In this article, we discuss the 11 best growth stocks to buy according to Ray Dalio.
Billionaire Ray Dalio founded Bridgewater Associates, one of the most successful hedge funds today with over $15 billion in assets under management, in 1973 when he was still learning the ropes on Wall Street. Over the years, Dalio, whose personal net worth is close to $20 billion, per news publication Forbes, has become one of the prominent names in the finance world through an investment strategy that carefully bets on both value and growth stocks. Between March and June this year, the portfolio value of the fund has jumped by $4 billion.
The top ten holdings comprise 33% of the portfolio with investments concentrated in the consumer goods, technology, and services sectors. The fund, which is based in Connecticut, made new purchases in 329 stocks, bought additional stakes in 255, reduced holdings in 116 stocks, and sold out of 80 equities during the second quarter of 2021, according to the latest 13F filings. Even though he came from humble beginnings, starting out as a caddy, Dalio has a degree from Harvard Business School and has also worked at a commodities firm.
Some of the top growth stocks in the investment portfolio of Bridgewater Associates at the end of the second quarter of 2021 were Micron Technology (NASDAQ:MU), NVIDIA Corporation (NASDAQ: NVDA), and Coupa Software Incorporated (NASDAQ: COUP), among others discussed in detail below. The success of Dalio – since inception, the total returns of his hedge fund have crossed $46 billion in value – has been an exception in the finance world that has struggled to produce more icons like him.
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 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). 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.
Ray Dalio of Bridgewater Associates
Our Methodology
With this context in mind, here is our list of the 11 best growth stocks to buy according to Ray Dalio. These were picked from the investment portfolio of Bridgewater Associates at the end of the second quarter of 2021.
The analyst ratings of each company are also discussed to provide readers with some more context about their investment decisions.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey. The list is compiled according to the number of hedge funds having stakes in each firm.
Best Growth Stocks To Buy According To Ray Dalio
11. NetApp, Inc. (NASDAQ:NTAP)
Number of Hedge Fund Holders: 31
NetApp, Inc. (NASDAQ:NTAP) is a California-based company that provides software, systems, and cloud services. It is placed eleventh on our list of 11 best growth stocks to buy according to Ray Dalio. According to the latest filings, Bridgewater Associates owned 88,499 shares in the company at the end of June 2021 worth $7.2 million, representing 0.04% of the portfolio.
On September 9, investment advisory Morgan Stanley maintained an Overweight rating on NetApp, Inc. (NASDAQ:NTAP) stock and raised the price target to $102 from $96, noting that the firm could possibly exceed run-rate targets in the next few years.
Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in NetApp, Inc. (NASDAQ:NTAP) with 1.6 million shares worth more than $139 million.
10. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Number of Hedge Fund Holders: 35
ZoomInfo Technologies Inc. (NASDAQ:ZI) is ranked tenth on our list of 11 best growth stocks to buy according to Ray Dalio. The firm owns and operates a cloud-based market intelligence platform and is headquartered in Washington. According to the latest data, Bridgewater Associates owned 9,744 shares in the company at the end of the second quarter of 2021 worth $508,000.
On September 7, investment advisory Stifel maintained a Buy rating on ZoomInfo Technologies Inc. (NASDAQ:ZI) stock and raised the price target to $75 from $70, noting the strong fundamentals performance of the firm.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in ZoomInfo Technologies Inc. (NASDAQ:ZI) with 2.6 million shares worth more than $136 million.
Just like Micron Technology (NASDAQ:MU), NVIDIA Corporation (NASDAQ:NVDA), and Coupa Software Incorporated (NASDAQ:COUP), ZoomInfo Technologies Inc. (NASDAQ:ZI) is one of the top growth stocks in the portfolio of Ray Dalio.
9. Zscaler, Inc. (NASDAQ:ZS)
Number of Hedge Fund Holders: 38
Zscaler, Inc. (NASDAQ:ZS) is placed ninth on our list of 11 best growth stocks to buy according to Ray Dalio. The firm markets cloud security services and is headquartered in California. According to 13F filings, Bridgewater Associates owned 45,589 shares in the company at the end of June 2021 worth $9.8 million, representing 0.06% of the portfolio.
On September 10, investment advisory BMO Capital reiterated an Outperform rating on Zscaler, Inc. (NASDAQ:ZS) stock and raised the price target to $315 from $250, highlighting the richer sales mix and growth durability of the firm.
Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Zscaler, Inc. (NASDAQ:ZS) with 1.4 million shares worth more than $318 million.
