In this article, we will take a look at the 14 high growth consumer stocks to buy. To skip our analysis of the recent trends and market activity, you can go directly to see the 5 High Growth Consumer Stocks to Buy.
Consumer stocks include stocks across two sectors that include companies offering products and services directly to consumers. The consumer staples sector provides essential products and services that are used by consumers on a daily basis. It includes food and beverages, household goods, hygiene products, and personal items, among others. On the other hand, the consumer discretionary sector provides non-essential goods and services including automobiles, luxury goods, and leisure items, among others.
The nature of products and services provided by the respective sectors significantly impacts the top and bottom lines for the companies providing these goods and services. Consumer Staples, with the provision of essential goods and services, has a more stable and robust top and bottom line as its demand remains relatively stable even in times of macroeconomic instability. On the other hand, customers tend to cut down their expenditures when it comes to consumer discretionary items when adverse macroeconomic situations persist.
The consumer staples sector faced challenges in the past year as the companies had to face rising inflation as well as increasing competition from private-label companies in the sector. The consumer staples sector benefits from attractive valuations as the stocks in the sector lost favor last year when investors flocked to mega-tech stocks. Attractive valuations, improving profit margins, and strong pricing power may translate into a positive year for the big names in the sector, according to Ben Shuleva, Fidelity Sector Portfolio Manager.
On the other hand, the consumer discretionary sector depicted resilience in the face of these challenges as pent up demand from previous years kept overall demand stable during 2023. According to Jordan Michaels, Fidelity Sector Portfolio Manager, the consumer discretionary sector is expected to continue to perform well this year as well, supported by interest rate cuts, lower inflation rates, and industry-wide factors.
Our list of 14 high growth consumer stocks to buy includes some of the most notable names in the consumer sectors and is dominated by companies from the consumer discretionary sector as these companies managed to grow their revenues significantly despite the incumbent macroeconomic adversity. These companies have benefited from multiple factors recently. For instance, Li Auto Inc. (NASDAQ:LI) and Rivian Automotive Inc. (NASDAQ:RIVN) significantly increased their production recently which has translated into high revenue growth. Similarly, the list includes multiple resorts and casino operators such as Wynn Resorts Limited (NASDAQ:WYNN), and Las Vegas Sands Corp. (NYSE:LVS) which have benefited from the resurgence of the travel and leisure industry.
A supermarket shelf overflowing with a variety of fast-moving consumer goods.
Methodology
To come up with 14 high growth consumer stocks to buy, we have used stock screeners to identify high growth consumer stocks. We filtered the stocks with at least $2.0 billion in market capitalization and a year-over-year revenue growth of more than 30% for the latest quarter, as of February 9. We then proceeded to rank the companies in ascending order of their revenue growth.
We have also provided hedge fund ownership data for the stocks on our list. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. 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.
14. Hims & Hers Health, Inc. (NYSE:HIMS)
Revenue Growth YoY: 56.52%
Number of Hedge Fund Holders: 24
San Francisco, California-based Hims & Hers Health, Inc. (NYSE:HIMS) is a multi-specialty telehealth platform that connects consumers to licensed healthcare professionals, for numerous conditions related to primary care, mental health, sexual health, skincare, and more.
On November 6, Hims & Hers Health, Inc. (NYSE:HIMS) released its financial results for Q3 2023. Its total revenue increased by 57% y-o-y to $227 million, while it reported a net loss of $7.6 million. It generated an EPS of -$0.04 for the quarter, $0.01 less than the analyst consensus.
Hims & Hers Health, Inc. (NYSE:HIMS) also announced that its Board of Directors had authorized a share repurchase program to repurchase up to $50 million worth of the company’s common stock over the next 2 years.
Like other stocks such as Wynn Resorts Limited (NASDAQ:WYNN), PDD Holdings Inc. (NASDAQ:PDD), and Rivian Automotive Inc. (NASDAQ: RIVN), Hims & Hers Health, Inc. (NYSE:HIMS) is among the 14 high growth consumer stocks to buy.
13. Norwegian Cruise Line Holdings Ltd. (NASDAQ:NCLH)
Revenue Growth YoY: 56.98%
Number of Hedge Fund Holders: 31
Miami, Florida-based Norwegian Cruise Line Holdings Ltd. (NASDAQ:NCLH) is a leading global cruise company that operates the Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands. Its fleet comprises of 32 ships with more than 65,500 berths providing access to nearly 700 destinations globally.
On January 31, Susquehanna analyst Christopher Stathoulopoulos raised the price target for Norwegian Cruise Line Holdings Ltd. (NASDAQ:NCLH) shares from $14 to $20 and maintained a ‘Neutral’ rating for the shares. The target price represents a potential upside of 21.80% based on the share price on February 7. The company’s revenue increased by nearly 57% y-o-y to $2.5 billion in Q3 2023.
