We recently published a list of 15 High Growth Companies Hedge Funds Are Buying. In this article, we are going to take a look at where Carvana Co. (NYSE:CVNA) stands against other high growth stocks.
The global economy in 2025 is expected to face modest growth amid ongoing challenges, with projections for US GDP at 2%, the Eurozone at 0.9%, and China at 4.2%. Inflation is likely to remain high because of increasing fiscal spending and potential tariffs, and central banks may have limited room to cut rates, leading to uncertain markets and possible volatility. However, rising productivity driven by AI and other emerging technologies offers long-term promise. The US is expected to benefit the most from these gains, while Europe may lag behind due to slower investment and tech adoption.
According to Deutsche Bank Wealth Management, policy is shifting from monetary to fiscal, with countries like China expected to launch growth initiatives. Equities, particularly American stocks, are favored by investors, supported by profit growth and favorable policy expectations. Bond markets and commodities also offer opportunities, and infrastructure investment is considered a long-term growth area. Similarly, despite the current market uncertainty, BlackRock believes there is reason to stay optimistic about developed market stocks in the next 6 to 12 months. American Treasuries, which used to act as a safety net when stocks dropped, have not offered the same protection lately. In addition, the dollar lost ground in recent selloffs, which is unusual. As a result, some investors are turning to alternatives like gold, which has hit record highs. The rise of AI is also reshaping the market, creating more concentration in a few big tech names. That can strengthen returns, but it also raises risks. Private capital is in demand too, though higher interest rates may weigh on future returns there.
As markets get more unpredictable, many investors are starting to follow hedge funds, hoping they can repeat last year’s strong returns and stay ahead of the curve. In 2024, hedge funds posted remarkable performance, leveraging the volatility and policy shifts in the markets. The average return through November was 10.7%, which is a significant improvement over the 5.7% return for the same period in 2023. This uptick was supported by market turbulence, changes in central bank policies, and the uncertainty surrounding the American presidential election. Notably, some hedge funds saw spectacular gains, such as Light Street Capital’s long/short tech fund skyrocketing 59.4%, while Discovery Capital, a macro-focused fund, posted a 52% return. Bridgewater’s Pure Alpha fund gained 11%, and Marshall Wace, a major British hedge fund, saw impressive returns across several of its funds, including a 14% return in its Eureka fund. Multi-strategy funds like Citadel and Millennium also performed well.
A customer buying a used car with the help of a finance specialist.
Our Methodology
For this article, we used the Finviz screener and filtered out stocks with 5-year revenue growth of over 20%, verifying this information from additional sources. We picked the 15 stocks with the highest hedge fund sentiment to compile this list, taking data from Insider Monkey’s database of Q4 2024. We ranked the list from least to most hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Carvana Co. (NYSE:CVNA)
Number of Hedge Fund Holders: 84
Average 5-Year Revenue Growth: 39.43%
Carvana Co. (NYSE:CVNA) is an Arizona-based company that facilitates the buying and selling of used cars online. The company handles all parts of the process, from finding and inspecting cars to offering financing, delivering vehicles, and supporting customers after the sale. On April 22, Piper Sandler maintained an Overweight rating on CVNA and raised the price target from $225 to $230. Despite falling inventories and rising prices, Carvana is expected to keep growing if auto credit stays available. Strong Q1 results led to a higher price target and a positive outlook for late 2025 by Piper Sandler.
In 2024, Carvana Co. (NYSE:CVNA) made history by becoming the most profitable public automotive retailer in the United States, based on Adjusted EBITDA margin. The company has been credited with over 10 years and $10 billion in investment for helping build a unique business model focused on both customer experience and strong financial results. In the fourth quarter, Carvana hit a 10.1% adjusted EBITDA margin and a 4.5% net income margin, making it the first year the company posted positive net income in every quarter.
Carvana Co. (NYSE:CVNA)’s Q4 units sold grew 50% year-over-year to 114,379, despite it being a slower season. The company reached new highs in gross profit, operating income, and other financial metrics, and the company plans to expand its vehicle selection and production even further in 2025 to grow beyond its current share of the market, which stands at nearly 1%.
According to Insider Monkey’s fourth quarter database, 84 hedge funds were bullish on Carvana Co. (NYSE:CVNA), compared to 66 funds in the last quarter. CAS Investment Partners was the leading stakeholder of the company, with 6.3 million shares worth $1.3 billion.
Overall, CVNA ranks 15th among the high growth companies hedge funds are buying. While we acknowledge the potential of CVNA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than CVNA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.