Along with Micron Technology (NASDAQ:MU), NVIDIA Corporation (NASDAQ:NVDA), and Coupa Software Incorporated (NASDAQ:COUP), Zscaler, Inc. (NASDAQ:ZS) is one of the best growth stocks to buy according to Ray Dalio.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Zscaler, Inc. (NASDAQ:ZS) was one of them. Here is what the fund said:
“We also exited our investment in Zscaler. Zscaler provides cloudbased Internet security solutions. Cybersecurity remains a top concern for businesses and governments alike as cyberattacks can have devastating financial and reputational consequences. Furthermore, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (Office 365, Salesforce, etc.) and a remote workforce make operating IT infrastructures increasingly complex. Zscaler’s scalable, cloud-based security platform is a more secure and efficient way to connect users and applications, which eliminates the need for several layers of security (firewalls, VPNs, etc.) developed and built over the last couple of decades. While the pandemic crisis is likely disrupting some areas of Zscaler’s new sales funnel, the company is particularly well-suited to scale and accelerate our market share-gain thesis. Ninety percent of employees are remotely connecting to the enterprise IT network in today’s inverted world, as opposed to prior solutions which are geared to support 10%-20% of workers connecting remotely with the rest connecting from within the walls of a corporate network. Many employees have used traditional VPN connections to log into their networks remotely, but Zscaler’s platform offers a more secure connection without exposing an entire internal network, is easier to configure and is less costly to operate at scale. While the trend toward connecting remote devices over the Internet backbone remains firmly in motion, the stock appreciated over 300% in 2020, quickly outgrowing our small-cap market cap mandate, and we ended our successful campaign.”
8. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 44
Teradyne, Inc. (NASDAQ:TER) is a North Reading-based firm that makes and sells automatic testing equipment to the semiconductor industry. It is ranked eighth on our list of 11 best growth stocks to buy according to Ray Dalio. According to regulatory filings, Bridgewater Associates owned 41,550 shares in the company at the end of June 2021 worth $5.5 million, representing 0.03% of the portfolio.
On June 21, investment advisory Evercore maintained an Outperform rating on Teradyne, Inc. (NASDAQ:TER) stock and raised the price target to $175 from $160, noting that the firm remained one of the “top picks” of the advisory.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Teradyne, Inc. (NASDAQ:TER) with 128 million shares worth more than $544 million.
In addition to Micron Technology (NASDAQ:MU), NVIDIA Corporation (NASDAQ:NVDA), and Coupa Software Incorporated (NASDAQ:COUP), Teradyne, Inc. (NASDAQ:TER) is one of the growth stocks favored by billionaire Ray Dalio.
7. Zendesk, Inc. (NYSE:ZEN)
Number of Hedge Fund Holders: 52
Zendesk, Inc. (NYSE:ZEN) is a California-based software development company. It is placed seventh on our list of 11 best growth stocks to buy according to Ray Dalio. According to securities filings, Bridgewater Associates owned 42,206 shares in the company at the end of the second quarter of 2021 worth $6 million, representing 0.06% of the portfolio.
In May, investment advisory UBS upgraded Zendesk, Inc. (NYSE:ZEN) stock to Buy from Hold and raised the price target to $190 from $171, predicting that the firm was capable of returning to an over 30% growth profile.
At the end of the second quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Zendesk, Inc. (NYSE:ZEN), up from 45 in the previous quarter worth $1.4 billion.
Micron Technology (NASDAQ:MU), NVIDIA Corporation (NASDAQ:NVDA), and Coupa Software Incorporated (NASDAQ:COUP) are some of the growth stocks attracting the interest of elite investors, just like Zendesk, Inc. (NYSE:ZEN).
In its Q4 2020 investor letter, Wasatch Ultra Growth Fund, an asset management firm, highlighted a few stocks and Zendesk, Inc. (NYSE:ZEN) was one of them. Here is what the fund said:
“Zendesk, Inc. (ZEN) was also a top contributor. The company provides business software using the software-as-a-service (SaaS) model. Zendesk has experienced strong demand throughout the Covid19 pandemic from customers in e-commerce, as well as from other businesses with employees working from home. Additionally, demand from clients in the travel and hospitality industries has picked up as global economies have begun to reopen. Adjusted earnings per share rose 42% in the company’s most recent quarter on revenue growth of 24% compared to the same quarter a year ago. An improved sales outlook from Zendesk’s management also helped lift the stock.”
6. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 52
NXP Semiconductors N.V. (NASDAQ:NXPI) is ranked sixth on our list of 11 best growth stocks to buy according to Ray Dalio. The company makes and sells semiconductors and is headquartered in the Netherlands. According to the latest filings, Bridgewater Associates owned 2,084 shares in the company at the end of June 2021 worth $429,000.
On September 3, investment advisory Argus initiated coverage of NXP Semiconductors N.V. (NASDAQ:NXPI) stock with a Buy rating and a price target of $260, noting that the firm was a leading semiconductor supplier to the auto industry.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in NXP Semiconductors N.V. (NASDAQ:NXPI) with 1 million shares worth more than $212 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NXP Semiconductors N.V. (NASDAQ:NXPI) was one of them. Here is what the fund said:
“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns and one-off production delays as well as demand resilience in areas like autos and smartphones. Two recent additions, specialty semiconductor maker (including) NXP Semiconductors, was among the portfolio’s leading contributors in the first quarter. NXP rose as auto production ramped up and electric vehicle sales continued to expand.”
