis to reach $36.2 million.
As of the end of the third quarter of 2022, 2 hedge funds had stakes in SurgePays, Inc. (NASDAQ:SURG).
9. Beam Global (NASDAQ:BEEM)
Number of Hedge Fund Holders: 3
Average Price Target by Analysts: $27.00
Clean mobility solutions company Beam Global (NASDAQ:BEEM) is one of the most promising growth stocks according to analysts. During the third quarter, Beam Global (NASDAQ:BEEM)’s revenue jumped about 28% on a YoY basis to reach $6.61 million, beating estimates by $2.13 million.
Earlier this month, Beam Global (NASDAQ:BEEM) said that it received several orders for its EV ARC off-grid EV charging systems from correctional facilities on the east and west coasts of the U.S. In January, Beam Global (NASDAQ:BEEM) secured an $847,000 order for its energy storage solutions to power recreational watercraft from an American company.
As of the end of the third quarter of 2022, 3 hedge funds had stakes in Beam Global (NASDAQ:BEEM), according to Insider Monkey’s proprietary database of hedge funds’ holdings.
8. KULR Technology Group, Inc. (NYSE:KULR)
Number of Hedge Fund Holders: 4
Average Price Target by Analysts: $3.75
California-based KULR Technology Group, Inc. (NYSE:KULR) makes thermal management technologies for batteries. Earlier this month the company posted its preliminary Q4 results. Its revenue in the last quarter of 2022 was estimated to come in at $1.8 million, up 137% YoY. The consensus estimate for this figure was $1.48 million. Gross margin in the quarter is estimated to be about 80%, up from 70% posted in the comparable quarter the previous quarter.
In December, KULR Technology Group, Inc. (NYSE:KULR) announced that it partnered with Theory Racing, a leading World Cup Enduro racing team.
7. Rekor Systems, Inc. (NASDAQ:REKR)
Number of Hedge Fund Holders: 5
Average Price Target by Analysts: $3.50
Rekor Systems, Inc. (NASDAQ:REKR) is a software company that makes systems for traffic and infrastructure monitoring. Rekor Systems, Inc. (NASDAQ:REKR)’s third quarter results posted in November showed that its revenue jumped about 183.5% on a YoY basis in the third quarter to reach $7.4 million, beating estimates by $0.65 million. Adjusted EPS in the period totaled -$0.17, beating estimates by $0.10. Adjusted gross margin in the quarter was 44.5%, down from 46.4% in the comparable quarter of the previous year.
In December, Rekor Systems, Inc. (NASDAQ:REKR) announced that it executed a term sheet providing for the issuance of up to $15 million in notes to strengthen its cash position and boost its growth plans.
As of the end of the September quarter of 2022, 7 hedge funds had stakes in Rekor Systems, Inc. (NASDAQ:REKR).
6. Akoustis Technologies, Inc. (NASDAQ:AKTS)
Number of Hedge Fund Holders: 6
Average Price Target by Analysts: $7.65
Radio frequency (RF) filter products maker Akoustis Technologies, Inc. (NASDAQ:AKTS) ranks 6th in our list of the most promising growth stocks according to analysts. Earlier this month Akoustis Technologies, Inc. (NASDAQ:AKTS) posted its fiscal second quarter results. Revenue in the period jumped about 60% on a YoY basis to reach $5.86 million. However, the figure missed the consensus forecast by $0.07 million. Adjusted EPS in the period came in at -$0.19, beating estimates by $0.07.
As of the end of the third quarter of 2022, 6 hedge funds had stakes in Akoustis Technologies, Inc. (NASDAQ:AKTS). One of the most notable stakeholders of Akoustis Technologies, Inc. (NASDAQ:AKTS) during this period was Richard Mashaal’s Rima Senvest Management.
5. Meta Materials Inc. (NASDAQ:MMAT)
Number of Hedge Fund Holders: 9
Average Price Target by Analysts: $2.38
Meta Materials Inc. (NASDAQ:MMAT) is a Canadian company that makes materials and nanocomposites. In November, Meta Materials Inc. (NASDAQ:MMAT) posted its Q3 results, which showed that its revenue in the period increased by a remarkable 329% on a YoY basis to total $2.45 million. However, the figure missed estimates by $1 million.
Back in November, Meta Materials Inc. (NASDAQ:MMAT) gained a lot of value after disclosures showed insiders were buying the stock. A filing showed that Meta Materials Inc. (NASDAQ:MMAT)’s Chairman John Harding bought 126,000 shares of the company at $1.74 per share.
