In this article, we will take a detailed look at the 10 Stocks in Wall Street’s Watchlist.
Dan Niles, Niles Investment Management founder, in a latest program on CNBC reiterated his concerns about a slowdown in AI spending and said that major technology companies were already facing the impact of a downbeat trend in the industry before the tariff wars started:
“When the MAG 7 reported the December quarter or calendar Q4, six of the seven had their March revenue estimates already cut. So think about that for a second. But the thing is, when the Fed’s cutting like it was last year, nobody cares, right? If the stocks are going up, the charts look good. Why worry about fundamentals or valuations?,” Niles said. “Because the stocks are going higher. So looking forward, I expect all the estimates to come down yet again for the June quarter. When these companies report the March quarter, they were already having troubles when they reported the December quarter before all this tariff stuff kicked in.”
Niles said that companies were buying more ahead of the China tariffs because they expected that duties were coming from the US.
“You can just see that from the China export data already, where for China as a whole, in the month of March, exports were up 12.4%. People were expecting 4.6%. So that’s a massive beat there. And so you can already tell demand’s being pulled forward. So my thought was there was a payback period coming anyway.”
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
For this article, we picked 10 stocks Wall Street analysts have been talking about lately. With each stock, we have mentioned its hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
New York Wall Street sign.
10. Target Corp (NYSE:TGT)
Number of Hedge Funds Investors: 49
Stephanie Link, Hightower Advisors CIO, explained in a latest program on CNBC why she’s buying Target Corp (NYSE:TGT) shares despite the stock declines and retail industry struggles.
“This is a turnaround story, but I think you’re seeing hints of improvement. The stock is down 24% since February. It’s trading at 12 times earnings, and they just gave earnings guidance for the full year, which I thought was actually better than expected. It yields 4%. This has never been a traffic problem. Traffic in the past quarter and several prior quarters has been around the 2% level. They just haven’t had the right product mix, with more discretionary versus consumables. But last quarter, you actually saw an improvement in discretionary, and their same-store sales beat expectations by 1.5%.
It’s a tough environment across the board in retail, but I think they’re doing all the right things. The issue with Target is they now need to string along quarters like the one they just had for the next few quarters to gain back investor confidence because it’s been very inconsistent.
While it’s a “show me” story, I do think they have the right products. Inventories are under control, and they’re focused on where they need to be, which is operating margin expansion.”
9. United Airlines Holdings Inc (NASDAQ:UAL)
Number of Hedge Funds Investors: 54
Joseph M. Terranova, Senior Managing Director for Virtus Investment Partners, said in a latest program on CNBC that United Airlines Holdings Inc (NASDAQ:UAL) is one of the airline stocks that “don’t look good” amid industry headwinds. Terranova’s fund owns a stake in the company:
“I’m going to be transparent—there’s a quarterly rebalance coming up, and these stocks could be removed. I agree with every one of these price cuts because I think the positive momentum in the airlines has been lost. It was good while it lasted, and we benefited from it. Now, in terms of fundamentals, there’s a clear challenge to revenue growth. You’re seeing lower fares and the potential for a fare war, while demand is starting to wane. I wanted a publicly traded fund so people could see my performance, and if I’m doing that, I have to be honest about what I see ahead. I’ll call it like it is—yes, we own it and can’t do much about it right now, but these stocks don’t look good.”
Patient Capital Management stated the following regarding United Airlines Holdings, Inc. (NASDAQ:UAL) in its Q4 2024 investor letter:
“United Airlines Holdings, Inc. (NASDAQ:UAL) had a strong fourth quarter, gaining 70.2% in the period. The company benefitted from continued strong demand that surprised the market as well as the initiation of a buyback program, the first since COVID. There continues to be strong travel demand from both retail and business travelers. According to the International Air Transport Association (IATA), global air passenger travel is still below the pre-COVID implied trend path despite reaching a new all-time high this year. United’s focus on the customer over the last few years has led to strong improvement in net promoter scores (NPS) which should continue to flow through the model via better TRASM (total revenue per available seat mile) and higher cash flows and earnings. As of today, United alone accounts for ~30% of the overall industry’s profits. We expect this market share to grow and be defensible as we transition to an environment where customer service becomes the differentiating factor, and scale provides unparalleled ability to reinvest in the customer experience.”