5. Coupa Software Incorporated (NASDAQ:COUP)
Number of Hedge Fund Holders: 54
Coupa Software Incorporated (NASDAQ:COUP) is placed fifth on our list of 11 best growth stocks to buy according to Ray Dalio. The firm owns and operates a cloud-based business management platform and is headquartered in California. According to the latest data, Bridgewater Associates owned 3,888 shares in the company at the end of the second quarter of 2021 worth more than $1 million.
On September 8, investment advisory Needham reiterated a Buy rating on Coupa Software Incorporated (NASDAQ:COUP) stock and raised the price target to $315 from $280, appreciating the “strong” second quarter earnings of the firm.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Coupa Software Incorporated (NASDAQ:COUP) with 4.6 million shares worth more than $1.2 billion.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Coupa Software Incorporated (NASDAQ:COUP) was one of them. Here is what the fund said:
“We started new investment campaigns in Coupa Software. Coupa is a leading provider of cloud-based business spend-management software. The company helps 1,400 customers process over $2 trillion in annual spend across more than 5 million suppliers. While this quarter’s announcement of a major new customer win at Walmart shows it still has a long runway for growth in this business, we are particularly excited about Coupa Pay—a recently introduced set of cloud services that seeks to process B2B payments (not just invoices) across its large network. B2B payments has seen far less innovation in recent years compared to B2C (PayPal, Venmo, Square), but we see it as a major opportunity in the years ahead.”
4. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 58
Lam Research Corporation (NASDAQ:LRCX) is a California-based firm that makes and sells semiconductor processing equipment. It is ranked fourth on our list of 11 best growth stocks to buy according to Ray Dalio. According to regulatory filings, Bridgewater Associates owned 36,506 shares in the company at the end of June 2021 worth $23.7 million, representing 0.15% of the portfolio.
On September 21, investment advisory UBS maintained a Buy rating on Lam Research Corporation (NASDAQ:LRCX) stock but lowered the price target to $715 from $780, predicting moderation in spending of semiconductor firms through to 2022.
At the end of the second quarter of 2021, 58 hedge funds in the database of Insider Monkey held stakes worth $3.7 billion in Lam Research Corporation (NASDAQ:LRCX) , up from 54 the preceding quarter worth $3.1 billion.
3. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 78
Intel Corporation (NASDAQ:INTC) is a California-based firm that sells essential technologies for smart devices. It is placed third on our list of 11 best growth stocks to buy according to Ray Dalio. According to 13F filings, Bridgewater Associates owned 35,490 shares in the company at the end of the second quarter of 2021 worth $1.9 million, representing 0.01% of the portfolio.
On July 23, investment advisory BMO Capital maintained an Outperform rating on Intel Corporation (NASDAQ:INTC) stock but lowered the price target to $70 from $75, appreciating the quarterly earnings but predicting compressed margins in the second half of the year.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $6.7 billion in Intel Corporation (NASDAQ:INTC), down from 83 in the previous quarter worth $7.6 billion.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 86
NVIDIA Corporation (NASDAQ:NVDA) is ranked second on our list of 11 best growth stocks to buy according to Ray Dalio. The company operates as a visual computing firm and is headquartered in California. According to securities filings, Bridgewater Associates owned 21,098 shares in the company at the end of June 2021 worth $16.8 million, representing 0.1% of the portfolio.
On September 17, investment advisory Bank of America reiterated a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) stock and raised the price target to $275 from $260, underlining the critical role of semiconductor firms in the digital economy.
At the end of the second quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $9 billion in NVIDIA Corporation (NASDAQ:NVDA), up from 80 the preceding quarter worth $6 billion.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
1. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 87
Micron Technology (NASDAQ:MU) is placed first on our list of 11 best growth stocks to buy according to Ray Dalio. The firm makes and sells memory and storage products and is headquartered in Idaho. According to the latest filings, Bridgewater Associates owned 216,148 shares in the company at the end of the second quarter of 2021 worth $18.3 million, representing 0.11% of the portfolio.
On August 30, investment advisory Deutsche Bank maintained a Buy rating on Micron Technology (NASDAQ:MU) stock and lowered the price target to $95 from $110, noting that memory stocks were under pressure because of pricing concerns.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Micron Technology (NASDAQ:MU), down from 100 in the preceding quarter worth $7.6 billion.
In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ:MU) was one of them. Here is what the fund said:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
You can also take a peek at 15 Dividend Stocks People Buy for Early Retirement and 10 Best Tech ETFs to Buy According to Reddit.
Follow Insider Monkey on Twitter
Suggested Articles:
- 10 Technology Stocks to Buy According to Mario Gabelli
- Cathie Wood Is Selling These 10 Stocks
- 10 Best SPACs to Invest In According to Reddit
Disclosure. None. 11 Best Growth Stocks To Buy According To Ray Dalio is originally published on Insider Monkey.
