In this piece, we will take a look at the ten best performing growth stocks in January 2024. If you want to skip our overview of growth stocks and the stock market climate, then you can take a look at 5 Best Performing Growth Stocks in January and February 2024.
When it comes to investing in stocks, the choice of the shares can depend on investment objectives and risk appetite. While people invest for a variety of reasons, the two main ones are a need to protect their capital against inflation and the desire to watch it grow in value. Depending on either of these, one can pile money either into growth stocks or in value stocks.
As the title suggests, growth stocks belong to those companies that are expected to grow their revenue and profitability in the future. This translated into hefty share prices, and one key way in which investors determine whether a stock is a growth stock is its price to earnings ratio. This ratio divides the current share price with the earnings per share to see the premium that the market is paying over a stock's ability to earn money through EPS.
Naturally, since their share prices are based on investor expectations instead of current financial performance, growth stocks are also riskier than value stocks. There are a couple of reasons behind this risk. The first is a sentiment driven share price driven by valuation models to an extent. While models such as discounted cash flows (DCF) provide a nice way to value a firm's future cash flows today, they still carry the risk of reality not matching the model and the shares adjusting to reflect this.
Additionally, growth isn't cheap and while we'll get to this later, since growth stocks rely on investor optimism about the future, they carry the risk of losing their value in case the economic clouds darken. A robust economy helped by consistent growth is a key determinant of growth stock performance, and this has also been the case throughout 2022 and 2023. The two years have proven to be among the most tumultuous in recent stock market history, and they've seen growth stocks tumble and then surge as a reflection of investor expectations for the economy.
Finally, one last important factor to keep in mind when looking at growth stocks is interest rates. These set the tone for the business climate, and for growth stocks, it means that they find it easier to finance their expansion if the rates are low. If you've been regularly following Insider Monkey or the financial media in general, you'd know that interest rates remain the hottest topic on Wall Street.
On this front, the tail end of February 2024 provided investors with a crucial data set to determine the future path of interest rates. Right now rates are quite high as the Federal Reserve is determined to stamp out inflation. Even as inflation remains above the Fed's benchmark, the fact that it has dropped noticeably over the past year or so has provided investors, and particularly those who like growth stocks, with hope that the first cuts will start soon.
Therefore, with inflation tied to interest rates, the personal consumption expenditure (PCE) price index data for January 2024 added to rate cut hopes. The data set from the Commerce Department revealed that during the month the PCE jumped by 0.3% and over the year, it stood at 2.4%. Both of these figures met market estimates, and consequently, the S&P 500 jumped by 26 basis points, while the tech heavy NASDAQ Composite (which includes some of the biggest growth stocks in the world) added 0.46% to its previous close.
However, while the dark economic clouds take their sweet time to dissipate, a recent growth stock earnings report shows just how brutal smart money can be if its expectations are not met. This earnings report was for the Bozeman, Montana based cloud computing services provider Snowflake Inc. (NYSE:SNOW) and it saw the firm forecast its revenue for the current quarter to sit between $745 million and $750 million. This fell shy of the average analyst estimates of $765 million (according to Refinitiv), and the miss came as Snowflake Inc. (NYSE:SNOW)'s management explained that economic uncertainty could drive its customers to reduce their spending. At the same time, the firm made a shocking announcement that revealed that its CEO Frank Slootman, who had joined in 2019 and led the firm to its current dominant role in the market, was retiring. Since such surprising announcements are rare for high growth stocks, investors reacted, and so far, Snowflake Inc. (NYSE:SNOW)'s shares have bled 19% since its earnings report for the fourth quarter of 2023.
With these details in mind, let's take a look at some top performing growth stocks in January and February. A couple of notable names are Meta Platforms, Inc. (NASDAQ:META), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
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Our Methodology
For our list of the best performing growth stocks, we ranked the 62 largest holdings of the iShares S&P 500 Growth ETF by their share price percentage gains during January and February 2024 and picked out the top stocks.
