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10 Best Stocks to Buy According to Billionaire Steve Cohen

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·13 min read
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In this article, we will discuss the 10 best stocks to buy according to billionaire Steve Cohen. If you want to skip our detailed analysis of Cohen's history, investment philosophy, and hedge fund performance, go directly to the 5 Best Stocks to Buy According to Billionaire Steve Cohen.

Steven A. Cohen, born on June 11, 1956, is an American financier and hedge fund manager. Cohen is the founder and CEO of Point72 Asset Management.

According to Bloomberg, Cohen’s fund has failed to perform in 2021 so far partially because of his support and bet on Gabe Plotkin’s Melvin Capital, which suffered huge losses amid the meme stock saga and needed to be rescued by other funds, including Cohen's. According to Bloomberg, Point72, whose 13F portfolio as of the first quarter of 2021 has a total value of $21.4 billion, returned just 1.2% in the first six months of 2021.

The 65-year-old billionaire’s stock picks still worth a look as Cohen has consistently outperformed the market for years and is known for his high-risk, high-reward bets. In 2020, Cohen’s Point72 Asset Management posted a 16% gain in 2020.

As of the end of the first quarter, Point72 Asset Management holds significant stakes in top tech companies, including Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Baidu, Inc. (NASDAQ: BIDU).

In Microsoft Corporation (NASDAQ: MSFT), Steve Cohen owns 596,055 shares. The investment covers 0.65% of the fund’s portfolio. Microsoft Corporation (NASDAQ: MSFT) currently has a $2.12 trillion market capitalization and was able to deliver a 38.54% return in the past 12 months. On June 2, KGI Securities initiated a coverage on Microsoft Corporation (NASDAQ: MSFT) with an “Outperform” rating and a price target of $300. Based on our calculations, Microsoft Corporation (NASDAQ: MSFT) ranks 2nd in our list of the 30 Most Popular Stocks Among Hedge Funds.

Another notable stock in Steve Cohen’s portfolio is Amazon.com, Inc. (NASDAQ: AMZN). The investor owns 79,978 shares in the company. Amazon is up 21.18% over the last 12 months. On April 5, Evercore ISI analyst Mark Mahaney initiated a coverage on Amazon with an “Outperform” rating and a price target of $4,000. In April Amazon.com, Inc. (NASDAQ: AMZN) posted earnings for the first quarter of 2021. It reported earnings per share of $15.79, beating market predictions by $6.18. The revenue for the first three months of 2021 was over $108.52 billion, beating the estimates by $3.89 billion. Amazon.com, Inc. (NASDAQ: AMZN) currently has a $1.86 trillion market capitalization.

Point72 Asset Management also holds 1.60 million shares in Baidu, Inc. (NASDAQ: BIDU) worth over $348 million. This represents 1.62% of their portfolio. Shares of the company rallied 49.16% in the last 12 months, resulting in a $65.65 billion market capitalization. The hedge fund’s stake in Baidu, Inc. (NASDAQ: BIDU) stock increased by 603% in the past few months, the latest data reveals. On July 13, KeyBanc analyst Hans Chung reiterated an “Overweight” rating and $332 price target on Baidu, Inc. (NASDAQ: BIDU). On June 17, Baidu (NASDAQ: BIDU) partnered with BAIC Group's EV brand ARCFOX to jointly release Apollo Moon, a new generation of driverless cars that are to be priced at RMB 480,000 per unit.

Billionaire Steve Cohen's Top 10 stock picks
Billionaire Steve Cohen's Top 10 stock picks

While choosing stocks to invest in, you should perform detailed research amid the increasing volatility in the financial markets, which is making it harder for even the smart money to sustain profits. The hedge fund industry that once used to post sterling gains is also feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 124 percentage points since March 2017. Between March 2017 and February 26, 2021, our monthly newsletter's stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16. That's why we believe hedge fund sentiment is a handy indicator that investors should consider. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Let’s start our list of 10 best stocks to buy according to billionaire Steve Cohen. We used Cohen's 13F portfolio for the first quarter for this analysis.

Best Stocks to Buy According to Billionaire Steve Cohen

10. Align Technology, Inc. (NASDAQ: ALGN)

Cohen's Stake Value: $142,152,000 Percentage of Steve Cohen's 13F Portfolio: 0.66% Number of Hedge Fund Holders: 49

Align Technology, Inc. (NASDAQ: ALGN) is a manufacturer of 3D digital tracers and the Invisalign clear aligners used in orthodontics. It was founded in 1997 and ranks tenth on the list of 10 best stocks to buy according to billionaire Steve Cohen. Align Technology, Inc. (NASDAQ: ALGN) shares have gained about 92.89% over the last 12 months.

