Should You Consider Adding Vericel Corporation (VCEL) to Your Portfolio?

Next Century Growth Investors, LLC, an investment management firm, has released its Q1 2024 investor letter titled “Small Cap Strategy.” A copy of the letter can be downloaded here. The market continued its rally in the first quarter of 2024, pausing in January but resuming its upward trajectory in February and March. During the quarter, the small cap strategy generated gains in most sectors, with the exception of technology, where two technology stocks contributed significantly to the index’s performance. Against this backdrop, the strategy returned 9.35% (net of fees) during the quarter, compared to a return of 7.58% for the Russell 2000 Growth Index. Additionally, please see the fund’s top five holdings for its top picks in 2024.

The Next Century Growth Small Cap strategy highlighted stocks like Vericel Corporation (NASDAQ:VCEL), in its Q1 2024 investor letter. Vericel Corporation (NASDAQ:VCEL) is a commercial-stage biopharmaceutical company. Vericel Corporation (NASDAQ:VCEL) has a one-month return of -2.71%, and its shares have gained 19.55% of their value over the past 52 weeks. On July 1, 2024, Vericel Corporation (NASDAQ:VCEL) stock closed at $45.03 per share with a market cap of $2.174 billion.

Next Century Growth Small Cap Strategy said the following about Vericel Corporation (NASDAQ: VCEL) in its Q1 2024 investor letter:

“Vericel Company (NASDAQ: VCEL) manufactures and markets two advanced cell therapy products: MACI, a cartilage repair product for the treatment of cartilage defects in the knee, and Epicel, a permanent skin substitute for severe burn care. The company also in-licensees NexoBrid, which is used to eliminate pressure ulcers in patients with partial or total burns. MACI, which is still less than 10% penetrated in a $2 billion addressable market, is the primary growth driver and continues to gain adoption among surgeons and patients due to strong clinical results. Epicel operates in a slower-growing segment of the burn market, but VCEL maintains a high market share. NexoBrid, a recently FDA-approved product, may be an additional growth catalyst for VCEL’s burn franchise. VCEL generates solid revenue growth, healthy profit margins, and is supported by a balance sheet with $125 million in cash and no debt.

A lab worker holding a vial of biopharmaceuticals for cell therapies.

Vericel Corporation (NASDAQ:VCEL) is missing from our list of the 31 most popular stocks among hedge funds. According to our database, 17 hedge fund portfolios held Vericel Corporation (NASDAQ:VCEL) at the end of the first quarter, compared to 16 in the prior quarter. Vericel Corporation (NASDAQ:VCEL) reported a 25% increase in total revenue for the quarter, beating its expected guidance range. Additionally, the company raised its full-year revenue guidance to $238 million to $242 million, citing a strong start to the year. While we recognize the potential of Vericel Corporation (NASDAQ:VCEL) as an investment, our conviction lies in the belief that AI stocks have greater promise to deliver higher returns, and in a shorter time frame. If you’re looking for an AI stock that’s as promising as NVIDIA but trades at less than 5x earnings, check out our report on the the cheapest AI stock.

We discussed Vericel Corporation (NASDAQ:VCEL) in another article and shared Brown Capital Management Small Company Fund’s views on the company. Additionally, please visit our Q1 2024 Hedge Fund Investor Letters page for more investor letters from hedge funds and other prominent investors.

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Disclosure: None. This article was originally published on Insider Monkey.