8. Delta Air Lines Inc (NYSE:DAL)
Number of Hedge Funds Investors: 57
Despite owning shares in Delta Air Lines Inc (NYSE:DAL), Joseph M. Terranova, Senior Managing Director for Virtus Investment Partners, believes there’s trouble ahead for Delta Air Lines Inc (NYSE:DAL). Here is what he said in a latest program on CNBC:
“I’m going to be transparent—there’s a quarterly rebalance coming up, and these stocks could be removed. I agree with every one of these price cuts because I think the positive momentum in the airlines has been lost. It was good while it lasted, and we benefited from it. Now, in terms of fundamentals, there’s a clear challenge to revenue growth. You’re seeing lower fares and the potential for a fare war, while demand is starting to wane. I wanted a publicly traded fund so people could see my performance, and if I’m doing that, I have to be honest about what I see ahead. I’ll call it like it is—yes, we own it and can’t do much about it right now, but these stocks don’t look good.”
7. Palo Alto Networks Inc (NASDAQ:PANW)
Number of Hedge Funds Investors: 64
Stephanie Link, Hightower Advisors CIO, explained in a latest program on CNBC why she’s buying Palo Alto Networks Inc (NASDAQ:PANW).
“Palo Alto is a fairly new position. I only started buying it about a month ago. It’s down 14% since I bought it. You know, I’m a big believer in cybersecurity, and these guys are a top-five player in the cybersecurity sector. They are building out scale through platformization, which could be a $15 billion annualized recurring revenue opportunity for them.
I think the biggest thing is that it’s trading at 14 times price-to-sales, which is not cheap, but CrowdStrike is trading at 22 times. It’s recovered all of its valuation discount post the glitch that they had. So I sold CrowdStrike and bought Palo Alto.”
6. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Funds Investors: 99
Steve Quirk, Robinhood chief brokerage officer, recently talked about the latest retail trade data released by his platform for February. Asked about the retail investors’ interest in Tesla Inc (NASDAQ:TSLA) despite the latest declines, Quirk said:
“You know, there’s a lot of people that have strong beliefs in Tesla, and that’s it. And you know, they are looking at this as an opportune time to add to portfolios. And you know, they’re a lot like portfolio managers. These, these, they’re quite savvy, our customers. They’re, they rotate out of names where they see nice appreciation, and they rotate into ones where they think there’s an opportunity.”
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“The largest relative detractors in the quarter were Tesla, Inc. (NASDAQ:TSLA) (not owned), Thermo Fisher Scientific, and Broadcom (not owned). We’ve spoken at length about our rationale for not owning Tesla. The stock enjoyed a 54% return during the quarter, with effectively all of the share price performance strength coming in the post-election period, as the market expressed a positive view on Elon Musk’s prominent role in the incoming Trump administration and its potential implications for Tesla. While we agree this development should be a net positive for Tesla and recognize the company’s interesting future prospects for autonomous driving and humanoid robots, its current valuation demands that shareholders pay primarily for potential innovations that have yet to materialize, with uncertain risks and timelines, presenting a different type of risk profile than we are comfortable with. Today, Tesla is an automobile manufacturer limited to the higher-income segment and is increasingly challenged to sell vehicles when interest rates are not zero. As such, we continue to question the company’s long-term growth profile, its ability to scale a large robotaxi service (which seems to be the source of euphoria in Tesla shares), and its corporate governance.”
5. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Funds Investors: 121
Steve Weiss, Founder and Managing Partner of Short Hills Capital Partners, disclosed in a latest program on CNBC that he’s piling into Netflix Inc (NASDAQ:NFLX) shares and gave his reasons:
“If you take a look at Netflix, also I’m looking at companies that are insulated. Netflix—you know, people have cut the cord, so what will they do before they cut Netflix? They’ll cut the services, streaming services they’re not happy with. You can also trade down, go to the ad-supported service.”
RiverPark Large Growth Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q4 2024 investor letter:
“Netflix, Inc. (NASDAQ:NFLX): NFLX was a top contributor in the fourth quarter powered by a 3Q earnings report that included stronger-than-expected revenue and operating income, solid subscriber additions, and positive forward commentary. Anti-password sharing and ad tier initiatives continue to drive subscriber growth while improving revenue per user trends, from recent price increases, drive margin expansion. The company was optimistic about future revenue growth, margin expansion, free cash flow generation and future return of capital programs.
The recent re-acceleration of subscriber growth, plus price increases on premium memberships and a stabilization of content investments, should position the company for low double digit annual revenue growth over the next few years while driving operating margin to more than 25%. We also believe that the stabilization of content spend should allow the company to continue to scale its free cash flow.”
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