As of Q4 2023, 31 of the 933 hedge funds tracked by Insider Monkey were long Norwegian Cruise Line Holdings Ltd. (NASDAQ:NCLH), holding shares worth $397 million. Its largest hedge fund shareholder was John W. Rogers’ Ariel Investments with ownership of 6.3 million shares valued at $126 million.
12. DraftKings Inc. (NASDAQ:DKNG)
Revenue Growth YoY: 57.40%
Number of Hedge Fund Holders: 55
Based in Boston, Massachusetts, DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming company with products that range across daily fantasy, regulated gaming, and digital media.
On November 2, DraftKings Inc. (NASDAQ:DKNG) released its financial results for Q3 2023. Its revenue increased by 57% y-o-y to $790 million while it generated a net loss of $283 million.
Earlier in June 2023, DraftKings Inc. (NASDAQ:DKNG) announced that it had submitted an indicative offer to acquire the U.S. business of PointsBet Holdings Ltd. for an all-cash purchase price of $195 million. The proposal represented a 30% premium to PointsBet’s existing agreement to sell the business to Fanatics Betting and Gaming. The company later announced that it is no longer pursuing the acquisition.
As of Q4 2023, DraftKings Inc. (NASDAQ:DKNG) shares were owned by 55 of the 933 hedge funds tracked by Insider Monkey, the second highest on our list of 14 high growth consumer stocks to buy.
Baron Funds, an investment management company, made the following comments about DraftKings Inc. (NASDAQ:DKNG) in its “Baron Discovery Fund” Q4 2023 investor letter:
“We added to our position in DraftKings Inc., the leading mobile sportsbook and gaming operator in the U.S. While we lowered our estimates for the fourth quarter due to lower hold in the month of November, it is important to keep in mind that while hold can be volatile from quarter to quarter, the company continues to slowly increase hold over time (primarily because of a higher percentage of the handle being in higher hold “parlay” bets). We continue to be attracted to DraftKing’s dominant market share and the scale advantages that come with this.”
11. TAL Education Group (NYSE:TAL)
Revenue Growth YoY: 60.51%
Number of Hedge Fund Holders: 32
Based in Beijing, China, TAL Education Group (NYSE:TAL) is a leading education and technology company operating in China. It offers comprehensive learning services to students from pre-school to the twelfth grade primarily through three flexible class formats: small classes, personalized premium services, and online courses.
On January 25, TAL Education Group (NYSE:TAL) released the financial results for the quarter ended November 30, 2023. Its net revenues increased by 61% y-o-y to $374 million, while it generated a net loss of $24 million compared to a net loss of $52 million. The EPS for the quarter was recorded at -$0.04, which missed the consensus by $0.03.
As of Q4 2023, TAL Education Group (NYSE:TAL) shares were held by 32 of the 933 hedge funds tracked by Insider Monkey, with the total hedge fund holdings valued at $525 million.
10. Wynn Resorts Limited (NASDAQ:WYNN)
Revenue Growth YoY: 83.15%
Number of Hedge Fund Holders: 46
Las Vegas, Nevada-based Wynn Resorts Limited (NASDAQ:WYNN) is a developer and operator of high-end hotels and casinos. It owns and operates Wynn Las Vegas, Encore Boston Harbor, Wynn Macau, and Wynn Palace, Cotai.
On February 7, Wynn Resorts Limited (NASDAQ:WYNN) released its financial results for Q4 2023. Its total revenue increased by 83% y-o-y to $1.8 billion, while it generated a net income of $729 million. At $6.19, its EPS exceeded the consensus estimates by $4.99.
As of Q4 2023, Wynn Resorts Limited (NASDAQ:WYNN) shares were held by 41 out of 933 hedge funds tracked by Insider Monkey, with a total value of $959 million. Ken Fisher’s Fisher Asset Management was the biggest hedge fund shareholder with ownership of nearly 3.9 million shares valued at $358 million.
In its Q4 2024 “Baron Real Estate Fund” investor letter, Baron Funds, an investment management company made the following comments about Wynn Resorts Limited (NASDAQ:WYNN):
“If cash flow returns to the level achieved in 2019 prior to COVID-19, we believe Wynn’s shares will increase 30% to 50% higher than where they have recently traded. We believe additional drivers for future value creation beyond a re-emergence in Macau business activity include: (i) our expectation for long-term growth opportunities in the company’s U.S.-centric markets of Las Vegas and Boston, including an expansion of Wynn’s Encore Boston Harbor resort; (ii) Wynn’s plans to develop an integrated resort in the United Arab Emirates with 1,500 hotel rooms and a casino that is similar in size to that of Encore Boston Harbor; (iii) opportunities to improve cash-flow margins by rightsizing labor and achieving lower staff costs in Macau; (iv) the possibility that Wynn is granted a New York casino license; and (v) an expansion in the company’s valuation multiple to levels achieved prior to the pandemic.”
