In this article, we will be taking a look at 10 stock picks to beat the market slump. To skip our detailed analysis of these stocks and current market conditions, you can go directly to see the 5 Stock Picks to Beat the Market Slump.
According to Forbes, Bank of America analysts have expressed negative opinions on the current market condition this year. Prices are continuing to remain high in a time of inflation, and stocks have remained too expensive for most to consider investing in. The bear market feared at the onset of 2022 has thus become a prolonged reality for those in the investment world this year.
At the same time, many investors have continued to invest in profitable securities to beat the market slump diligently. Top picks for most individual and institutional investors have generally ranged within the technology and energy sectors, with stocks like Exxon Mobil Corporation (NYSE:XOM), Apple Inc. (NASDAQ:AAPL), and QUALCOMM, Incorporated (NASDAQ:QCOM) keeping investors satisfied. According to the Wall Street Journal this July, many individual investors are treating this as the time to double down on tech stocks. While the Nasdaq Composite Index fell by 21% from the start of 2022 to July, many investors remain hopeful for a rebound. Their hopes were answered eventually near the end of July, when the Nasdaq Composite Index rose by 12%, outperforming the broader S&P 500 Index, which rose by 9.1%.
Similar outlooks can be spotted surrounding energy stocks in the midst of fuel-shortage risks. Many investors today are bullish on energy stocks. According to Bloomberg, energy stocks rallied by over 40% from the start of 2022 to September, helped by surging profits from rising oil and gas prices. An MLIV Pulse survey conducted in the second week of September also showed that tw0-thirds of the respondents, consisting primarily of portfolio managers and retail investors, plan to increase their exposure to the energy sector over the next six months. In times of rampant inflation, with rate hikes continuing to haunt the market, the energy sector has become of the last remaining sanctuaries for investors today. The only way to beat the current market slump is to invest more in stocks that are still gaining, and energy stocks are among those few that have continued to gain even in the current market condition.
Image by Sergei Tokmakov Terms.Law from Pixabay
We can now take a look at the 10 stock picks to beat the market slump.
Our Methodology
We have selected stocks that have been on the rise in September, and are popular among the hedge funds tracked by Insider Monkey in the second quarter of 2022. They are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest. We have also mentioned analyst ratings for all these stocks, alongside their price targets, indicating positive analyst opinions and significant upside potential. Finally, we have also mentioned key fundamentals surrounding these stocks, such as their gains in the past week or over the past year, projected EPS growth, revenue growth, and latest earnings results, among more.
Stock Picks to Beat the Market Slump
10. Apache Corporation (NYSE:APA)
Number of Hedge Fund Holders: 36
Year-to-Date Price Gains: 17.14%
Apache Corporation (NYSE:APA) is an energy company working through its subsidiaries to explore for, develop, and produce oil and gas properties. The company has several operations in the US, Egypt, and the UK. It also operates exploration activities offshore Suriname. It is based in Houston, Texas.
On September 19, Neal Dingmann at Truist raised his price target on Apache Corporation (NYSE:APA) shares from $66 to $75. The analyst also reiterated a Buy rating on the stock.
This September, Apache Corporation (NYSE:APA) declared a $0.25 per share quarterly dividend, representing a 100% increase from its prior dividend of $0.13. The company has a one-year dividend growth rate of 337.5%. Apache Corporation’s (NYSE:APA) EPS is also expected to rise by 19% over the next three to five years.
There were 36 hedge funds long Apache Corporation (NYSE:APA) in the second quarter, with a total stake value of $745 million.
Oakmark Funds, an investment management firm, mentioned Apache Corporation (NYSE:APA) in its first quarter 2022 investor letter. Here’s what the firm said:
“Our oil holding, APA Corporation (NASDAQ:APA) (+54%) was one of our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
Apache Corporation (NYSE:APA), like Exxon Mobil Corporation (NYSE:XOM), Apple Inc. (NASDAQ:AAPL), and QUALCOMM, Incorporated (NASDAQ:QCOM), was among the top performing stocks in September, leading to many elite hedge funds adding it to their portfolios.
9. Coterra Energy Inc. (NYSE:CTRA)
Number of Hedge Fund Holders: 40
Year-to-Date Price Gains: 34.7%
Coterra Energy Inc. (NYSE:CTRA) is an energy company working to develop, explore, and produce oil, natural gas, and natural gas liquids in the US. The company focuses on the Marcellus Shale with about 177,000 net acres in the dry gas window of the play located in Susquehanna County. It also holds the Permian Basin properties with about 306,000 net acres.
On September 21, a Neutral rating was reiterated on Coterra Energy Inc. (NYSE:CTRA) by Scott Gruber, an analyst at Citigroup. Gruber also raised his price target on the stock from $27 to $30.
Coterra Energy Inc. (NYSE:CTRA) is considered to be one of the top growth stocks in the market today, having shown an increase in its net income in the second quarter. Over the next three to five years, its EPS is expected to grow by 55.04%. It has a one-year dividend growth rate of 282.9%. Coterra Energy Inc.’s (NYSE:CTRA) EPS in the second quarter was $1.35, beating estimates by $0.07, and its revenue was $2.57 billion, beating estimates by $361.03 million.
