In this article we will share our list of the 15 best innovative stocks to buy now.
We are on the cusp of huge transformational changes that will fundamentally change the way we work, the way we live and take care of our health, the way we shop and spend our free time, and the way we eat. These changes are exponential in nature. This means every single year we make bigger progress than the year before. You may not see many changes from this year to the next, but in about 5 to 10 years our lives will change dramatically.
The number one change that’s happening is in the genomic space. A year ago we heard about an obscure coronavirus that was rampant in a Chinese region, but we didn’t pay much attention to it. It was spreading exponentially. Exponential growth sneaks up on us. We don’t notice any changes to our lives from one day to the other. Things start to change very very slowly, and then speed up. Within a couple of months of its “known” emergence in China, the coronavirus started spreading in our communities. At the beginning of March of 2020, we had our first few cases. By the middle of March, we had a few dozen COVID-19 deaths. By the middle of April we had more than 33000 deaths.
A decade ago, it would have been unthinkable to produce a vaccine to fight a coronavirus in less than a year. Pfizer and Moderna were testing their vaccine candidates in less than 6 months; their vaccines received emergency authorization in less than a year thanks to the progress we have achieved in the genomic space. This is just the beginning.
There are multiple companies within the United States as well as all around the world that are working on cutting edge gene editing technologies to develop treatments for cancer, chronic diseases, and antibiotic resistant infections. Gene editing technologies will also speed up innovation in the agriculture space.
MSCI’s Global Transformational Changes Index tracks the performance of “a set of companies that are expected to derive significant revenue from one or more of four themes: Future of Work, Digital Consumer, Genomics & Telehealth and Food Revolution.” This Index of innovative stocks returned 38.7% in 2020 and outperformed the S&P 500 Index by more than 20 percentage points. Broad market index funds give investors only a small exposure to technologically innovative stocks. That’s why MSCI’s Global Transformational Changes Index was able to beat the market by a very large margin last year.
ProShares MSCI Transformational Changes ETF (ANEW) tracks the performance of MSCI’s Index by investing in the same companies using the same weights utilized by MSCI’s index. As of January 27th ANEW had more than 150 stocks among its holdings and its two biggest holdings were Alnylam Pharmaceuticals, Inc. (ALNY) and Apple Inc (AAPL). Both of these stocks had a weight of 2.15% in the ETF. The top 50 holdings of ANEW accounted for 74% of the ETF.
In this article we will rank the top 50 holdings of ProShares MSCI Transformational Changes ETF (ANEW) using Insider Monkey’s hedge fund sentiment data and identify the 15 best innovative stocks to buy according to hedge funds. Since our hedge fund sentiment data excludes the foreign stocks, our list will be excluding some potentially very innovative and transformational foreign companies. For example ANEW’s third and fourth biggest holdings are Chinese tech giant Tencent and Meituan with portfolio weights of 2.14% and 2.07%. These two stocks won’t be included in our list because of lack of hedge fund sentiment data.
You have to keep in mind that our rankings represent hedge funds’ list of 15 best innovative stocks to buy. Our premium newsletters might have a different opinion on these stocks. You already know that ProShares have a different opinion than the hedge funds tracked by Insider Monkey.
Let’s now take a look at the best innovative stocks to buy now.
15. NVIDIA Corporation (NVDA)
Number of HFs: 82
Value of HF Holdings: $7.7 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 30
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.33%
NVIDIA’s chips powered nearly every major AI breakthrough (see our article). Artificial Intelligence will be a more significant technology than the internet. NVDA is a stock that investors should buy and hold forever. One hedge fund manager doesn’t agree with this assessment. Here is what Vulcan Value Partners said in its 2020 Q3 investor letter:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. During the first quarter of 2019, its stock price declined considerably due to the combination of three factors. A capital spending hiatus by cloud providers, the collapse in demand for cryptocurrency mining, along with the end of the product cycle in its most recent gaming chip caused NVIDIA to miss its quarterly earnings estimates. As a result, we were given the opportunity to purchase NVIDIA with a significant margin of safety in March of 2019. NVIDIA’s value grew substantially while we owned it, and we continued to follow our discipline by trimming and adding to the company as its price fluctuated. We exited NVIDIA when its stock price rose close to our estimate of fair value. The combination of its value growth and the closing of the price to value gap provided substantial returns over our investment period.”
