16 Stocks Hedge Funds and Wall Street Analysts Are Crazy About
In this article, we discuss 16 stocks hedge funds and Wall Street analysts are crazy about. If you want to see more stocks in this selection, check out 5 Stocks Hedge Funds and Wall Street Analysts Are Crazy About.
Equity markets have been on a roll, with major indices recouping all the losses accrued last year and posting double-digit percentage gains. Tech-heavy index Nasdaq has surprised investors, rallying by more than 40%, with the S&P 500 up by more than 10%. The rally has been fueled by the artificial intelligence craze that saw hedge funds and other institutional investors ramp up positions in some of the biggest plays with exposure to the revolutionary technology.
The rally posted in the first half of the year came amid expectations that the US Federal Reserve will go slow on interest rate hikes. In addition, there were expectations that the US economy would stay clear of recession amid improving economic conditions supported by solid economic data. Resilience in the labor market with solid job reports helped strengthen investor sentiments about the state of the US and global economy.
Consequently, the broader hedge fund industry was up by 3.4% in the first half of the year. Some stocks hedge funds and Wall Street analysts were crazy about included Microsoft, Nvidia, Meta Platforms, Alphabet, Amazon, and Apple. The best-performing strategies at the height of the bearish strategy in 2022 underperformed in the first half, as strategies with higher bets to risk assets led the performance.
Hedge funds that were net long some of the big tech plays generated significant returns, generating gains of up to 4%. On the other hand, hedge fund assets grew by $35.3 billion to highs of $2.9 trillion, driven by a net positive performance of $79.4 billion.
After an impressive start to the year, the upward momentum has started waning, fueling the suggestion of a potential pullback. Fuelling speculation of a possible pullback is uncertainty over the monetary policy outlook, sending jitters in the investment community. While expectations were high that the FED would start cutting interest rates at year-end, it looks unlikely. The FED has hiked above the 5% threshold, with officials remaining hawkish over further hikes.
Monetary policy uncertainty is not the only headwind likely to take a toll on equities and hedge fund performance. Soaring geopolitical tensions in the Middle East is another major headwind that could trigger a push for safe haven at the expense of risky assets in the equity markets. Concerns about the deteriorating earnings outlook are another headwind that could take a toll on market equity sentiments.
Similarly, Federated Hermes Chief Equity Strategist Phil Orlando believes tech stocks are up for a correction before year-end. The strategists have taken issue with the fact that the eight major tech stocks that have been vital in pushing major indices up are up by more than 60%.
"From a valuation perspective, they're trading at something like 40 times forward revenues and 130 times forward revenues and 130 times forward earnings. That, in our view, is excessive, and it's reminiscent of what the tech stocks did in that fourth quarter of 1999 as we were going into the Y2K calendar changeover." Orlando said.
Photo by AlphaTradeZone
Sharing similar sentiments of a potential correction is legendary investor Paul Tudor Jones, who believes the US is in its weakest fiscal position since World War II.
According to the Tudor Investment founder, the current geopolitical environment might not suit the markets. The sentiments come as market volatility and economic conditions worldwide are making investors and businesses cautious about major decisions heading into year-end.
Despite the skepticism, investors expect hedge funds to generate solid returns even with interest rates remaining higher for longer. Investors expect hedge funds to return an average of 9.75% annually within 19 months, up from 6.85%. The expected returns are not surprising, as hedge funds perform well in higher and stable interest rate environments.
Our Methodology
Investors can remain active in the market by sticking to reliable, high-growth stocks. Some of the best stocks to buy, according to hedge funds, include those that have lived up to their growth potential in the past. These stocks are supported by solid growth metrics and long-term prospects owing to their exposure to game-changing technologies, essential products, and services.
Our list contains some of the top stocks based on the number of hedge funds holding stakes in them, according to Insider Monkey hedge fund data. We have ranked the stocks with the highest upside potential based on consensus analysts' 12-month price targets and current prices.
Stocks Hedge Funds and Wall Street Analysts Are Crazy About
16. MercadoLibre, Inc. (NASDAQ:MELI)
Upside Potential: 32.54%
Number of Hedge Fund Holders: 77
MercadoLibre, Inc. (NASDAQ:MELI) is a consumer cyclical play that benefits from strong consumer spending power. The company provides online marketplaces for Latin America, where business,' merchants, and individuals can offer and buy goods online.
It is one of the stocks hedge funds and Wall Street analysts are crazy about, as the stock is up by more than 40% for the year, outperforming the S&P 500. The stock has also returned over 4,400% since going public in 2007, affirming its status in generating shareholder value. MercadoLibre, Inc. (NASDAQ:MELI) delivered a 57% year-over-year increase in revenue in the recent quarter, which affirms underlying growth.