On July 9, Stephens analyst Chris Cooley upgraded Align Technology (NASDAQ: ALGN) from “Equal Weight” to “Overweight” with a price target of $700 from $600. On April 28, Align Technology, Inc. (NASDAQ: ALGN) posted earnings for the first quarter of 2021. It reported earnings per share of $2.49, beating market predictions by $0.48. The revenue for the first three months of 2021 was over $894.8 million, up 62.4% YoY, beating the estimates by $77.17 million.

Just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN) and Baidu, Inc. (NASDAQ: BIDU), Align Technology, Inc. (NASDAQ: ALGN) is one of the best stocks to buy according to billionaire Steve Cohen.

Point72 Asset Management holds 262,500 shares in Align Technology, Inc. (NASDAQ: ALGN) worth $142.15 million, representing 0.66% of its portfolio. Bares Capital Management, with 769,911 shares, is the biggest stakeholder in the company.

In its fourth quarter 2020 investor letter, Harding Loevner, an investment management firm, highlighted a few stocks, and Align Technology, Inc. (NASDAQ: ALGN) was one of them. Here is what the fund said:

“If you must head to one of the economy’s hot spots, perhaps look for soft wear rather than software. Align Technology was founded in 1997 in a Silicon Valley duplex with a singular vision: use technology to straighten teeth. Align pioneered computer-aided invisible orthodontics as an alternative to metal braces, and has now treated over 9 million patients with its Invisalign clear aligners. Align utilizes direct-to-consumer advertising to pull patients into participating dentists’ offices, equipping practitioners with real-time visualization and algorithm-assisted treatment planning to create and fit bespoke flexible plastic aligners. The company has been expanding its acceptance among practitioners for decades, but during the pandemic the numbers of those seeing the benefits of being able to treat patients with less chair time and fewer visits seems to have reached a tipping point. Like Disney, Align has also used the crisis to expand its digital marketing, reaching stay-at home teens and adults spending hours on Zoom, increasingly focused on how their teeth look on camera. As dental offices have reopened, Align’s earnings have benefitted from pent-up demand. It is emerging from the pandemic with a larger market share in orthodontics and a larger mind share with consumers.”

9. Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX)

Cohen's Stake Value: $142,681,000 Percentage of Steve Cohen's 13F Portfolio: 0.66% Number of Hedge Fund Holders: 68

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) is an American biopharmaceutical company. It was founded in 1989, and the company stands ninth on the list of 10 best stocks to buy according to billionaire Steve Cohen. Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) currently has a $51.23 billion market capitalization.

On June 18, Vertex Pharmaceuticals (NASDAQ: VRTX) declared that Health Canada has permitted Marketing Authorization for TRIKAFTA for the medication of certain patients with cystic fibrosis. On June 30, Raymond James analyst Danielle Brill initiated a coverage on Vertex (NASDAQ: VRTX) with a “Market Perform” rating.

Just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Baidu, Inc. (NASDAQ: BIDU), Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) is one of the best stocks to buy according to billionaire Steve Cohen.

The hedge fund run by Steve Cohen owns 663,973 shares in the Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), worth $142.68 million, representing 0.66% of his investment portfolio. There were 68 hedge funds in our database that held stakes in Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) in the first quarter of 2021, compared to 53 funds a quarter earlier.

ClearBridge Investments, in their first quarter 2021 investor letter, mentioned Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX). Here is what the fund said:

“While equity participation has been broadening, not all sectors and industries have benefited. Health care, which represents the Strategy’s second largest overweight, has lagged in recent months but we believe positive vaccine development and upcoming clinical news for other therapeutics will eventually lead to greater recognition by investors. Vertex Pharmaceuticals, continues to expand its cystic fibrosis franchise globally while advancing multiple underappreciated pipeline assets.”

8. AstraZeneca PLC (NASDAQ: AZN)

Cohen's Stake Value: $176,648,000 Percentage of Steve Cohen's 13F Portfolio: 0.82% Number of Hedge Fund Holders: 34

AstraZeneca PLC (NASDAQ: AZN) is a multinational pharmaceutical and biotechnology company. The company was founded in 1992, and it ranks eighth on the list of 10 best stocks to buy according to billionaire Steve Cohen. AstraZeneca PLC (NASDAQ: AZN) has returned 12.26% to investors in the last 3 months.

On July 14, AstraZeneca PLC’s (NASDAQ: AZN) scheduled $39 billion buyout of Alexion Pharmaceuticals (NASDAQ: ALXN) was approved by the U.K.'s Competition and Markets Authority. This merger will help boost AstraZeneca PLC (NASDAQ: AZN)'s line of rare disease drugs. On June 17, UBS analyst Michael Leuchten raised the firm's price target on AstraZeneca to 9,200 GBp from 8,000 GBp and maintained a “Buy” rating on the shares.