For these top growth stock performers, we used we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
10. KLA Corporation (NASDAQ:KLAC)
Number of Q4 2023 Hedge Fund Shareholders: 55
Share Price Performance: 21.25%
KLA Corporation (NASDAQ:KLAC) is an American semiconductor company headquartered in Milpitas, California. A sizeable entity with more than ten thousand employees, the firm provides equipment and products that help chip manufacturers manage product quality. The firm has been doing well on the financial front as of late since it has beaten analyst EPS estimates in all four of its latest quarters.
By the end of Q4 2023, 55 out of the 933 hedge funds covered by Insider Monkey's database had bought and owned KLA Corporation (NASDAQ:KLAC)'s shares. Panayotis Takis Sparaggis's Alkeon Capital Management was the firm's biggest hedge fund investor as it held a $431 million stake.
KLA Corporation (NASDAQ:KLAC) joins NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms, Inc. (NASDAQ:META), and Advanced Micro Devices, Inc. (NASDAQ:AMD) in our list of top performing growth stocks in January and February 2024.
9. General Electric Company (NYSE:GE)
Number of Q4 2023 Hedge Fund Shareholders: 92
Share Price Performance: 23.88%
General Electric Company (NYSE:GE) is the well known American industrial equipment company headquartered in Boston, Massachusetts. The firm made a big announcement in February 2024, when following a slate of ransomware attacks on healthcare firms, it introduced a new grid system designed to withstand cyber attacks.
As of December 2023 end, 92 out of the 933 hedge funds profiled by Insider Monkey were the firm's shareholders. General Electric Company (NYSE:GE)'s largest stakeholder in our database is Chris Hohn's TCI Fund Management due to its $5.3 billion investment.
8. Lam Research Corporation (NASDAQ:LRCX)
Number of Q4 2023 Hedge Fund Shareholders: 67
Share Price Performance: 24.31%
Lam Research Corporation (NASDAQ:LRCX) is another semiconductor firm. It sells equipment to enable companies such as Intel to manufacture their chips. A key stock in the era of AI, the firm has beaten analyst EPS estimates in all four of its latest quarters, and the average share price target of $887 prices in a hefty upside.
By the end of last year's fourth quarter, 67 out of the 933 hedge funds part of Insider Monkey's database had bought a stake in Lam Research Corporation (NASDAQ:LRCX). Ken Fisher's Fisher Asset Management was the firm's biggest investor through its $2.3 billion stake.
7. Eli Lilly and Company (NYSE:LLY)
Number of Q4 2023 Hedge Fund Shareholders: 102
Share Price Performance: 26.82%
Eli Lilly and Company (NYSE:LLY) is the American healthcare and pharmaceutical giant headquartered in Indianapolis, Indiana. The fact that its stock is up by 26.82% is unsurprising considering that its weight loss drug Mounjaro is a stunning success. Eli Lilly and Company (NYSE:LLY)'s CEO further stoked the fire in February 2024 when he revealed that the firm plans to introduce its weight loss drugs to India.
Insider Monkey dug through 933 hedge fund holdings for 2023's December quarter and found that 102 had held the firm's shares. Eli Lilly and Company (NYSE:LLY)'s largest hedge fund shareholder is Ken Fisher's Fisher Asset Management courtesy of its $2.6 billion investment.
6. Netflix, Inc. (NASDAQ:NFLX)
Number of Q4 2023 Hedge Fund Shareholders: 89
Share Price Performance: 27.69%
Netflix, Inc. (NASDAQ:NFLX) is a software company whose platform enables users to watch content online. The firm made a big announcement in February 2023, when it revealed that a former Sherlock Holmes producer will now head its globally renowned film making division.
89 out of the 933 hedge funds covered by Insider Monkey's Q4 2023 research had invested in Netflix, Inc. (NASDAQ:NFLX). Ken Fisher's Fisher Asset Management was the biggest investor through its $2 billion stake.
Meta Platforms, Inc. (NASDAQ:META), Netflix, Inc. (NASDAQ:NFLX), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD) are some top performing growth stocks in 2024.
Click to continue reading and see 5 Best Performing Growth Stocks in January & February 2024.
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Disclosure. None. 10 Best Performing Growth Stocks in January & February 2024 was initially published on Insider Monkey.
