In this article, we discuss the 10 stocks Reddit’s WallStreetBets is buying before earnings.
The United States economy has roared back into life over the past few months after a torrid 2020 marred by COVID-19 lockdowns. Just before the US government released GDP figures that showed that the economy had grown beyond the pre-pandemic size, data released by Refinitiv, a financial market data and infrastructure firm, indicated that the largest companies in the country, often represented by the S&P 500 Index, were on track to smash market expectations on earnings for the second quarter.
According to the data research firm, the S&P 500 Index was actually set for the biggest quarterly earnings growth in more than a decade. In the days since the data was released, more than 120 companies on the index have released earnings results for the second quarter. A whopping 88% have beaten market estimates. As more firms prepare to release earnings reports, retail investors, who frequent internet platforms like Reddit, have started loading up stocks that are expected to soar following the release of their quarterly earnings.
Some of the stocks presently popular on the 10-million strong Reddit platform WallStreetBets include Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Lyft, Inc. (NASDAQ: LYFT), among others. These and others like them are discussed in detail below. Refinitiv estimates that earnings for the S&P 500 are expected to grow 78% year-on-year in the second quarter. The estimates seem realistic given that the S&P 500 has already soared by 90% compared to the lows of March 2020.
Investors should take advantage of this post-pandemic boom. Even big finance is capitalizing on the improving economy. The entire hedge fund industry is 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 26th 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 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 stocks Reddit’s WallStreetBets is buying before earnings. These were ranked keeping in mind the number of mentions on Reddit forum WallStreetBets, analyst ratings, business fundamentals, and hedge fund sentiment around each. All the firms listed below are expected to unveil their earnings results for the second quarter on August 3 or after the close of market on August 2.
Stocks Reddit’s WallStreetBets is Buying Before Earnings
10. Big 5 Sporting Goods Corporation (NASDAQ: BGFV)
Number of Hedge Fund Holders: 14
Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is a California-based sporting goods retailer. It is placed tenth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company is expected to post second quarter earnings after the close of the market on August 3. In earnings results for the first quarter, posted on May 4, the firm reported earnings per share of $0.90, beating market predictions by $0.040. The revenue over the period was $272 million, up 25% year-on-year.
On May 5, investment advisory Lake Street raised the price target on Big 5 Sporting Goods Corporation stock to $26 from $19 and maintained a Buy rating, appreciating the quarterly earnings beat by the firm in the first three months of 2021.
At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $27 million in Big 5 Sporting Goods Corporation, down from 17 in the preceding quarter worth $15 million.
Just like Activision Blizzard, Inc., Match Group, Inc., and Lyft, Inc., Big 5 Sporting Goods Corporation is one of the stocks Reddit’s WallStreetBets is buying before earnings.
9. Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS)
Number of Hedge Fund Holders: 16
Kratos Defense & Security Solutions, Inc. is ranked ninth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company markets aerospace and defense services and mostly works with the United States government. The company will post earnings results for the second quarter after the close of the market on August 3. In earnings results for the first quarter, posted in early May, the firm beat market expectations on revenue and earnings per share.
On July 26, investment advisory B Riley upgraded Kratos Defense & Security Solutions, Inc. stock to Buy from Neutral with a price target of $32, underlining that the demand for the products sold by the firm remained high.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Washington Harbour Partners is a leading shareholder in Kratos Defense & Security Solutions, Inc. with 475,989 shares worth more than $12 million.
Alongside Activision Blizzard, Inc., Match Group, Inc., and Lyft, Inc., Kratos Defense & Security Solutions, Inc. is one of the stocks Reddit’s WallStreetBets is buying before earnings.
8. SunPower Corporation (NASDAQ: SPWR)
Number of Hedge Fund Holders: 18
SunPower Corporation (NASDAQ: SPWR) is a company that offers solar solutions. It is headquartered in California and is placed eighth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company stands to benefit from proposed new tax credits for solar manufacturing in the US. The company will post second quarter earnings after the close of the market on August 3. The firm missed market expectations on revenue in the first quarter but beat them on earnings per share.
On July 2, investment advisory Goldman Sachs maintained a Neutral rating on SunPower Corporation stock but raised the price target to $25 from $22, highlighting that supply chain risks in the industry were lessening and could benefit the firm.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $182 million in SunPower Corporation, down from 24 in the previous quarter worth $345 million.
In addition to Activision Blizzard, Inc., Match Group, Inc., and Lyft, Inc., SunPower Corporation is one of the stocks Reddit’s WallStreetBets is buying before earnings.