As of the end of the third quarter of 2022, 9 hedge funds had stakes in Meta Materials Inc. (NASDAQ:MMAT)
4. Ebix, Inc. (NASDAQ:EBIX)
Number of Hedge Fund Holders: 17
Average Price Target by Analysts: $96.75
Shares of California-based software company Ebix, Inc. (NASDAQ:EBIX) are trading at around $17 as of February 21 morning. Analysts’ average price target for the stock is $96.75. This shows a huge upside potential from current levels. In November, Ebix, Inc. (NASDAQ:EBIX) posted its third quarter results. Adjusted EPS in the period came in at $0.70. Revenue in the quarter jumped about 34.5% on a YoY basis to reach $257.9 million, beating estimates by $46.15 million.
Ebix, Inc. (NASDAQ:EBIX) recently announced that its annuity exchange AnnuityNet4 (AN4) saw record volumes in 2022, driven by favorable market conditions and interest rate dynamics.
Transactions on the platform surpassed 580,000, showing a YoY growth of 36%.
Hedge funds are also increasing their bets in Ebix, Inc. (NASDAQ:EBIX). At the end of the third quarter, 17 funds had stakes in Ebix, Inc. (NASDAQ:EBIX), up from 13 funds in the previous quarter.
3. Clearfield, Inc. (NASDAQ:CLFD)
Number of Hedge Fund Holders: 20
Average Price Target by Analysts: $109.80
Fiber optic manufacturing and distribution company Clearfield, Inc. (NASDAQ:CLFD) ranks 3rd in our list of the 12 most promising growth stocks according to analysts. Earlier this month Clearfield, Inc. (NASDAQ:CLFD) posted its fiscal first quarter results, which show that Clearfield’s revenue in the period increased by a whopping 68% on a YoY basis to reach $86 million. This figure also beat analyst estimates by $2.44 million. GAAP EPS in the period came in at $1, beating estimates by $0.04. Clearfield, Inc. (NASDAQ:CLFD) reiterated its 2023 fiscal net sales guidance, according to which the metric is expected to come in between $380 million to $393 million, versus the consensus estimate of $385.35 million. This would show a 40% to 45% growth from fiscal 2022.
As of the end of the third quarter of 2022, 20 hedge funds tracked by Insider Monkey had reported owning shares in Clearfield, Inc. (NASDAQ:CLFD). The total value of these stakes was about $170 million.
2. Calix, Inc. (NYSE:CALX)
Number of Hedge Fund Holders: 24
Average Price Target by Analysts: $82.56
Calix, Inc. (NYSE:CALX) provides Cloud and software services to communication service providers. Calix, Inc. (NYSE:CALX) looks promising based on its average price target set by analysts. Last month, Calix, Inc. (NYSE:CALX) posted its fourth quarter results. Revenue in the quarter increased by about 39% on a YoY basis to reach $244.51 million, beating estimates by $3.31 million. Net income came in at $11.93 million. Calix, Inc. (NYSE:CALX) said its cash and cash equivalents as of the end of the quarter stood at $79.07 million.
In January, Loop Capital analyst Fahad Najam upped his price target on the stock to $88 from $83 and kept a Buy rating. The analyst advised investors to be “aggressive buyers” of Calix, Inc. (NYSE:CALX) as he believes there are significant growth opportunities ahead for the company.
At the end of the third quarter of 2022, 24 hedge funds reported owning stakes in Calix, Inc. (NYSE:CALX), compared to 22 funds in the previous quarter. The total value of these stakes was $451 million.
Carillon Tower Advisers made the following comment about Calix, Inc. (NYSE:CALX) in its Q3 2022 investor letter:
“Another strong performer during Q3 was Calix, Inc. (NYSE:CALX). Calix stock rebounded sharply in the quarter after reporting stellar earnings. They offer next-gen fiber broadband solutions to telecommunication companies primarily for rural markets. The broadband buildout in rural markets is still in the early innings, and the company’s subscription model offers great visibility going forward.”
1. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 47
Average Price Target by Analysts: $43.98
Sunrun Inc. (NASDAQ:RUN) is one of the most promising growth stocks according to analysts. During the third quarter, Sunrun Inc. (NASDAQ:RUN)’s revenue jumped about 44% on a YoY basis. GAAP EPS in the quarter totaled $0.96, beating estimates by $1.01.
Earlier this month, Sunrun Inc. (NASDAQ:RUN) and PG&E (NYSE:PCG) announced that they formed a partnership to develop an optimal battery dispatch schedule to lower power costs when demand spikes.
As of the end of the third quarter of 2022, 47 hedge funds reported owning stakes in Sunrun Inc. (NASDAQ:RUN), up from 36 hedge funds in the previous quarter. This shows that hedge fund sentiment around Sunrun Inc. (NASDAQ:RUN) is positive.
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Disclosure: None. 12 Most Promising Growth Stocks According to Analysts is originally published on Insider Monkey.