Based on 14 Wall Street analysts offering 12-month price targets for MercadoLibre, Inc. (NASDAQ:MELI) in the last three months, the average price target is $1,621.67, with a high forecast of $2,180 and a low forecast of $1,300. The average price target represents a 32.54% change from the last price of $1,223.50.
As of the end of the second quarter of 2023, 77 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported having stakes in MercadoLibre, Inc. (NASDAQ:MELI). Generation Investment Management was the leading shareholder in MercadoLibre, Inc. (NASDAQ:MELI) with stakes worth $687.10 million.
15. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Upside Potential: 32.64%
Number of Hedge Fund Holders: 68
According to hedge funds, Intuitive Surgical, Inc. (NASDAQ:ISRG) is one of the best stocks to buy for anyone looking to gain exposure in the healthcare sector. The company creates, produces, and markets products that enable physicians and healthcare providers to improve the quality and accessibility of minimally invasive care. Its lead product is the da Vinci Surgical System, which enables complex surgery using a minimally invasive approach.
While the stock is flat for the year after a deep pullback, it remains a high-growth stock that keeps growing year after year. Since Intuitive Surgical, Inc. (NASDAQ:ISRG)'s surgical robots hit the market in 2000, the shares have rallied by more than 14,000%, outperforming average market returns of 340% over the same period.
Based on 13 Wall Street analysts offering 12-month price targets for Intuitive Surgical, Inc. (NASDAQ:ISRG) in the last three months, the average price target is $362.31, with a high forecast of $400 and a low forecast of $290. The average price target represents a 32.64% change from the last price of $273.15.
As of the end of the second quarter of 2023, 68 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in Intuitive Surgical, Inc. (NASDAQ:ISRG). The biggest stakeholder of Intuitive Surgical, Inc. (NASDAQ:ISRG) during this period was Citadel Investment Group via $663.86 million stakes in the firm.
14. Danaher Corporation (NYSE:DHR)
Upside Potential: 33.43%
Number of Hedge Fund Holders: 89
Danaher Corporation (NYSE:DHR) is one of the stocks hedge funds and Wall Street analysts are crazy about gaining exposure in diagnostics and research. The company's range of offerings extends to designing, producing, and promoting professional products and services for the medical, industrial, and commercial sectors. This includes bioprocess technologies, consumables, and services within its biotechnology segment.
Danaher Corporation (NYSE:DHR) is fresh from spinning off its slower-growing and lower-margin water business. With the spinoff, the company is expected to focus on high-growth areas even as it moves to complete the acquisition of UK-based life sciences company Abcam, which is expected to unlock new growth opportunities. The spinoff and acquisition are expected to accelerate earnings growth, which explains why it is still one of the best stocks to buy, according to hedge funds.
The average price target for Danaher Corporation (NYSE:DHR) is $279.45. This is based on 12 Wall Street's Analysts 12-month price targets, issued in the past three months. The highest analyst price target is $305.00; the lowest forecast is $240.00. The average price target represents a 33.43% Increase from the current price of $209.43.
At the end of Q2 this year, Danaher Corporation (NYSE:DHR) had 89 hedge fund investors out of 910 profiled by the Insider Monkey database. The largest shareholder was Viking Global, which had 4.26 million shares of Danaher Corporation (NYSE:DHR) worth around $1.02 billion.
13. Teck Resources Ltd (USA) (NYSE:TCK)
Upside Potential: 34.03%
Number of Hedge Fund Holders: 79
Teck Resources Ltd (USA) (NYSE:TCK) is one of the best stocks to buy, according to hedge funds, for anyone eyeing exposure to the acquisition, development, and production of natural resources. The company operates through steelmaking coal, copper, zinc, and energy segments.
Given that the stock is up by more than 400%, it affirms why it is one of the best players in the industry. Teck Resources Ltd (USA) (NYSE:TCK) has benefited from growing demand for industrial metals with the global economy opening following the COVID-19 slowdown and shutdowns.
Based on 5 Wall Street analysts offering 12-month price targets for Teck Resources Ltd (USA) (NYSE:TCK) in the last three months, the average price target is $52.15, with a high forecast of $57.01 and a low forecast of $47.14. The average price target represents a 34.03% change from the last price of $38.91.
Out of 910 hedge funds profiled by Insider Monkey, around 79 hedge fund investors had invested in Teck Resources Ltd (USA) (NYSE:TCK). Eric W. Mandelblatt-led Soroban Capital Partners was the largest shareholder of Teck Resources Ltd (USA) (NYSE:TCK), which owned around 10.06 million shares valued at $423.61 million.
12. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Upside Potential: 35.42%
Number of Hedge Fund Holders: 121
Headquartered in Hsinchu City, Taiwan, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the largest integrated circuits and semiconductor device manufacturers. The company provides complementary metal oxide silicon wafer fabrication processes to manufacture logic mixed-signal. It also offers support and engineering services.