7. Realty Income Corporation (NYSE: O)
Number of Hedge Fund Holders: 18
Realty Income Corporation (NYSE: O) is ranked seventh on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company is based in California and is structured as a real estate investment trust that focuses on investments in properties with long-term commercial leases. The firm will post second quarter earnings after the close of market on August 2. On July 14, the firm declared a monthly dividend of $0.2355 per share, in line with previous. The forward yield was 4.13%.
On June 3, investment advisory Mizuho upgraded Realty Income Corporation stock to Buy from Neutral with a price target of $77, noting that low rates, merger related synergies and recognition of prior period rents would improve earnings in the coming months.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $183 million in Realty Income Corporation, down from 24 in the previous quarter worth $238 million.
Activision Blizzard, Inc., Match Group, Inc., and Lyft, Inc. are some of the stocks Reddit’s WallStreetBets is buying before earnings, just like Realty Income Corporation.
6. BP p.l.c. (NYSE: BP)
Number of Hedge Fund Holders: 29
BP p.l.c. (NYSE: BP) is an energy company headquartered in London. It is placed sixth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The share price of the firm had been soaring in recent weeks amid increased demand for oil as the economy reopened following the pandemic lockdowns and an impasse over production by oil producing countries. The company will post second quarter earnings before the opening of the market on August 3. The firm has a market cap of over $81 billion.
On July 23, investment advisory Piper Sandler reiterated an Overweight rating on BP p.l.c. (NYSE: BP) stock and raised the price target to $37 from $32, backing the firm to deliver solid results in the third quarter and beat market estimates on earnings in the second.
At the end of the first quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in BP p.l.c. (NYSE: BP), the same as in the previous quarter worth $927 million.
Activision Blizzard, Inc., Match Group, Inc., and Lyft, Inc. are some of the stocks Reddit’s WallStreetBets is buying before earnings, alongside BP p.l.c. (NYSE: BP).
In its Q1 2020 investor letter, Broyhill Asset Management highlighted a few stocks and BP p.l.c. (NYSE: BP) was one of them. Here is what the fund said:
“As if a global pandemic wasn’t enough, during the quarter OPEC and Russia decided to add an oil crisis to the list of things for investors to panic about. After oil’s largest one-day decline in history, we established a small position in Exxon Mobile (XOM) and British Petroleum (BP)—two of the largest, best managed, and well capitalized companies in the industry.
We don’t have a short-term view on oil, but we do know that the best cure for low oil prices is low oil prices. And with the sector trading at its lowest level relative to the market in history, we are willing to bet that the current extremes in negative sentiment willrevert to more normal levels—and more normal oil prices—at some point. In the interim, we are being paid 10% annually to wait.”
5. ConocoPhillips (NYSE: COP)
Number of Hedge Fund Holders: 51
ConocoPhillips (NYSE: COP) is a Texas-based company in the oil and gas business. It is ranked fifth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company will release the second quarter earnings report before the opening of the market on August 3. The firm beat market expectations on earnings per share and revenue for the first quarter. On July 30, news publication Bloomberg reported that the company was among the potential bidders in a sale of the Permian Basin oil fields presently owned by oil giant Shell.
Devon Energy (NYSE:DVN) and ConocoPhillips are among potential suitors studying Royal Dutch Shell’s (RDS.A, RDS.B) portfolio of Permian Basin oil fields, which could be worth as much as $10B in a sale, Bloomberg reports.
On July 23, investment advisory Piper Sandler maintained an Overweight rating on ConocoPhillips stock and raised the price target to $80 from $69, noting the robust free cash outlooks for oil companies in the coming months.
At the end of the first quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in ConocoPhillips, up from 49 in the previous quarter worth $687 million.
In its Q1 2021 investor letter, ClearBridge Investments highlighted a few stocks and ConocoPhillips (NYSE: COP) was one of them. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) ConocoPhillips. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
4. Eli Lilly and Company (NYSE: LLY)
Number of Hedge Fund Holders: 55
Eli Lilly and Company (NYSE: LLY) is placed fourth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company makes and sells pharmaceuticals and is headquartered in Indiana. The firm will post second quarter results before the opening of the market on August 3. On July 29, the firm revealed the results of an analysis into a clinical study into a new drug being developed by the firm for the treatment of Alzheimer’s. The firm said early results showed slower cognitive declines in patients who took the drug.
On July 26, investment advisory Truist initiated coverage of Eli Lilly and Company stock with a Buy rating and a price target of $262, identifying some potential risks to the stock that could hinder growth over the next few months.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Eli Lilly and Company with 6 million shares worth $1.4 billion.
