The next time you go looking for the best possible growth stocks to buy, remember that you don't have to reinvent the wheel every time. Studying the activities of investors with successful track records is an easy way to jump-start your stock-picking process.
Keeping tabs on billionaire investors is probably easier than you think. Every three months, the U.S. Securities and Exchange Commission (SEC) makes just about anyone with over $100 million under management report their trading activities and the latest round of quarterly disclosures.
Before you make any hasty decisions with your own capital, remember, billionaires can make mistakes too. Instead of blindly following the world's most successful investors, let's look at some of the reasons these stocks keep getting their attention.
1. Doximity
Billionaire Steven Cohen and the fund he manages, Point72, bought nearly 675,000 shares of Doximity (DOCS -2.73%) in the first quarter. This company runs a social media platform for practicing healthcare providers and already boasts around 80% of all U.S. physicians as members.
The first quarter of 2023 was a difficult one for social media companies that rely on advertising dollars, but you would hardly notice from looking at Doximity's results from its fiscal fourth quarter, which ended on March 31. Pharmaceutical companies realizing the value in physicians' social media feeds drove total sales 18% higher year over year.
To keep busy physicians engaged with the curated social media feeds it provides, Doximity offers them some well-appreciated services. The Doximity platform helps with on-call scheduling, faxes, e-signatures, and telehealth visits. In fact, its telehealth service was used by 380,000 unique providers during the first three months of 2023.
Doximity's most recent offering, DocsGPT, could be its most popular yet. The generative artificial intelligence application dramatically reduces the amount of time physicians spend filling out paperwork, such as post-training documentation and pre-approval forms.
Doximity stock sank following its fiscal Q4 earnings call because management predicted fiscal Q1 revenue would land in a range between $106.5 million and $107.5 million. That is slightly less than Wall Street's consensus estimate of $112.1 million but hardly a reason to avoid making a long-term investment in this exceptional growth stock.
Shares of Doximity have been trading at more than 40 times forward-looking earnings expectations. I think this increasingly useful platform can justify its high valuation over the long run. That said, investors should understand that further signs of a slowdown ahead could be met by a severe market beatdown.
2. Uber Technologies
The biggest bet David Tepper and his highly successful fund, Appaloosa Management, made in 2023's Q1 was on Uber (UBER -2.03%). After buying up nearly 4.8 million shares, the mobility-service provider now makes up more than 10% of Appaloosa's portfolio.
Tepper's likely impressed with Uber's increasingly diverse operation. Instead of relying on its initial mobility service, most of Uber's total revenue stream now comes from its delivery and freight businesses.
Uber Freight is already one of the largest logistics networks in the U.S. with $17 billion in freight under management and more than 200,000 users on the platform. The company estimates the U.S. trucking industry alone represents an $884 billion opportunity. But gaining a leading position in this space might not be as easy as Tepper originally imagined. Citing a challenging market cycle, the company noted that Q1 freight revenue fell 23% year over year.
At recent prices, you can scoop up shares of Uber for 35.5 times forward-looking earnings estimates. This seems like a steep multiple to pay for a company that lost $3.4 billion over the past 12 months. I could change my tune if the freight business quickly turns itself around. For now, though, it's probably best to let billionaires risk their money while you watch this stock from a safe distance.
