In this article, we discuss 10 best stocks to buy for the next three months. If you want to see more stocks in this selection, check out 5 Best Stocks To Buy For The Next 3 Months.
Element Capital, one of the largest macro hedge funds in the world managed by Jeffrey Talpins, plans to reduce its asset base in order to boost its performance following a series of poor returns. The fund, which currently manages around $12 billion in assets and has a strong long-term track record, suffered a significant loss of 9.6% last month as equity markets surged on the expectation that interest rates would not rise further. In response, Element Capital will make it easier for investors to exit the fund by temporarily relaxing its redemption terms, a move aimed at reducing the firm’s assets to increase its agility and ability to react quickly to market changes.
In January, certain hedge funds encountered difficulties due to the rally in equities, particularly speculative stocks that were heavily impacted in the previous year. Additionally, bond markets also experienced gains due to the expectation that central banks were effectively controlling inflation. As a result, funds that were positioned for higher interest rates, including computer-driven funds that were betting on declines in bond and equity prices, suffered significant losses.
On the other hand, there were clear winners in the stock market as well. Said Haidar, the founder of Haidar Capital Management, had a strong belief that inflation was going to rapidly increase globally, which is evident by the figure of $63 billion – the amount of assets that the hedge fund reported at the beginning of 2022. However, the hedge fund’s actual assets were only $1.2 billion due to extensive leverage. This resulted in a tumultuous year with a significant increase of 54% in one month, and a decrease of 20% in another. Nevertheless, the hedge fund generated a return of 193% for its investors. Haidar made a substantial bet on the rapid rise of interest rates, leading the hedge fund to profit from the rise in inflation that led to the most combative central bank tightening campaign. Haidar personally earned $859 million in 2022, which ranks him sixth on Bloomberg’s annual list of the top hedge fund managers. While the list is dominated by industry sharks, Haidar is a relatively unknown name. The top three spots were claimed by Ken Griffin, Steve Cohen, and Izzy Englander, who are collectively worth about $55 billion.
It is wise to follow the movements of elite hedge funds to navigate the tumultuous stock market. Some of the best stocks to invest in according to smart investors include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META).
Our Methodology
We scanned Insider Monkey’s database of holdings of 943 elite hedge funds tracked as of the end of the fourth quarter of 2022 and picked the top 10 companies that were most popular among smart investors. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Best Stocks To Buy For The Next 3 Months
10. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 117
Salesforce, Inc. (NYSE:CRM) is a California-based company that uses customer relationship management technology to bring companies and customers together worldwide. According to Morgan Stanley, Salesforce, Inc. (NYSE:CRM) has the potential to increase its earnings per share by 20% or more in the coming years. This is due to the company’s recent restructuring and involvement of activist investors, which could improve its financial performance.
On February 21, Cowen raised the firm’s price target on Salesforce, Inc. (NYSE:CRM) to $170 from $160 and maintained an Outperform rating on the shares. The reason behind this move was that Cowen’s survey of commercial partners indicated a strong performance in the fourth quarter. However, their checks on enterprises showed weaker results, which suggests that there may be higher pressure on net expansion rates and cross-selling. Salesforce, Inc. (NYSE:CRM) is facing different factors such as activism, an increased focus on profit, and challenging demand headwinds. Despite these challenges, the stock is responding well to the outlook of stronger margins after the company’s headcount cuts.
According to Insider Monkey’s fourth quarter database, 117 hedge funds were long Salesforce, Inc. (NYSE:CRM), and Harris Associates is the largest stakeholder of the company, with 8.14 million shares worth $1.08 million.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META), Salesforce, Inc. (NYSE:CRM) is one of the best stocks to invest in.
Aristotle Atlantic made the following comment about Salesforce, Inc. (NYSE:CRM) in its Q3 2022 investor letter:
“We sold Salesforce, Inc. (NYSE:CRM) to reduce our weighting in the Information Technology sector. Salesforce held their investor day, and the company reiterated their organic Fiscal Year 2026 revenue target of $50 billion. This target remains more back-end loaded based on current slowing macroeconomic conditions and requires new annual contract growth well ahead of what the company has been averaging for the past few years. We are skeptical that the company will be able to achieve this revenue target organically and see Merger & Acquisitions (M&A) being key to achieving the growth. While we believe Salesforce has shown good success in growing its non-CRM clouds, we do see more competitive pressures emerging for the Marketing and Customer Service Clouds, specifically on the pricing side during a global economic slowdown.”
9. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Holders: 129
Activision Blizzard, Inc. (NASDAQ:ATVI) is a California-based developer and publisher of interactive entertainment content and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. On February 21, it was announced that the 13-month-old proposal by Microsoft (NASDAQ:MSFT) to acquire Activision Blizzard, Inc. (NASDAQ:ATVI) for $69 billion could be entering a crucial phase in Europe. This comes after a closed-door hearing with European Union regulators to determine whether the proposed acquisition raises significant anti-competitive concerns.
On February 16, Deutsche Bank analyst Benjamin Soff upgraded Activision Blizzard, Inc. (NASDAQ:ATVI) to Buy from Hold with a price target of $90, up from $83. The analyst believes that the company’s business model provides the best risk/reward outlook across the gaming sector this year. He stated that Activision Blizzard, Inc. (NASDAQ:ATVI) has strong momentum across its major franchises, with the highest concentration of “must-have” content at a time when consumers are becoming increasingly selective. Activision Blizzard, Inc. (NASDAQ:ATVI) also has the potential to offer attractive returns for shareholders, even if the proposed Microsoft deal falls through. Despite challenges in consumer spending across the industry, the analyst believes that Activision can still generate healthy growth levels this year.
According to Insider Monkey’s Q4 data, 129 hedge funds were bullish on Activision Blizzard, Inc. (NASDAQ:ATVI), up from 96 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of the company, with 52.7 million shares worth $4.03 billion.
Here is what Cooper Investors specifically said about Activision Blizzard, Inc. (NASDAQ:ATVI) in its Q2 2022 investor letter:
“Activision Blizzard, Inc. (NASDAQ:ATVI) – our investment preceded news that the company was under investigation for workplace bullying. When it became clear management had misled the market on the extent of the problem we sold, led by our principles of Responsible Investing. We did not benefit from the subsequent M&A premium paid by Microsoft.”
8. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 135
Uber Technologies, Inc. (NYSE:UBER) is one of the biggest mobility technology companies in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia excluding China and Southeast Asia. It operates through three segments – Mobility, Delivery, and Freight. On February 20, Uber Technologies, Inc. (NYSE:UBER) announced that it is planning to introduce 25,000 electric vehicles for ride-sharing in India over the course of three years as part of its effort to become more environmentally friendly. To achieve this goal, the ride-hailing platform’s fleet partners will purchase 25,000 XPRES’T electric vehicle units from Tata Motors. The EVs will operate in several major cities, including Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bengaluru, and Ahmedabad.
On February 13, Argus analyst Bill Selesky raised the firm’s price target on Uber Technologies, Inc. (NYSE:UBER) to $43 from $36 and kept a Buy rating on the shares. The analyst believes that Uber Technologies, Inc. (NYSE:UBER)’s ridesharing and food delivery businesses will perform strongly in the future, and the company will return to pre-pandemic ridership levels by 2023. The research note also mentions that Argus is optimistic about Uber’s recent acquisitions of Drizly, which is an on-demand alcohol marketplace that will expand the company’s Delivery business, and Transplace, a logistics technology platform with one of the largest managed transportation and logistics networks in the world.
According to Insider Monkey’s Q4 database, 135 hedge funds were long Uber Technologies, Inc. (NYSE:UBER), and it is one of the best stocks to buy according to smart investors. Alkeon Capital Management is the biggest stakeholder of the company, with 12.80 million shares worth $316.7 million.
Artisan Partners made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2022 investor letter:
“During the quarter, we began new GardenSM campaigns in Uber Technologies, Inc. (NYSE:UBER) and Shopify. In July, we initiated our position in Uber, a leader in global ride-hailing and online food delivery. We believe the company is well positioned to benefit from strong secular tailwinds in both of its core businesses. Earlier this year, management outlined a plan at its investor day to achieve $4 billion of free cash flow by 2024, an encouraging commitment given investors have maligned the company for years of being unprofitable. We witnessed solid progress toward achieving this goal in the company’s most recent earnings results, where it beat expectations for the quarter on both fronts and delivered positive FCF for the first time. The company also indicated it isn’t seeing any evidence of slowing demand. We recognize the execution risk associated with Uber achieving its long-term targets, and the path likely won’t be linear, which is why we are keeping our position size modest until we see signs of continued operational momentum in the coming quarters.”
7. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) reported fourth quarter earnings on February 2. The company announced GAAP earnings per share of $1.88 and a revenue of $117.15 billion, falling short of Wall Street estimates by $0.07 and $4.5 billion, respectively. Installed base crossed 2 billion active devices and hit an all-time high for all major product categories. Apple’s board of directors also declared a cash dividend of $0.23 per share, which was paid to unitholders on February 16, 2023.
According to investment advisory Bernstein, Apple Inc. (NASDAQ:AAPL)’s Services growth has decelerated for six consecutive quarters, with gross margins also contracting last quarter, primarily due to softness in Apple Inc. (NASDAQ:AAPL)’s Advertising and App Store businesses. The firm predicts that Services will grow 10% in fiscal 2023 as reported, and 13% at constant currency, primarily due to weaker advertising growth. However, Bernstein believes that the weakness in Advertising and the App Store is a temporary downturn and not a fundamental one. In the long term, Bernstein expects Services to grow between 12% and 15% over the next 3 to 5 years, driven by growth in the installed base, increased ARPU, and new services offerings. Bernstein has a Market Perform rating on Apple Inc. (NASDAQ:AAPL) with a price target of $125 as of February 21.
According to Insider Monkey’s fourth quarter database, Apple Inc. (NASDAQ:AAPL) was part of 135 hedge fund portfolios, compared to 140 in the prior quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a significant position holder in the company, with nearly 15 million shares worth $1.94 billion.
Here is what Distillate Capital has to say about Apple Inc. (NASDAQ:AAPL) in its Q3 2022 investor letter:
“The largest new purchase was Apple Inc. (NASDAQ:AAPL), which after underperforming saw its valuation improve significantly. Over the course of the last year, Apple’s consensus estimated forward free cash flows rose modestly, while its enterprise value fell by around 30%. Apple ranks below the 25th most attractive name in the portfolio and so its weight is capped at 4% vs. 6% for names in the top quartile.”
6. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 139
Mastercard Incorporated (NYSE:MA) is an American multinational payments technology firm. On January 26, Mastercard Incorporated (NYSE:MA) reported a Q4 non-GAAP EPS of $2.65 and a revenue of $5.8 billion, outperforming Wall Street consensus by $0.07 and $10 million, respectively. Net revenue increased 12%, or 17% on a currency-neutral basis, which includes a 1 percentage point benefit from acquisitions. On February 14, Mastercard Incorporated (NYSE:MA) declared a quarterly dividend of $0.57 per share, in line with previous. The dividend is payable on May 9, to shareholders of record on April 7.
On January 30, Mizuho analyst Dan Dolev raised the firm’s price target on Mastercard Incorporated (NYSE:MA) to $405 from $380 and maintained a Buy rating on the shares following the “solid” Q4 results.
According to Insider Monkey’s fourth quarter database, 139 hedge funds were long Mastercard Incorporated (NYSE:MA), compared to 146 funds in the preceding quarter. Charles Akre’s Akre Capital Management held the largest stake in the company, with 5.8 million shares worth $2.03 billion.
In addition to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META), Mastercard Incorporated (NYSE:MA) is one of the most popular stocks among smart investors.
Baron FinTech Fund made the following comment about Mastercard Incorporated (NYSE:MA) in its Q4 2022 investor letter:
“Shares of global payment network Mastercard Incorporated (NYSE:MA) increased after reporting strong quarterly results, with 15% revenue growth and 13% EPS growth despite significant headwinds from currency movements and the suspension of operations in Russia. Payment volume grew 21% in local currency (excluding Russia) as consumer spending remained resilient and the international travel recovery continued as border restrictions were lifted. We continue to own the stock due to Mastercard’s long runway for growth and significant competitive advantages.”
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Disclosure: None. 10 Best Stocks To Buy For The Next 3 Months is originally published on Insider Monkey.