In its Q1 2020 investor letter, Amana Mutual Funds Trust highlighted a few stocks and Eli Lilly and Company (NYSE: LLY) was one of them. Here is what the fund said:
“Even so, Lilly stood out as one, among a handful, of companies that registered a positive return for the first quarter. In January, Lilly reported excellent fourth quarter results, with revenue growing at a faster clip than over the first three quarters of the year. Lilly is also financially strong with debt equivalent to only two times EBITDA3 and 12% of market capitalization. Johnson & Johnson, while trailing Lilly, shares many of the same characteristics and also outperformed.”
3. Lyft, Inc. (NASDAQ: LYFT)
Number of Hedge Fund Holders: 60
Lyft, Inc. operates as a ridesharing company offering services primarily in the United States and Canada. It is ranked third on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. In earnings results for the first quarter, the company missed market expectations on earnings per share but beat them on revenue. It is expected to announce the second quarter results after the close of market on August 3. The company has a market cap of more than $18 billion and posted more than $2.3 billion in revenue last year.
On July 21, investment advisory DA Davidson assumed coverage of Lyft, Inc. stock with a Buy rating and a price target of $25, underlining that the firm would benefit from the long-term growth in the ride sharing business.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Alkeon Capital Management is a leading shareholder in Lyft, Inc. with 5 million shares worth more than $321 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Lyft, Inc. (NASDAQ: LYFT) was one of them. Here is what the fund said:
“New purchase Lyft, the No. 2 U.S. rideshare operator, is exclusively focused on the secular growth opportunity in the rideshare market and stands to be a direct economic reopening beneficiary. The company made tremendous progress on margins during 2020 and improved its ability to meet long-term targets. Lyft is also leveraged to the eventual transition to autonomous driving.”
2. Match Group, Inc. (NASDAQ: MTCH)
Number of Hedge Fund Holders: 68
Match Group, Inc. is placed second on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The firm is headquartered in Texas and owns and operates dating platforms. Some of the platforms it runs include Tinder, Match, Meetic, OkCupid, Hinge, Pairs, PlentyOfFish, and OurTime, among others. The company will post second quarter earnings after the close of market on August 3. The share price of the firm has soared as COVID-19 vaccinations allow for dating to resume across the globe.
On July 21, investment advisory Truist reiterated a Buy rating on Match Group, Inc. stock and raised the price target to $190 from $160, highlighting the improving fundamentals of the firm in the post-pandemic economy.
At the end of the first quarter of 2021, 68 hedge funds in the database of Insider Monkey held stakes worth $2.9 billion in Match Group, Inc., down from 72 in the preceding quarter worth $3.7 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Match Group, Inc. (NASDAQ: MTCH) was one of them. Here is what the fund said:
“In addition to the new issue market, we have been tactically adding growth exposure. Our largest new position was Match Group, the global leader in the online dating space that was spun off by Interactive Corp. in 2020. Singles have put their life plans on hold during the pandemic but continue to want to meet people. Match was negative impacted by COVID, especially in markets like India, but the business is very profitable with high margins and is driving growth through international expansion, increasing users and better monetization and engagement.”
1. Activision Blizzard, Inc. (NASDAQ: ATVI)
Number of Hedge Fund Holders: 76
Activision Blizzard, Inc. is a company that focuses on the production of interactive entertainment content. It is based in California and is ranked first on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The firm will post second quarter earnings after the close of the market on August 3. In earnings results for the first quarter, posted on May 4, the firm reported earnings per share of $0.84, beating market expectations by $0.15. The revenue over the period was $2 billion, up 36% year-on-year.
On August 2, investment advisory Credit Suisse raised the price target on Activision Blizzard, Inc. stock to $125 from $120 and maintained an Outperform rating, noting that the firm was positioned strongly for the transition to online and mobile gaming.
At the end of the first quarter of 2021, 76 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Activision Blizzard, Inc., down from 81 in the preceding quarter worth $3.7 billion.
In its Q1 2021 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and Activision Blizzard, Inc. (NASDAQ: ATVI) was one of them. Here is what the fund said:
“The portfolio established a position in video game publisher Activision Blizzard. As a watchlist company we have followed Activision for several years. As a reminder the role of the watchlist is to allow us to focus on a select group of companies where we seek to observe important signals around either value latency, industry trends or management behaviour that portend attractive investment propositions.
Technology can often play a disruptive role in content, however video games are a clear beneficiary of technology, both in terms of more immersive and realistic gaming experiences as well as the monetisation opportunities this creates…” (Click here to see the full text)
You can also take a peek at 15 Best High Volume Stocks to Buy Now and 10 Best Up and Coming Stocks to Invest In.
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This article is originally published at Insider Monkey.
