Smart Money Is Piling Into These Growth Stocks

A total of 22 funds in our system held shares of Sprouts Farmers Market Inc (NASDAQ:SFM) on June 30, up from 18 funds at the end of March. In the second quarter, the Phoenix, Arizona-based organic grocery store operator reported $1 billion in revenue, representing 14% year-over-year growth, though that figure missed analysts’ estimate of $1.04 billion. Last month, Sprouts Farmers Market slashed its full-year same-store sales estimate to 1.5%-to-2.5% from its prior forecast of 3.5%-to-4.5%. The company also lowered its full-year EPS estimate to $0.83-to-$0.86 from $0.96-to-$0.98. The company cited “significant ongoing deflation” and enhanced promotional efforts as reasons for the revisions. Nonetheless, the company has promising avenues for growth in the future due to rising demand for organic food. Sprouts now has around 240 stores in 13 states, significantly up from less than 50 stores in 2011. Adam Weiss’ Stillwater Investment Management owns 632,300 shares of the company as of the end of the second quarter.

In the second quarter, the hedge funds tracked by Insider Monkey actively piled into Beacon Roofing Supply, Inc. (NASDAQ:BECN), which posted record breaking net sales of $1.15 billion in the third quarter, representing impressive 60% year-over-year growth. Organic sales in the quarter also jumped by 8.7%, mainly due to its greenfield investments over the past few years, as well as favorable weather conditions in Dallas. Net income for the quarter totaled $41.1 million, compared to $28.3 million in the same period of 2015. The stock is up by 4% year-to-date. Ken Griffin’s Citadel Investment Group was one of 40 hedge funds in our database with a long position in Beacon Roofing Supply, Inc. (NASDAQ:BECN) at the end of the second quarter, up from 29 at the end of the first quarter.

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