In this article, we will take a look at 11 High Profit Margin Stocks to Buy According to Hedge Funds.
US equities fell on March 19, with oil prices falling as Wall Street awaited the latest news on the Iran conflict. The drop came after crude futures rose as high as 10% to $119 per barrel as Iran and Israel conducted attacks on critical oil and gas infrastructure. The intensification of hostilities fueled fears of more serious repercussions from the conflict than anticipated. Meanwhile, markets had been wrestling with rising inflation estimates from the Federal Reserve, which lowered expectations for interest rate cuts.
Given that markets seem to be dismissing any rate cuts this year, analysts at Macquarie suspect the Fed’s next move will be in the opposite direction. In notes released before and after the Fed meeting, the firm stated that it believes inflationary pressures are growing and will compel the Fed to raise interest rates sometime next year. Regarding this, the firm stated the following:
“We see the next move as a hike. However, with more mixed signals from the labor market and the potential for consumer headwinds near-term from higher oil, we have now pushed out this timing to 1H27.”
With that backdrop, let’s explore our list of high profit margin stocks to buy according to hedge funds.
Our Methodology
For this list, we used stock screeners to compile a list of companies with a net profit margin above 25%, signaling strong operational efficiency and pricing power. These stocks are also popular among analysts and elite hedge funds.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
11. Trip.com Group Limited (NASDAQ:TCOM)
Trip.com Group Limited (NASDAQ:TCOM) ranks among the best high profit margin stocks to buy. On February 26, Barclays reduced its price target for Trip.com Group Limited (NASDAQ:TCOM) to $75 from $90 while retaining an Overweight rating on the company’s stock. The firm stated that both revenues and earnings came in somewhat higher than originally expected.
Trip.com Group Limited (NASDAQ:TCOM) beat analyst expectations with earnings per share of $4.97, compared to $4.77. In addition, the company generated $15.4 billion in revenue, which exceeded the predicted $14.86 billion. However, the slightly higher revenues were partially offset by marginally higher fourth-quarter expenses, while gross margins were stable at 81%.
Trip.com demonstrated particularly strong growth, with foreign reservations up 60% year-over-year in 2025 and 2026 to date, as well as in outbound travel. Management also issued a positive first-quarter outlook, citing sustained momentum experienced quarter-to-date, particularly with regard to Chinese New Year travel demand.
Global travel service company Trip.com Group Limited (NASDAQ:TCOM) provides end-to-end solutions for the corporate travel, lodging, tour, and transportation sectors.
10. Crown Castle Inc. (NYSE:CCI)
Crown Castle Inc. (NYSE:CCI) ranks among the best high profit margin stocks to buy. On March 5, Bernstein SocGen Group began coverage of Crown Castle Inc. (NYSE:CCI) with an Outperform rating and a $102 price target. The firm forecasts revenue growth will rebound to the low single digits following recent low years, including a 2026 slump caused by $3.5 billion in Dish cancellations.
Crown Castle’s quarterly results were impacted by a dispute with former DISH Network following the cancellation of wireless tower contracts. DISH had been Crown Castle’s largest additive customer in recent years, though it currently accounts for about 5% of total annual site rental revenue as of the end of 2025.
Crown Castle’s towers earn $102,000 per site, trailing competitors American Tower at $125,000 and SBA Communications at $107,000. Bernstein expects carrier renewals in the coming years to result in around 3% year-over-year increase, excluding Sprint and Dish turnover.
Crown Castle Inc. (NYSE:CCI) is a major player in the real estate investment trust (REIT) sector, with a sizable portfolio that comprises over 40,000 cell towers.
9. Marvell Technology, Inc. (NASDAQ:MRVL)
Marvell Technology, Inc. (NASDAQ:MRVL) ranks among the best high profit margin stocks to buy. Following Marvell Technology, Inc. (NASDAQ:MRVL)’s quarterly earnings, Loop Capital reiterated its Buy rating and $120 price objective for the stock on March 6. The company posted fourth-quarter earnings that exceeded Wall Street projections and provided first-quarter guidance that was much higher than analyst estimates, driven by strong demand for its AI data center solutions.