Just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN) and Baidu, Inc. (NASDAQ: BIDU), AstraZeneca PLC (NASDAQ: AZN) is one of the best stocks to buy according to billionaire Steve Cohen. Point72 Asset Management holds 3.55 million shares in the firm worth over 176 million. This represents 0.82% of its portfolio.

Baron Health Care Fund, in their fourth-quarter 2020 investor letter, mentioned AstraZeneca PLC (NASDAQ: AZN). Here is what the fund said:

“AstraZeneca PLC is a multinational pharmaceutical company developing drugs across multiple therapeutic areas such as oncology and respiratory diseases. Shares were impacted by news of AstraZeneca’s joint development with Oxford University of a viral-based COVID-19 vaccine. Given a mixed data set due to an unforeseen error in dosing that occurred in the Brazilian market, the vaccine timelines slipped, hurting share performance. Our investment thesis on AstraZeneca is not dependent on COVID-19 but rather its best-in-class large-cap growth profile, and we retain conviction.”

7. Micron Technology, Inc. (NASDAQ: MU)

Cohen's Stake Value: $185,318,000 Percentage of Steve Cohen's 13F Portfolio: 0.86% Number of Hedge Fund Holders: 100

Micron Technology, Inc. (NASDAQ: MU) is an American computer memory and computer data storage producer. Micron Technology, Inc. (NASDAQ: MU) was founded in 1978 and is placed seventh on the list of 10 best stocks to buy according to billionaire Steve Cohen. Micron Technology, Inc. (NASDAQ: MU) shares have gained about 55.49% in value over the last 12 months.

On June 30, Micron Technology, Inc. (NASDAQ: MU) posted earnings results for the third quarter of 2021. The earnings per share was $1.88, beating market predictions by $0.17. The revenue over the period was $7.42 billion, up 36.4% YoY, beating the estimates by $160 million. On June 30, BMO Capital analyst Ambrish Srivastava upgraded Micron Technology, Inc. (NASDAQ: MU) from “Market Perform” to “Outperform” with a price target of $110.00 from $90.

Just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Baidu, Inc. (NASDAQ: BIDU), Micron Technology, Inc. (NASDAQ: MU) is one of the best stocks to buy according to billionaire Steve Cohen. The hedge fund managed by Steve Cohen owns more than 2 million shares in the company worth $185.32 million, representing 0.86% of their portfolio. In addition, Arrowstreet Capital owns 14.71 million shares of Micron Technology, Inc. (NASDAQ: MU), worth over $1 billion, topping the list of over 866 hedge funds tracked by Insider Monkey.

Bonsai Partners, in their first quarter 2021 investor letter, mentioned Micron Technology, Inc. (NASDAQ: MU). Here is what the fund said:

“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.

With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.

As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins..." (Click here to see the full text)

6. Twitter, Inc. (NYSE: TWTR)

Cohen's Stake Value: $226,653,000 Percentage of Steve Cohen's 13F Portfolio: 1.05% Number of Hedge Fund Holders: 107

Twitter, Inc. (NYSE: TWTR) is an American microblogging and social networking service. The company was incorporated in 2006 and is ranked sixth on the list of 10 best stocks to buy according to billionaire Steve Cohen. The company’s shares have offered investors returns of 92.94% over the course of the past 12 months.

On June 9, Vertical Group analyst Phil Leggiere upgraded Twitter, Inc. (NYSE: TWTR) from “Positive” to “Very Positive.” On June 3, Twitter, Inc. (NYSE: TWTR) introduced 'Blue' subscription service at $2.99/month.

Just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN) and Baidu, Inc. (NASDAQ: BIDU), Twitter, Inc. (NYSE: TWTR) is one of the best stocks to buy according to billionaire Steve Cohen. The hedge fund run by Steve Cohen owns 30,636 shares in the company. Point72 Asset Management increased its stake in the company by 7% in the first quarter, ending the period with $226.65 million shares of the company stock. Hedge fund sentiment increased for Twitter, Inc. (NYSE: TWTR). (NASDAQ: VIAC) at the end of the first quarter of 2021. Insider Monkey's data shows that 107 elite hedge funds held stakes in the company at the end of the first quarter, up from 78 funds a quarter earlier.

ClearBridge Investments, in its first quarter 2021 investor letter, mentioned Twitter, Inc. (NYSE: TWTR). Here is what the fund has to say about Twitter in its letter:

“Media has been another bright spot for the Strategy, boosted by the return of live events and subsequent rebound in advertising as well as good initial traction for several of our companies new streaming services. Twitter was also a solid contributor on strong results and better-than-expected projections for future user and revenue growth.”

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Disclosure: None. 10 Best Stocks to Buy According to Billionaire Steve Cohen is originally published on Insider Monkey.