In this article, we discuss the 15 best stocks to invest in right now according to hedge funds. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Stocks To Invest In Right Now According to Hedge Funds.
Choosing the right stocks to add to an investment portfolio without a time-tested strategy is incredibly hard and can be a daunting and time-consuming endeavor. With unprecedented gains being created in the market, many expect a continuation of this recent increase in investment activity. Through the end of August, markets were having a stellar year, with the S&P 500 adding 20.4% in the first eight months of 2021. That trajectory changed in September, in what is regarded as the stock market's worst month in history, as the index lost nearly 5%. The growing likelihood of rising interest rates and tighter monetary policy, alongside debt ceiling jitters, Chinese real estate troubles and valuation concerns, combined to send markets lower.
A recent poll by the National Association for Business Economists in the US indicates that economists expect GDP growth to be 5.6%, down from the anticipated growth of 6.7% earlier this year. In such an uncertain time, investors are prioritizing security and investment stability more so than ever before.
In this environment, investors should back stocks with sound fundamentals and strong catalysts for growth to shield themselves from possible volatility. Some of the stocks to keep a lookout for include Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA) and Apple Inc. (NASDAQ:AAPL), among others discussed in detail below.
With this context in mind, here is our list of the 15 best stocks to invest in right now. The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey. The following list is ranked according to the number of hedge funds having stakes in each firm.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Stocks To Invest In Right Now According to Hedge Funds
15. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 108
Incorporated in Delaware, and based in New York, JPMorgan Chase & Co. (NYSE:JPM) is a multinational financial services and investment banking firm that offers financial advisory services and solutions across the globe. The company ranks fifteenth on our list of the 15 best stocks to invest in right now.
By the end of the second quarter of 2021, 108 hedge funds out of the 873 tracked by Insider Monkey held stakes in JPMorgan Chase & Co. (NYSE:JPM) worth roughly $4.8 billion. This is compared to 111 hedge funds in the previous quarter with a total stake value of approximately $5.2 billion.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in JPMorgan Chase & Co. (NYSE:JPM) with 6.9 million shares worth more than $1 billion.
On October 15, Barclays analyst Jason Goldberg raised the price target on JPMorgan Chase & Co. (NYSE:JPM) to $193 from $187, and kept an Overweight rating on the shares.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NASDAQ:MA) and Apple Inc. (NASDAQ:AAPL), JPMorgan & Chase Co. (NYSE:JPM) is one of the stocks to watch.
14. Salesforce.com, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 108
Salesforce.com, Inc. (NYSE:CRM) is a cloud-based software company headquartered in San Francisco, California. Some of the services provided by the company include customer service, application development and analytics. The software tech company ranks fourteenth on the list of the 15 best stocks to invest in right now.
At the end of the second quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $11.7 billion in Salesforce.com, Inc. (NYSE:CRM), compared to 91 hedge funds in the previous quarter with stakes worth $8.8 billion. Rishi Renjen of ROAM Global Management is the leading shareholder in the company with over 99,069 shares worth more than $24.19 billion.
On September 24, RBC Capital analyst Rishi Jaluria raised the his price target on Salesforce.com, Inc. (NYSE:CRM) to $325 from $310 and kept an Outperform rating on the shares.
“Part 5: A New Investment in Salesforce.com
The assertion that mega caps can also be mispriced is a good segue to our second new investment in Salesforce.com. Salesforce is one of the largest software companies in the world with a market value of around US$ 250 bn. It is best known for its customer relationship management or “CRM” solution, known as its Sales Cloud. It has three additional clouds (“Service,” “Marketing” and “Commerce”) as well as a thriving platform business with both owned and 3rd party software solutions.
I first came across Salesforce in 2013. I was invested in Bechtle, a German company that provides companies with their in-house IT. I kept hearing about a strange new concept called “the Cloud” and wanted to get up to speed on the topic in case it was a risk to Bechtle. As a result, I picked up a copy of “Behind the Cloud”. It documents how Salesforce.com pioneered cloud-based software and revolutionised the software industry.
