We recently published a list of 11 Unstoppable Growth Stocks to Invest in Now. In this article, we are going to take a look at where JFrog Ltd. (NASDAQ:FROG) stands against other unstoppable growth stocks to invest in now.
BlackRock highlighted that the trade conflict between the US and China continues to cause major economic disruptions. However, the expectations of a supply-driven contraction in the US are very different from a typical business cycle recession. The hard economic rules binding on policy are expected to limit the damage. Furthermore, the AI mega force has been keeping the firm overweight on the US stocks and positive on developed market stocks, despite the expectations of volatility.
Focus Areas Amidst Tariff Worries
BlackRock believes that some of the sectors are more exposed to tariffs as compared to others, with sectoral differences already at play in the earnings releases for Q1 2025. The companies that are at the forefront of the AI mega force continued to keep fueling the US equity strength, while policy uncertainty significantly impacts the broader market. The leading technology companies managed to exceed the Q1 earnings expectations, highlighted the increasing AI-driven demand, and announced plans to raise investments focused on AI.
Such trends strengthen the fact that how AI mega force continues to persist despite the supply-driven disruptions. As a result, BlackRock has remained positive on developed market (DM) stocks, primarily the US. On the other hand, automakers have been tagged by the firm as the ones most exposed to key supply inputs from China. Furthermore, some of the automakers have highlighted the impact of tariffs in their respective expectations for full-year earnings.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Franklin Templeton believes that it is of utmost importance to remember that tough economic and/or market phases are finite. Investors who tend to see most of the profits during the recovery are the ones staying the course during the stormy weather. The investment firm continues to see increased potential for a sustained period of small-cap leadership. Considering its metric of choice to gauge index valuations, EV/EBIT, the Russell 2000 is far more attractively valued as compared to the Russell 1000, says Franklin Templeton.
As per the investment manager, the valuation situation becomes even more attractive when consensus earnings growth is included. Notably, growth stocks are the ones capable of increasing their earnings faster as compared to an average business in the respective industry or broader market. At 2024 end, the Russell 2000 was expected to see stronger earnings growth in 2025 as compared to the Russell 1000, based on EPS, added the investment firm.
Our Methodology
To list the 11 Unstoppable Growth Stocks to Invest in Now, we used a screener to shortlist the companies catering to the growth sectors that have 3-year revenue growth of at least ~25%, and that have appreciated significantly on a YTD basis. We also mentioned hedge fund sentiments around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiment.
Note: The data was recorded on May 9.
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).
A corporate executive standing in front of a large monitor, demonstrating the DevOps package repository.
JFrog Ltd. (NASDAQ:FROG)
Number of Hedge Fund Holders: 32
3-Year Revenue Growth: ~25.9%
% Increase on a YTD Basis: ~27.04%
JFrog Ltd. (NASDAQ:FROG) offers a software supply chain platform. Analyst Mike Cikos from Needham maintained a “Buy” rating on the company’s stock, while keeping the price objective at $46.00. The analyst’s rating is backed by the company’s impressive financial performance, evidenced by its healthy revenue growth and strong increase in remaining performance obligations. In Q1 2025, JFrog Ltd. (NASDAQ:FROG)’s revenue came in at $122.4 million, reflecting a rise of 22% YoY, while its remaining performance obligations sat at $424.2 million as of March 31, 2025.
Furthermore, JFrog Ltd. (NASDAQ:FROG)’s net dollar retention rate remained stable at 116%, exhibiting its ability to retain and expand within the existing customer base, added the analyst. The continuation of multi-year deals cements its resilient business model, aiding the analyst’s rating. JFrog Ltd. (NASDAQ:FROG)’s customers with over $100K ARR rose to 1,051 as compared to 911 in the year-ago period. During Q1 2025, the company saw cloud momentum fueled by increased usage, it accelerated full-platform adoption, and continued to witness growth in its security core.
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“We initiated a position in JFrog Ltd. (NASDAQ:FROG), a leading provider of software tools that help developers manage, secure, and release modern software applications. JFrog’s flagship product, Artifactory, is a universal repository that stores and manages the “binaries” – the machine-readable files that applications rely on to run in production. As companies build increasingly complex applications with numerous dependencies and components from open-source libraries, managing these binaries has become mission-critical. JFrog simplifies this complexity by offering a centralized solution to store, track, and secure all software binaries, ensuring consistent deployments and faster development cycles. The company also provides adjacent security tools, such as JFrog Xray and Advanced Security, which continuously scan these binaries for vulnerabilities and policy violations, ensuring that only safe, compliant software reaches production.
JFrog has established itself as the industry standard in binary management, serving more than 7,000 customers, including 83% of the Fortune 100, the top 10 global technology corporations, the largest 10 financial institutions, and 9 of the top 10 health care organizations. The company is gaining market share from smaller competitors in the binary category due to its breadth and depth of coverage – Artifactory supports over 30 different package formats and programming languages (far more than competitors), while offering more efficient storage, deeper security context, and tighter integrations with other developer tools. Once adopted, JFrog delivers measurable ROI for customers by freeing up developer time, reducing complexity, and preventing costly security breaches. This has driven industry-leading customer gross retention rates of 97%, and solid 117% net expansion rates as customers expand their usage and adopt more product modules. 46 customers each spend more than $1 million annually on the platform. JFrog’s stickiness and strong developer brand awareness produce healthy unit economics, with trailing-twelve-month free cash flow margins more than doubling over the past two years to 22% as of the latest reported quarter.
Looking ahead, we believe JFrog can sustain healthy growth as generative AI adoption accelerates, driving the need to manage new binary types (e.g., large language model artifacts) and increasing overall application complexity. Additionally, we expect average deal sizes to grow as customers adopt higher-priced products like Advanced Security and migrate to JFrog’s cloud offering, which typically yields a 20% to 80% uplift in pricing. This combination of pricing power and operating leverage should drive strong free cash flow growth over time, which we believe will bode well for the stock.”
Overall, FROG ranks 4th on our list of unstoppable growth stocks to invest in now. While we acknowledge the potential of FROG as an investment, our conviction lies in the belief that some deeply undervalued 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 a deeply undervalued AI stock that is more promising than FROG but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