9. e.l.f. Beauty, Inc. (NYSE:ELF)
Revenue Growth YoY: 84.91%
Number of Hedge Fund Holders: 34
Oakland, California-based e.l.f. Beauty, Inc. (NYSE:ELF) sells premium-quality makeup with a brand portfolio that comprises of five brands: e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People and Keys Soulcare.
On February 6, e.l.f. Beauty, Inc. (NYSE:ELF) released its financial results for the quarter ended December 31, 2023. Its revenue increased by 85% y-o-y to $271 million while it generated a net income of $27 million. Its normalized EPS of $0.74 exceeded consensus estimates by $0.18.
Following the earnings release, DA Davidson analyst Linda Bolton Weiser raised the price target for e.l.f. Beauty, Inc. (NYSE:ELF) shares to $220 from $178 and maintained a ‘Buy’ rating for the shares. The target price represents a potential upside of 26.06% based on the share price on February 7.
8. Atour Lifestyle Holdings Limited (NASDAQ:ATAT)
Revenue Growth YoY: 93.10%
Number of Hedge Fund Holders: 15
Shanghai, China-based Atour Lifestyle Holdings Limited (NASDAQ:ATAT) is a leading hospitality and lifestyle company in China. It is the leading upper midscale hotel chain in China and is the first Chinese hotel chain to develop a scenario-based retail business.
On November 16, Atour Lifestyle Holdings Limited (NASDAQ:ATAT) released its financial results for Q3 2023. Its revenue increased by 93% y-o-y to $177 million while net income more than doubled to $36 million.
As of Q4 2023, 15 of the 933 hedge funds tracked by Insider Monkey held shares of Atour Lifestyle Holdings Limited (NASDAQ:ATAT), the lowest on our list of 14 high growth consumer stocks to buy.
7. PDD Holdings Inc. (NASDAQ:PDD)
Revenue Growth YoY: 93.89%
Number of Hedge Fund Holders: 71
Shanghai, China-based PDD Holdings Inc. (NASDAQ:PDD) is a multinational commerce group that owns and operates a portfolio of businesses. It has built a network of sourcing, logistics, and fulfillment capabilities, that support its underlying businesses. Its Pinduoduo is a mobile-only marketplace that connects millions of agricultural producers with consumers across China.
Following 94% year-over-year revenue growth in Q3 2023 to generate $9.4 billion in total revenue, Benchmark analyst Fawne Jiang raised the price target for PDD Holdings Inc. (NASDAQ:PDD) shares to $190 from $140 and maintained a ‘Buy’ rating for its shares.
As of Q4 2023, 71 of the 933 hedge funds tracked by Insider Monkey owned shares of PDD Holdings Inc. (NASDAQ:PDD), valued at $8.3 billion. The company ranks highest on our list of 14 high growth consumer stocks to buy based on the number of hedge funds that own its shares.
In its Q4 2024 investor letter, GreenWood Investors LLC, an investment management firm, made the following comments about PDD Holdings Inc. (NASDAQ:PDD):
“Using insights gleaned from our close proximity to e-commerce at CTT, we undertook a multi-month effort to underwrite PDD Holdings. This US-listed Irish holding company owns China’s leading disruptive marketplace called PinDuoDuo. During the summer, as it became unbearable for most investors to remain publicly invested in Chinese equities, we took a position in PDD. Adding to the narrative during the summer for PDD was that its international business, Temu, was burning cash and carried with it a negative valuation consolidated into PDD’s holding company structure. Yet, as we were able to validate the major competitive advantage its direct-selling model has, from Chinese factory direct to the global consumer, we understood the losses to be highly temporary as the company leaned into digital marketing — becoming by far the largest digital advertiser on all leading platforms.”
6. Trip.com Group Limited (NASDAQ:TCOM)
Revenue Growth YoY: 99.36%
Number of Hedge Fund Holders: 40
Shanghai, China-based Trip.com Group Limited (NASDAQ:TCOM) is one-stop travel service provider comprising of Trip.com, Ctrip, Skyscanner, and Qunar. It offers services including accommodation reservation, transportation ticketing, packaged tours, and corporate travel management.
On November 20, Trip.com Group Limited (NASDAQ:TCOM) released its financial results for the third quarter of 2023. It generated a strong performance during the quarter with net revenue up 99% y-o-y to $1.9 billion and a net income of $637 million. Its normalized EPS of $1.01 surpassed consensus estimates by $0.34.
Following the earnings release, Benchmark analyst Fawne Jiang reiterated a $55 price target and a ‘Buy’ rating for Trip.com Group Limited (NASDAQ:TCOM) shares.
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Disclosure: None. 14 High Growth Consumer Stocks to Buy is originally published on Insider Monkey.