It stands out as one of the best growth stocks to buy according to hedge funds, as its products are always in high demand for gaming consoles, computers, smartphones, and high-performance computing applications.
In addition, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world's largest pure-play chip foundry, able to produce chips under contract for its customers. Some of its biggest customers include Apple, Advanced Micro Devices, Broadcom, and Nvidia.
The average price target for Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is $122.50. This is based on 9 Wall Street analysts' 12-month price targets, issued in the past 3 months.
The highest analyst price target is $130.00; the lowest forecast is $115.00. The average price target represents a 35.42% Increase from the current price of $90.46.
Insider Monkey took a look at Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) hedge funds at the end of Q2 and found out that 121 had invested in the company with First Eagle Investment Management, the largest stockholder with 9.06 million shares that were worth $914.18 million at least.
11. Uber Technologies, Inc. (NYSE:UBER)
Upside Potential: 35.53%
Number of Hedge Fund Holders: 144
Uber Technologies, Inc. (NYSE:UBER) is a company that develops and operates proprietary technology applications. It operates through the Mobility segment, connecting consumers with various transportation modalities through ridesharing crashing and micro-mobility. The delivery segment allows searching for and discovering restaurants, grocery, and alcohol stores. Its Freight segment manages the transportation and logistics network.
After coming under pressure last year, Uber Technologies, Inc. (NYSE:UBER) has found its footing in 2023, going by the 69% plus rally. The rally has come on the ridesharing giant jumping into profitability amid improving underlying fundamentals. In the last quarter, the company turned $33.6 billion worth of booking into revenue of $9.2 billion, up 14%. Likewise, it delivered a net income of $394 million, the first-ever profit proving the business model is viable.
The average price target for Uber Technologies, Inc. (NYSE:UBER) is $58.93. This is derived from the 12-month price targets of 31 Wall Street analysts published in the past 3 months.
The highest analyst price target is $68; the lowest forecast is $52. The average price target represents a 35.53% Increase from the current price of $43.48.
At the end of June 30, Uber Technologies, Inc. (NYSE:UBER) had 144 hedge fund investors out of 910 funds tracked by the Insider Monkey database. Altimeter Capital Management was the largest stockholder, with 13.34 million shares valued around $575.74 million.
10. Amazon.com, Inc. (NASDAQ:AMZN)
Upside Potential: 35.74%
Number of Hedge Fund Holders: 278
Amazon.com, Inc. (NASDAQ:AMZN) is the world's largest e-commerce store, allowing people to purchase and sell items in online stores. It has also evolved to become the world's largest provider of cloud computing solutions as it continues manufacturing and selling electronic devices.
Amazon.com, Inc. (NASDAQ:AMZN) stands out as one of the best stocks to buy according to hedge funds, owing to its diversified business empire and market-leading position in various segments. It is monetizing its logistics network and opening it up to third parties, likely to unlock a $100 billion revenue opportunity.
In addition, Amazon.com, Inc. (NASDAQ:AMZN) has affirmed its status as one of the biggest innovators as it continues integrating artificial intelligence solutions into its products and services. The stock is up by over 50% for the year, affirming its status as a high-growth play.
The average price target for Amazon is $176.18.
The average of 41 Wall Street analysts' forecasts for the stock price in 12 months, made in the last quarter.The highest analyst price target is $230; the lowest forecast is $140. The average price target represents a 35.74% Increase from the current price of $129.79.
Insider Monkey took a look at hedge fund portfolios for Amazon.com, Inc. (NASDAQ:AMZN) second quarter of 2023 investments and concluded that 278 had shares in the firm. Harris Associates was Amazon.com, Inc. (NASDAQ:AMZN) largest shareholder which owned about 15.62 million shares for about $2.04 billion.
9. Pfizer Inc. (NYSE:PFE)
Upside Potential: 38.15%
Number of Hedge Fund Holders: 73
Pfizer Inc. (NYSE:PFE) is one of the stock hedge funds and Wall Street analysts are crazy about in the healthcare sector as it manufactures, distributes, and sells biopharmaceutical products worldwide. Headquartered in New York, the company is best known for offering medicines and vaccines in various therapeutic areas, including cardiovascular metabolic, migraine, and women's health under the Eliquis.
While the company has come under pressure recently owing to declining COVID-19 vaccine sales, it has embarked on a cost-cutting spree to try and bolster its margins. Pfizer Inc. (NYSE:PFE) is planning for at least $3.5 billion in cost cuts.
Based on 12 Wall Street analysts offering 12-month price targets for Pfizer Inc. (NYSE:PFE) in the last three months, the average price target is $44.36, with a high forecast of $75.00 and a low forecast of $35.00. The average price target represents a 38.15% change from the last price of $32.11.