Since then, I have followed Salesforce from a distance and visited it several times in San Francisco. I did not consider it seriously as an investment though as for much of the period, I had not yet overcome my aversion to loss-making companies.
This changed in December last year when Salesforce announced the acquisition of Slack (a former investment of the Business Owner Fund, described in my 2020 half-year letter) for US$ 27 bn. On the date of announcement, Salesforce’s market value fell by around US$ 20 bn. Effectively, the market was saying that Slack was almost worthless, which, as an enthusiastic owner of Slack, I disagreed with. Initially, I decided to keep our Slack stock and roll it into Salesforce (as part of the consideration was in Salesforce’s own stock). As Salesforce’s price fell further in the subsequent months, I bought its stock directly to make it a full-size position post the closing of the Slack acquisition…” (Click here to see the full text)
13. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 112
More commonly referred to as simply Disney, The Walt Disney Company (NYSE:DIS) is a multinational mass media and entertainment conglomerate. The company holds a branched out interest in entertainment and mass media.
As of the end of the second quarter of 2021, Philippe Laffont of Coatue Management is among the leading shareholders of The Walt Disney Company (NYSE:DIS), according to the data tracked by Insider Monkey. Overall, 112 funds were bullish on the company by the end of the June quarter, compared to 134 in the previous quarter.
On September 22, Bank of America analyst Jessica Reif Ehrlich reiterated a Buy rating alongside a $223 price target on shares of The Walt Disney Company (NYSE:DIS).
“DIS shares declined for the quarter, taking a pause after a big fourth quarter and first quarter stock price advance, as Disney+ subscriber numbers were disappointing to investors. Disney+, the company’s DTC streaming business, had blown past previous subscriber projections, having gone from zero to 104 million in 17 months, but investors were now expecting 109 million subscribers. Management still expects significant continued growth to 230-260 million subscribers in 2024.
DIS is blessed with a deep library of unique content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands including Disney, Marvel, Pixar, and Lucasfilm, as well as the ABC network. The company also has a wealth of upcoming new content, expecting over 100 original titles per year, including two new Star Wars spin-off series, 10 Star Wars films, 10 Marvel films, 15 Disney and Pixar films, and 15 Disney and Pixar series.
Now that the disruption in its theme park, cruise, and theatrical businesses appears to be coming to an end, we believe that Disney is among the best-positioned media companies in the new landscape to combine multi-channel and DTC distribution. We also note that DIS has an extremely strong balance sheet and a growing pool of free cash flow to be used both to return to shareholders and to invest in future opportunities.”
12. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 113
Netflix, Inc. (NASDAQ:NFLX) is a subscription-based entertainment services company that offers TV series, documentaries and feature films across a wide variety of genres and languages. The company has roughly 204 million paid members in over 190 countries. The entertainment company ranks twelfth on our list of the 15 best stocks to invest in right now.
As of the end of the second quarter, 113 hedge funds tracked by Insider Monkey reported owning stakes in Netflix, Inc. (NASDAQ:NFLX). The total worth of these stakes is $13.2 billion. This shows the hedge fund sentiment is positive for the entertainment company as 110 hedge funds had stakes in the company in the previous quarter, having a total worth of $14 billion.
On October 13, Jefferies analyst Andrew Uerkwitz raised his price target on Netflix, Inc. (NASDAQ:NFLX) to $737 from $620, and kept a Buy rating on the shares of the company.
Out of the hedge funds being tracked by Insider Monkey, Ken Fisher's Fisher Asset Management is among the leading shareholders of Netflix, Inc. (NASDAQ:NFLX), with 3.98 million shares amounting to $2.1 billion in worth.
“We purchased Netflix in March, initiating a 3% position in the Portfolio. We believe Netflix is a highly competitively advantaged company. It has recently met all our investment guardrails, and we anticipate it will remain sustainably above our guardrails over the next five years and beyond. We know Netflix for its ubiquitous streaming service and deep library of owned content. The company has made investments in this content (currently running at nearly $20 billion/year), generally keeping subscribers highly engaged and loyal to their service. The company has number one market share in 99% of markets globally, but it is our view that video streaming on-demand is still an underpenetrated space with many years of attractive growth likely ahead. The service is also relatively affordable at roughly $11/month on average globally.