14. Activision Blizzard, Inc. (ATVI)
Number of HFs: 93
Value of HF Holdings: $4.2 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 7
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.98%
Activision Blizzard Inc. (NASDAQ:ATVI) is a video game holding company founded in 2008 as a result of a merger between Activision Inc. and Vivendi Games. It owns some of the very famous gaming titles such as Call of Duty, Candy Crush Saga, Diablo, and Warcraft. It develops games for all key platforms including mobile, game consoles, and PCs. Moreover, it also conducts eSports leagues and tournaments to generate revenue, besides making money from ads and in-game content.
The Santa Monica, California-based game publisher has enjoyed tremendous growth over the past year as the global video game industry thrived during 2020 due to the Covid-19 outbreak. Stuck-at-home gamers spent more time playing video games during the pandemic that drove revenue for gaming stocks including ATVI. The company’s revenue in the previous quarter climbed 38 percent on a year-over-year basis to $1.28 billion. Moreover, it also raised its revenue outlook for the full year from $7.25 billion to $7.67 billion.
CEO Bobby Kotick said in an interview last year that the company plans to hire at least 2,000 people to meet production demands. Meanwhile, Activision plans to launch more games for mobile devices to capitalize on the massive mobile user base. Its chief operating officer Daniel Alegre said in a statement that ATVI will gradually bring all its games to mobile.
Activision’s games performed exceptionally well in 2020. The company announced last month that its “Call of Duty” franchise hit a record $3 billion in total bookings over the past 12 months. Looking forward, it plans to launch the highly anticipated “Overwatch 2” and “Diablo 4” for PC and “Diablo Immortal” for mobile.
13. Netflix, Inc. (NFLX)
Number of HFs: 104
Value of HF Holdings: $13.9 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 6
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.98%
Netflix Inc. (NASDAQ:NFLX), founded in 1997, is a video streaming giant based in Scotts Valley, California. With the aggressive international expansion in recent years, it has become the world’s biggest subscription streaming service. The company went public in May 2002 by selling 5.5 million shares at $15. It has come a long way since then, overcoming many challenges in its decades-long journey.
Ruane, Cunniff & Goldfarb talked about Netflix, Inc. in its 2020 Q4 investor letter:
“Netflix is on the global trend toward subscription-based streaming video consumption, which we think is still in its early innings. As people increasingly watch their TV and movies via apps instead of cable bundles, we expect a relatively egalitarian media ecosystem that historically supported many winners to become much more elitist. The streaming model heavily favors scaled early movers, who benefit from a virtuous cycle in which massive content investment attracts incremental subscribers and revenues, which enable further content investment, which yields still more subscriber growth.
Netflix is investing heavily to drive this virtuous cycle, which is depressing their current profits, but people can only watch so much TV and wrap their arms around so much selection, which means that the growth of programming spend will eventually have to slow. If the world’s most compelling collections of streamed video content continue to attract incremental subscribers amidst a moderating pace of investment, then content cost per subscriber will begin to fall, widening competitive gaps that are already very substantial by layering a cost advantage on top of a product quality advantage. As a result of this dynamic– which we think competitors will struggle to replicate– we believe that the leaders of the video entertainment industry’s streaming era will be far larger and more profitable than those of the cable era. While this possibility is by no means lost on the stock market, we invested in Netflix because we believed their prices still failed to discount the degree to which we expect a small handful of victors to take most of the streaming era’s significantly greater spoils.”
12. Adobe Inc. (ADBE)
Number of HFs: 106
Value of HF Holdings: $10.5 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 19
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.82%
ADBE ranks 12th in our list of the best innovative stocks to buy. California-based Adobe has become a household name because of its multimedia and design products, such as Photoshop, Adobe Illustrator and Adobe After Effects. In fiscal fourth quarter, Adobe’s revenue jumped 14% on a year-over-year basis to reach $3.42 billion. Creative segment revenue came in at $2.08 billion, while Document Cloud sales totaled $411 million. For fiscal 2021, the company expects $15.15 billion in revenue, compared to the Wall Street estimate of $12.8 billion.
Adobe is also one of the top 3 stock picks of Qualivian’s Aamer Khan. Here is what he told Insider Monkey about ADBE:
A document, media and commerce software company which is at the forefront of the digital revolution. Its products are, by a long way, leaders in their respective segments, and are steadily increasing share. The company’s successful migration from a software license sale to a subscription model in the 2012-2014 time frame has resulted in a visible, recurring and highly profitable revenue model.