The company reported adjusted EPS of $0.80 in Q4, exceeding the analyst consensus of $0.79 by $0.01. Revenue hit a record $2.22 billion, up 22% year-over-year and slightly higher than the $2.21 billion expectation.
Marvell’s data center segment generated $1.65 billion in revenue during the quarter, accounting for 74% of overall sales and up 21% year-over-year. Meanwhile, the communications and other segment generated $567.4 million, a 26% increase year-over-year. Loop Capital also highlighted the company’s fiscal 2027 revenue expectation for data centers, which is expected to increase by more than 40% from a previous estimate of 25%.
Marvell Technology, Inc. (NASDAQ:MRVL) is a semiconductor development and manufacturing company with a major focus on data centers.
8. Adobe Inc. (NASDAQ:ADBE)
Adobe Inc. (NASDAQ:ADBE) ranks among the best high profit margin stocks to buy. On March 12, Adobe Inc. (NASDAQ:ADBE) posted strong fiscal Q1 earnings, though its stock price fell 6.7% owing to leadership transition news and fears about AI competition. Adobe’s results exceeded forecasts, with annualized recurring revenue of $26.06 billion and AI-driven revenue growth tripling year-over-year.
Moreover, the company’s AI shift has shown up in a number of major areas. During Q1, monthly active users across Acrobat, Creative Cloud, Express, and Firefly reached 850 million, representing a 17% increase year-over-year.
Despite the strong earnings announcement, Adobe Inc. (NASDAQ:ADBE) shares fell as CEO Shantanu Narayen announced his plan to leave Adobe after 18 years in the role. Narayen stated that he would collaborate with Lead Independent Director Frank Calderoni and the Board to select his successor, although no timetable was provided.
Adobe Inc. (NASDAQ:ADBE) is a software company that specializes in creating, publishing, and promoting digital content. It offers a wide range of tools for professionals and consumers, including Photoshop, Illustrator, Acrobat, and Premiere Pro, which are often bundled in the Adobe Creative Cloud subscription.
7. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) ranks among the best high profit margin stocks to buy. On March 10, Truist Securities boosted its price target for Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) to $525 from $490, while keeping a Buy rating on the company’s shares. The firm cited encouraging Week-36 interim findings from Vertex’s Phase 3 RAINIER study in IgAN.
The trial satisfied all primary and secondary objectives, demonstrating deep, consistent answers across subgroups and a strong safety profile. The trial results are the first of several major catalysts for Vertex’s rare kidney lineup, which has recently gained investor attention.
Stifel, which has a Hold rating on VRTX shares, also remarked on the study’s findings, saying they are highly statistically relevant and should meet the clearance criteria. However, the firm stated that it is uncertain whether the medication differs from competing products such as Otsuka’s sibeprenlimab in the increasingly saturated IgAN market.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a global biotechnology company. It develops and commercializes therapies for serious diseases, with a primary focus on cystic fibrosis and genetic disorders.
6. AppLovin Corporation (NASDAQ:APP)
AppLovin Corporation (NASDAQ:APP) ranks among the best high profit margin stocks to buy. Following an investor meeting on March 10, William Blair reiterated its Outperform rating on AppLovin Corporation (NASDAQ:APP). The company’s management expressed optimism that existing business patterns will continue, despite the fact that the stock has fallen significantly year-to-date, despite rising 85% over the previous year.
AppLovin CEO Adam Foroughi cited proprietary first-party data, such as ad serving, engagement data, and feedback loops, as a key benefit that contributes to the Axon machine learning stack. In that regard, the company’s Axon 2.0 incorporates the latest AI research, resulting in increased take rates as demand grows.
Meanwhile, on March 5, Oppenheimer reduced its price target for AppLovin Corporation (NASDAQ:APP) from $740 to $660 while keeping an Outperform rating on the company’s shares. The firm observed that the stock had fallen more than 28% year-to-date, while the S&P Composite remained steady, which it sees as an opportunity for investors, given the company’s earnings and future growth potential.
AppLovin Corporation (NASDAQ:APP) is a software-based advertising and app monetization company. It operates through two segments, Advertising and Apps. The company also develops and publishes free-to-play mobile games through its studios and partners.
While we acknowledge the potential of APP to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than APP and that has 100x upside potential, check out our report about the cheapest AI stock.
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