We believe Netflix’s growth in content spend is beginning to moderate, which could allow margin expansion to continue for many years when paired with ongoing subscriber growth and price increases. While there is competition from the likes of Apple (Apple TV+), Amazon (Prime Video), Disney (Disney+ and Hulu), and others, we believe there can be a handful of winners in this industry. Already, we see many people subscribe to multiple streaming video services, with Netflix being their “anchor” service. That said, the barriers to entry are high, and we believe they are getting higher given the substantial amount of capital and size of the subscriber base required to maintain a competitive service for both viewers and content producers. Over the next five years, we expect Netflix’s earnings growth to be approximately 30% annualized and free cash flow to grow at an even higher rate.”
11. Berkshire Hathaway Inc. (NYSE:BRK-A)
Number of Hedge Fund Holders: 116
Berkshire Hathaway Inc. (NYSE:BRK-A) operates in the insurance, freight rail transportation, and utility industries worldwide through its subsidiaries. Founded in Omaha, Nebraska, in 1837, Berkshire Hathaway Inc (NYSE: BRK.A) is one of the largest publicly traded companies in the world, and is ranked eleventh on our list of 15 best stocks to invest in right now.
Our database shows that 116 hedge funds are bullish on Berkshire Hathaway Inc. (NYSE:BRK.A) in the second quarter of 2021, up from 111 in the previous quarter. The Bill & Melinda Gates Foundation Trust is among the leading shareholders in Berkshire Hathaway Inc. (NYSE:BRK-A), with over 43.68 million shares worth more than $12.14 billion.
Driven by increasing profits on its railroad, utilities and energy divisions, the company gained 30.97% in the last year, and 20.33% in the year to date.
Black Bear Value Partners, in its Q3 2021 investor letter, mentioned Berkshire Hathaway Inc. (NYSE:BRK-A). Here is what the fund said:
“Please see Q1 letter for our Berkshire on a Napkin investment exercise. We have written on it extensively and will save your eyeballs from extraneous reading. Berkshire is very cheap for owning such high-quality businesses and will continue to grind higher and compound value for us.”
10. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 135
This September, Doug Anmuth of JPMorgan raised his price target on Uber Technologies, Inc. (NYSE:UBER) to $72, alongside an Overweight rating on the shares. The analyst praised the company for exhibiting a stronger execution and noted that it is well-positioned to benefit as the supply trends continue to improve.
Altimeter Capital Management is the company’s largest shareholder at the end of the second quarter of 2021, with shares valued at over $1.2 billion. Overall, 135 hedge funds tracked by Insider Monkey were bullish on Uber Technologies, Inc. (NYSE:UBER) in Q2, valued at $10.4 billion. This shows that hedge fund sentiment is positive for the ride-hailing company as 130 hedge funds had stakes in the company in the first quarter.
“The pandemic has also brought attention to the question of gig worker employment status for companies, including ClearBridge holdings Uber and Lyft. In the U.K., Uber proactively classified its drivers as “workers” ahead of final rulings from the British court system. The worker status in the U.K. is a designation between self-employed and employed status that entitles drivers to minimum wage, holiday pay and in some cases a pension.
ClearBridge has engaged with Uber on labor issues since its IPO, and we have given feedback over that time to the CEO, CFO, Chief Legal Officer and Investor Relations on labor relations as well as strategy and communications. Uber’s agreement on this designation is ahead of other competitors in the market and the legal mandate represents a step forward in the company’s thinking about labor. The agreement represents a short-term hit to earnings, yet in some ways it places Uber ahead of the market in its ability to balance labor and shareholder interests. Workers benefit from improved conditions, with new contributions amounting to roughly 3% of a driver’s earnings, while Uber establishes more certainty on costs and visibility into its regulatory environment and operation conditions in the future.”
9. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 138
Apple Inc. (NASDAQ:AAPL) is placed ninth on our list of 15 best stocks to invest in right now. The company operates as a technology firm with a large stake in the consumer electronics business. It is headquartered in California.
On October 8, Morgan Stanley analyst Katy Huberty maintained an Overweight rating and $168 price target on Apple Inc. (NASDAQ:AAPL) shares.
Out of the hedge funds being tracked by Insider Monkey, Warren Buffett’s Berkshire Hathaway is a leading shareholder in Apple Inc. (NASDAQ:AAPL), with over 887 million shares worth more than $121.5 billion. According to our database, 138 hedge funds were long in Apple Inc. (NASDAQ:AAPL) in the second quarter of 2021, compared to 127 funds in the preceding quarter.
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
8. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 143
At the end of the second quarter of 2021, 143 hedge funds in the database of Insider Monkey held stakes worth $16.3 billion in PayPal Holdings, Inc. (NASDAQ:PYPL). The number of hedge funds with stakes in the company remained unchanged for the first and second quarter. Alexander Becker of Codex Capital is the leading shareholder in the company, with 32,900 shares worth more than $9.59 billion.
On September 9, investment advisory DA Davidson maintained a Buy rating on PayPal Holdings, Inc. (NASDAQ:PYPL) stock with a price target of $325.
Qualivian Investment Partners mentioned PayPal Holdings, Inc. (NASDAQ:PYPL) in their Q2 2021 investor letter and discussed its stance on the firm. Here’s what the fund said:
“PayPal: The company reported a slightly disappointing quarter with revenues growing 19%, missing on the average revenue per transaction due to the accelerated decline in eBay transactions, the higher mix of Braintree transactions, and other impacts from hedging and F/X translations. Given the stock’s significant outperformance in 2020 and heightened expectations coming into the quarter, the stock has been consolidating since the earnings report. Long term we remain bullish on PayPal, given the company’s continued growth in eCommerce end markets, as well as the continued share gains of digital payments/wallets over paper payments.”
7. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 146
Alibaba Group Holding Limited (NYSE:BABA) is a multinational technology company that specializes in e-commerce, retail and cloud computing. One of the largest Chinese companies in the world, with a market capitalization of $444.18 million, Alibaba Group Holding Limited (NYSE:BABA) comes in at seventh on our list of the 15 best stocks to invest in right now.
At the end of the second quarter of 2021, 146 hedge funds in the database of Insider Monkey held stakes worth $16.79billion in Alibaba Group Holding Limited (NYS:BABA).
On September 6, KGI Securities began coverage of Alibaba Group Holding Limited (NYSE: BABA) with a Neutral rating and $26.34 price target on its shares.
Out of the hedge funds being tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management is among the leading shareholders in Alibaba Group Holding Limited (NYSE:BABA), with over 14 million shares worth $3.2 billion.
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
6. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 155
Ranked sixth on our list of the 15 best stocks to invest in right now, Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google Inc.. The multinational conglomerate owns and operates a large number of internet-based platforms.
Even though Alphabet Inc. (NASDAQ:GOOG) saw a slight decline in the number of hedge funds having stakes in the company in the second quarter, the stock remains one of the most popular amongst institutional investors. At the end of June, 155 funds out of the 873 tracked by Insider Monkey had stakes in the company, compared to 159 in the previous quarter
On October 12, JPMorgan analyst Doug Anmuth maintained an Overweight rating on Alphabet Inc. (NASDAQ:GOOG) with a $3,250 price target, noting that the company was the most liked mega-cap internet stock.
Out of the hedge funds being tracked by Insider Monkey, Florida-based Ivy Lane Capital is among the leading shareholders in Alphabet Inc. (NASDAQ:GOOG) with 9,700 shares worth more than $24.3 billion.
“Many higher growth companies reported strong results amid the pick-up in broad economic activity including Alphabet. These higher growth companies tend to have increased sensitivity to a change in discount rates and were supported as long-term interest rates stabilized over the period.”
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Disclosure: None. 15 Best Stocks To Invest In Right Now According to Hedge Funds is originally published on Insider Monkey.