This week we’re looking for companies loved by the world’s best investors and red-hot stocks.
Lists of the 20 hottest big- and small-cap smart money favorites can be found at the end of this article.
Among the stocks featured on our screen, there is a particular bias towards Indian stocks. They make up a third of the results. This is despite a period of market jitters in response to the results of the recent Indian general election, which was won by the BJP, the party of incumbent Prime Minister Narendra Modi, which turned out to be less convincing than expected.
One of these Indian companies is among the three stocks we’ll look at below, which were chosen because their share price has risen the most over the past month.
How Data Dive works for elite companies
Our hunt for high-growth elite companies begins with selecting the top five large- and small-cap companies (under $2.3 billion) among the elite investors we track. Elite investors represent approximately the top 3% of the more than 10,000 equity managers controlled by Citywire. All companies must have a rating of at least AA.
We then select the 20 companies from each group with the biggest three-month share price gains.
Each week we provide one of six simple but powerful reviews of Citywire Elite’s top-rated stocks to uncover investment ideas for readers. We alternate between different ones every week. They are:
Hims & Hers – growth by 66% in a month
Online pharmacy with AAA rating His and her health (USA: HIMS) was able to join the ranks of weight-loss drugs thanks to a loophole in the US Food and Drug Administration (FDA). In response to this, the company’s shares are rising rapidly.
The company is taking advantage of an FDA rule that allows companies to make “complex” versions of drugs that are on the public health body’s official shortage list.
Such is the case with Wegovy and Zepbound, revolutionary weight-loss drugs made by AAA-rated companies. Novo Nordisk (DK:NOVO.B) and AAA rating Eli Lilly (USA:LLY) respectively. Pharmaceutical companies have been unable to meet the rampant demand for their glucagon-like peptide-1 (GLP-1) drugs, which mimic the hormone that makes you feel full.
Hims & Hers has teamed up with an FDA-compliant partner to create its own version of GLP-1 drugs, which it sells at a price significantly lower than those made by Novo and Lilly.
However, FDA-approved and patented versions of the drug will not remain on the shortage list forever, and other companies may also attempt the same maneuver as Hims & Hers. However, online pharmacies may have long-term benefits.
Hims & Hers generates the majority of its revenue from product subscriptions. He also prescribes medications and offers regular consultations.
The benefit of this business model, as well as the creation of negative working capital (money coming in before related expenses are incurred), is that it can create a “hard” relationship with customers. If the company can build a large and loyal customer base for its weight-loss drugs, it could be in a strong position to sell Novo and Lilly products once shortages ease.
Consensus forecasts have not yet seen significant improvements following the GLP-1 news, but growth expectations are still very strong (see chart below).
GE T&D – growth by 48% per month
AAA rating GE T&D (IN:522275) has had a great month, but it pales in comparison to its stock’s 616% rise over the past year.
The company is benefiting from growing orders for its power grid equipment as countries around the world look to modernize and expand their power distribution infrastructure to move towards net zero.
GE T&D’s home market, India, not only shares these environmental ambitions, but rapid economic growth is creating additional tailwinds as electricity demand soars.
After a brief wobble caused by a surprise election result in India, stocks began to rise again.
Nvidia – growth by 42% in a month
Appearing on yet another of our screens is AAA rated. Nvidia (US: NVDA), the chip designer that is revolutionizing artificial intelligence and this week became the world’s most valuable company by market capitalization.
The company’s stellar earnings for the month were the result of better-than-expected quarterly results and a well-received stock split.
Sometimes a motion graphic speaks a thousand words, and the image below is one we’ve used and updated several times over the past few years to illustrate all the excitement surrounding Nvidia (look how the data center streak has gone!).
We used the same graphic in August 2022 when we urged readers to look beyond falling stock prices and slumping sales in the gaming industry and instead focus on the potential AI-related data center demand that top investors were focusing on. Since then, the stock has returned more than eightfold.
Comparing today’s motion graphics with those of 2022 shows how much better than expected the potential of AI has proven to be.
Momentum could become a self-reinforcing phenomenon as more investors buy after seeing strong gains in stocks. This will likely be a factor in Nvidia’s recent strong growth. This increases the risks if AI spending begins to dry up over the past two years.
There are no signs of orders slowing down yet, although there are concerns about how AI is impacting the business of successful software companies such as AA-rated companies. Adobe (US: ADBE) and rated AA Salesforce (USA: CRM).
This could have negative consequences in the future, but the executives followed by Citywire Elite Companies are still interested in it.
Meet your new equity research team – the world’s 277 best portfolio managers!
Hot elite companies
All companies presented in the tables below are ordered by share price changes over three months.
Big hats
Source: FactSet. Forecasts for the next 12 months.
Small hats
Source: FactSet. Forecasts for the next 12 months.