11. Salesforce.com Inc. (CRM)
Number of HFs: 106
Value of HF Holdings: $11.1 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 45
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 0.85%
Salesforce.com, Inc.(NYSE: CRM) is a cloud-based software company that brings customers and companies together. Through their One Integrated Customer Relationship Management Platform, they are able to provide customer relationship management solutions that give all the departments whether it be sales, marketing, commerce or service, a single distributed view of every customer. Here is what Alger Spectra Fund said about CRM recently:
“Salesforce.com is a leading software-as-a-service company with turnkey salesforce productivity and customer relationship management applications as well as a cloud-based development environment. Increased spending on technology by corporations digitizing their business models supported the performance of salesforce.com shares. We believe the return on investment (ROI) from deploying salesforce.com technology is compelling because the company’s products make enterprises more productive and profitable while fostering growth. This attractive ROI has resulted in the company’s continuing high unit volume growth.”
10. Bristol-Myers Squibb (BMY)
Number of HFs: 124
Value of HF Holdings: $7.6 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 32
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.27%
Wedgewood Partners summarized its BMY investment thesis in its latest investor letter:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
9. Mastercard (MA)
Number of HFs: 133
Value of HF Holdings: $15.6 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 36
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.17%
Del Principe O’Brien Financial Advisors’ comments on Mastercard explains how a large number of fund managers see Mastercard. Here is what they said:
“The market pullback in the spring gave us a chance to become owners of Mastercard, one of the biggest players in the global payments industry. In fiscal year 2019, the company processed almost $5 trillion in purchase transactions and holds 29% of the global market share for credit cards and 24% of the global market for debit cards.
In June, Mastercard entered into an agreement to acquire Finicity, a financial data and insight provider, for a purchase price of $825 million. The move is meant to strengthen Mastercard’s existing open banking platform. Open banking is a system that gives third parties, including other banks and tech start-ups that provide financial services (think budgeting apps), digital access to financial data. A user-focused innovation in the banking industry, open banking is thought to be the future of banking. We see an active investment in its open banking platform as a good move for Mastercard toward maintaining its leadership in the global market.”
8. Apple Inc. (AAPL)
Number of HFs: 134
Value of HF Holdings: $127 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 2
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 2.15%
Apple ranks 8th in our list of the best innovative stocks to buy now. In its 2020 Q3 investor letter RiverPark summarized why Apple is a great long-term investment:
We believe that Apple remains one of the most innovative, best positioned and most profitable companies in what are still the early innings of the mobile technology revolution. Additionally, a fall 5G launch should benefit the company, COVID has highlighted the opportunity for the Apple Watch to be an essential health monitoring device, and the company has rapidly diversified into new high growth and high margin products. AirPods, which were launched only three years ago, are on track to generate $15-$20 billion in revenue this year, 5%-8% of total company revenue. iPhones continue to represent a progressively smaller portion of total revenue (44% of the company’s third quarter revenue, down from 48% a year ago), which should help to lessen the impact of year-to-year iPhone refresh cycles.
At the same time, Services provides robust growth for the company ($13 billion, up 15% yearover-year, and 22% of revenue in the June quarter, and more than $39 billion so far in Apple’s fiscal 2020, is accretive to the company’s margins (Services gross profit grew 20% for the quarter and accounts for 39% of total company gross profit) and adds a large, recurring revenue segment to the company’s business mix. The company maintains a fortress balance sheet with $193 billion of cash, $80 billion net of debt. We expect excess cash flow of more than $60 billion per year, which has been increasingly returned to shareholders through both a growing dividend and increased share repurchases. The company also recently completed a 4 for 1 stock split that was well received by investors.”
7. PayPal Inc. (PYPL)
Number of HFs: 150
Value of HF Holdings: $11.5 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 37
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.07%
PYPL ranks 7th in our list of the best innovative stocks to buy now. PayPal revolutionized digital payments and it is not done yet.
“The really important thing is to take a step back and see that there is a tremendous rise in all forms of digital payment right now”. The CEO of PayPal (PYPL), Dan Schulman said, 40%-70% of consumers want to use a ‘cashless’ method in all their transactions not only in malls, restaurants but also in Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. PayPal is known for operating an online payment system that supports money transfers in majority of countries around the world. There are 26 million Paypal merchants up to date.
“Not only would we allow people to buy, sell, and hold cryptocurrencies but very importantly, they could use those as a funding source… to buy any of our 28 million merchants,”. According to Schulman, PayPal is beginning to add more functionality to cryptocurrencies. “The promise is to use a modern technology to enhance the utility of payments,” said Schulman in an interview with CNBC.