There were 40 hedge funds long Coterra Energy Inc. (NYSE:CTRA) in the second quarter, with a total stake value of $437.4 million. Out of these funds, Diamond Hill Capital was the largest stakeholder in the company, holding 4.5 million shares worth about $116.4 million.
Palm Valley Capital Management, an investment management firm, mentioned Coterra Energy Inc. (NYSE:CTRA) in its second quarter 2022 investor letter. Here’s what the firm said:
“We sold two Fund positions during the quarter which includes Coterra Energy (NYSE:CTRA). As a result of surging oil and natural gas prices, Coterra reached our valuation, and we exited the position in April.”
8. Valero Energy Corporation (NYSE:VLO)
Number of Hedge Fund Holders: 43
Year-to-Date Price Gains: 30.37%
Valero Energy Corporation (NYSE:VLO) is another energy company on our list, working to manufacture, market, and sell transportation fuels and petrochemical products in the US, Canada, the UK, Ireland, and internationally. The company operates through its Refining, Renewable Diesel, and Ethanol segments. It is based in San Antonio, Texas.
An Overweight rating was reiterated on shares of Valero Energy Corporation (NYSE:VLO) on September 12, by analyst Ryan Todd at Piper Sandler. Todd also placed a $148 price target on the stock.
This September, Valero Energy Corporation (NYSE:VLO) was named as one of the top beneficiaries of the Biden administration’s releases from the US Strategic Petroleum Reserve. The company managed to take in about 52.7 million barrels of crude oil. Valero Energy Corporation’s (NYSE:VLO) revenue has shot up by 91.47% year over year, and its EPS is expected to grow by 7% over the next three to five years.
Valero Energy Corporation (NYSE:VLO) had 43 funds long its stock in the second quarter, and 47 funds long its stock in the previous quarter. Their total stake values were $759 million and $438 million, respectively.
7. Suncor Energy Inc. (NYSE:SU)
Number of Hedge Fund Holders: 47
Year-to-Date Price Gains: 5.84%
Suncor Energy Inc. (NYSE:SU) is an energy company based in Canada. The company focuses mainly on the development of petroleum resource basins in Canada’s Athabasca oil sands. It also explores, acquires, develops, produces, transports, refines, and markets crude oil in Canada and internationally.
William Janela, an analyst at Credit Suisse, initiated coverage of Suncor Energy Inc. (NYSE:SU) shares on August 10 with an Outperform rating.
Over the next three to five years, Suncor Energy Inc.’s (NYSE:SU) EPS is expected to grow by 10.95%. The company’s one-year dividend growth rate currently stands at 82.04%, showing that it is a reliable dividend-payer as well. Suncor Energy Inc.’s (NYSE:SU) revenue growth year over year stands at 64.4%, and its operating cash flow has grown by 125.58% year over year as well.
Our hedge fund data shows 47 funds long Suncor Energy Inc. (NYSE:SU) in the second quarter, and 41 funds long the stock in the previous quarter. Their total stake values were $2.4 billion and $2.1 billion, respectively.
6. CF Industries Holdings, Inc. (NYSE:CF)
Number of Hedge Fund Holders: 52
Year-to-Date Price Gains: 32.87%
CF Industries Holdings, Inc. (NYSE:CF) is a materials company working to manufacture and sell hydrogen and nitrogen products. The company’s products aid energy, fertilizer, emissions abatement, and other industrial activities across the globe. It is based in Deerfield, Illinois.
Joshua Spector at UBS holds a Buy rating on shares of CF Industries Holdings, Inc. (NYSE:CF) as of August 25. The analyst also raised his price target on the stock from $108 to $128.
CF Industries Holdings, Inc. (NYSE:CF) had an EPS of $6.15 in the second quarter of 2022, beating estimates by $0.36. The company’s revenue has grown by 121.57% year over year, and over the next three to five years, its EPS is also expected to grow further by 6%. CF Industries Holdings, Inc. (NYSE:CF) has a one-year dividend growth rate of 8.33% as well.
Out of 895 hedge funds, 52 funds were long CF Industries Holdings, Inc. (NYSE:CF) in the second quarter. Their total stake value was $1.3 billion. Soroban Capital Partners was the largest stakeholder in the company, holding 2.5 million shares worth $213 million.
Chartwell Investment Partners, an asset management company, mentioned CF Industries Holdings, Inc. (NYSE:CF) in its second quarter 2022 investor letter. Here’s what the firm said:
“We sold the full position in fertilizer company CF Industries, which also had a 20%+ YTD return (through 6/30), as we had concerns that the company would announce capacity additions, which would negatively impact nitrogen pricing.”
CF Industries Holdings, Inc. (NYSE:CF), like Exxon Mobil Corporation (NYSE:XOM), Apple Inc. (NASDAQ:AAPL), and QUALCOMM, Incorporated (NASDAQ:QCOM), is an outperforming stock many elite hedge funds have been eyeing this year.
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Disclosure: None. 10 Stock Picks to Beat the Market Slump is originally published on Insider Monkey.