Insider Monkey looked at Pfizer Inc. (NYSE:PFE), and at the end of Q2, out of 910 profiled hedge funds by the database, the company had 73 hedge fund investors. The largest stockholder was Diamond Hill Capital, with 6.90 million shares, which were valued at $253.10 million.
8. The Charles Schwab Corporation (NYSE:SCHW)
Upside Potential: 39.98%
Number of Hedge Fund Holders: 88
The Charles Schwab Corporation (NYSE:SCHW) is one of the best stocks to buy, according to hedge funds, for anyone looking to diversify their portfolio in the financial services sector. The company operates as a savings and loan holding company. It offers wealth management securities brokerage, banking asset management, and financial advisory services.
The discount brokerage and investment firm posted better-than-expected earnings, with $0.77 a share that beat estimates. It delivered net interest revenue of $2.24 billion, better than expected, as bank sweep deposits increased in September for the first time since March last year.
Based on 14 Wall Street analysts offering 12-month price targets for Charles Schwab in the last three months, the average price target is $71.85, with a high forecast of $92 and a low forecast of $55. The average price target represents a 39.98% change from the last price of $51.33.
Insider Monkey took a look at hedge fund portfolios for The Charles Schwab Corporation (NYSE:SCHW) second quarter of 2023 investments and found out that 88 had a stake in the company. Harris Associates was the firm's largest shareholder, which had roughly 18.87 million shares that valued at about $1.07 billion of The Charles Schwab Corporation (NYSE:SCHW).
7. NVIDIA Corporation (NASDAQ:NVDA)
Upside Potential: 42.94%
Number of Hedge Fund Holders: 175
NVIDIA Corporation (NASDAQ:NVDA) is arguably the best stock to buy, according to hedge funds, if the 200% plus rally in 2023 is anything to go by. The company has benefited from the artificial intelligence boom as it relies on providing the much-needed graphics processing units for supporting the technology. Its graphics unit offers GeForce GPUs that are used in gaming and PCs. It also provides chips used for cloud-based visual and virtual computing.
NVIDIA Corporation (NASDAQ:NVDA) is one stock hedge fund that Wall Street analysts are crazy about as it continues to benefit from the AI boom. The company delivered record-breaking second-quarter results as revenues increased 101% to $13.51 billion, with earnings per diluted shares growing 429% to $2.70.
The average price target for NVIDIA Corporation (NASDAQ:NVDA) is $649.82. This is derived from the 12-month price targets of 39 Wall Street analysts published in the past 3 months. The highest analyst price target is $1,100; the lowest forecast is $560. The average price target represents a 42.94% Increase from the current price of $454.61.
Insider Monkey took a look at hedge fund portfolios for NVIDIA Corporation (NASDAQ:NVDA) Q2 investments and found out that 175 had a stake in the company, compared to 132 funds in the previous quarter. GQG Partners was the firm’s largest shareholder which had about 13.94 million shares for roughly $5.90 billion of NVIDIA Corporation (NASDAQ:NVDA).
6. PayPal Holdings, Inc. (NASDAQ:PYPL)
Upside Potential: 54.39%
Number of Hedge Fund Holders: 86
Headquartered in San Jose, California, PayPal Holdings, Inc. (NASDAQ:PYPL) operates a technology platform enabling digital payments for merchants and consumers worldwide. It provides payments under the PayPal, Credit, Braintree, Venmo, Xoom, and Zettle brands.
PayPal Holdings, Inc. (NASDAQ:PYPL) shares are trading at a significant discount, with one of the cheapest valuations in history at the back of the stock pulling back by about 80%. The digital payment giant has stabilized its growth and right-sized its cost structure amid the deteriorating macroeconomics. It has also doubled down investments on three products of digital wallets, branded checkout, and unbranded checkout, whereby it holds considerable market shares.
The investments have allowed PayPal Holdings, Inc. (NASDAQ:PYPL) to gain financial momentum through the recent solid earnings results, with revenues rising 7% to $7.3 billion and GAAP earnings improving to $1 billion from a loss of $341 million a year ago.
Based on 32 Wall Street analysts offering 12-month price targets for PayPal Holdings in the last three months, the average price target is $86.07, with a high forecast of $126 and a low forecast of $60. The average price target represents a 54.39% change from the last price of $55.75.
Insider Monkey looked at hedge fund portfolios for PayPal Holdings, Inc. (NASDAQ:PYPL) Q2 2023 investments and found out that 86 had a stake in PayPal Holdings, Inc. (NASDAQ:PYPL).
Two Sigma Advisors was its biggest shareholder with roughly 5.70 million shares for about $380.60 million of PayPal Holdings, Inc. (NASDAQ:PYPL).
Click to continue reading and see 5 Stocks Hedge Funds and Wall Street Analysts Are Crazy About.
Suggested articles:
Disclosure: None. 16 Stocks Hedge Funds and Wall Street Analysts Are Crazy About is originally published on Insider Monkey.