“What we’re most excited about is enabling people to take that cryptocurrency and effectively turn it into a currency to be able to use it in any of our 28 million merchants,” said Dan Schulman while also stating that they’ll do these things without any volatility. “We’ll take that crypto, and convert it to fiat currency so they can immediately accept it”.
6. Alphabet Inc. (GOOG)
Number of HFs: 106
Value of HF Holdings: $10.5 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 25
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.68%
Alphabet is really a portfolio of tech companies. Its main business is search, but it is also in streaming business. It is among the biggest cloud companies in the world. We featured Alphabet in our article about the 12 best autonomous vehicle stocks to buy. It is investing in quantum computing. It is one of the top artificial intelligence stocks to buy. Despite all of these investments, it is still wildly profitable. Here is what Wedgewood Partners said about Alphabet’s core search business in its 2020 Q4 investor letter:
“Alphabet’s core Google revenues grew +9% during the quarter, a meaningful acceleration from the -8% decline during the COVID-19-impacted second quarter. The Google unit also unexpectedly showed some modest expense leverage after several quarters of heavy reinvestment, driving double-digit earnings growth at Alphabet. We would not be surprised if that leverage is short-lived. However, Alphabet continues to meaningfully under-earn relative to its potential, and we welcome any effort that brings forward, or at least highlights, the Company’s pent-up earnings power. On the latter score, Alphabet announced it will be providing more detailed operating segment profit data in the coming year.”
5. Visa Inc (V)
Number of HFs: 160
Value of HF Holdings: $18.7 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 29
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.37%
Visa is one of those stocks that never gets cheap enough for value investors to buy, yet the stock reaches a new high year after year. For example, Horizon Kinetics compared Visa to Facebook in its 2019 Q3 investor letter. Visa’s 3-year revenue growth rate was 13.9%, vs. Facebook’s 31.2%, yet Facebook’s PE ratio of 29.6 was lower than Visa’s PE ratio of 32.5. The implication was that Facebook is cheaper than Visa, but this doesn’t mean that Visa will be a bad investment for investors.
Here is why Qualivian Investment Partners believes Visa will continue to compound at high rates:
“Visa: was a positive contributor in the quarter, just less so than our other holdings. Visa’s fiscal Q4 quarter (calendar Q3) results were better-than-expected as revenue and EPS beat street expectations driven by stabilizing domestic transaction volumes and good expense control. Although results showed continued pressures from depressed cross border volumes, which may continue for the foreseeable future as with MA, we believe the worst is behind us and our long-term thesis of V’s structural positioning on the other side of the pandemic remains intact. Looking to the back half of 2021 and going into 2022, we see a recovery in cross-border activity, which together with traditional spending improvements at the POS, leaves considerable room for upside upon reopening. Further, once the macro normalizes (medium term), we believe V (and MA) will continue to benefit from structural drivers including increased contactless payments, more eCommerce transactions, as well as a lift in the value-added services like fraud/gateway/marketing services, and demand for other flows such as B2B, G2C and use of Visa Direct. There is no credible competition on the horizon for the Visa/Mastercard payment networks.”
4. Alibaba Group Holding Ltd (BABA)
Number of HFs: 166
Value of HF Holdings: $28.8 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 17
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.83%
China has become a leader in innovation and it has one of the most advanced online markets in the world. We have no doubt that Chinese economy will become the largest economy in the world over the next 10 years or so. This isn’t a very long time period. It is coming. It is likely that Alibaba will become bigger than Amazon. However, Alibaba faces bigger competition than Amazon and it is subject to significantly more political risk than Amazon. That’s probably why it is much cheaper than Amazon and that’s why it declined recently.
Third Point said the following about Alibaba in its 2020 Q2 letter:
“As we have articulated in prior letters, our outlook for Alibaba and the broader Chinese e‐commerce market is bright. We believe online gross merchandise value (“GMV”) will grow at a mid‐teens CAGR over the next five years, propelled by both (1) rising consumption per capita, as the Chinese retail market is equal in size to the U.S. despite four times as many consumers, and (2)increased penetration of retail by online, a trend which we believe has been structurally accelerated by the COVID‐ 19 pandemic. As the e‐commerce market matures, we believe Alibaba & JD will leverage scale and growing repositories of transaction data to increase monetization of their platforms through targeted advertising to improve revenue yields (revenues as a percentage of GMV) from a starting point of less than 4% today. As a point of comparison, brick‐and‐mortar retail store rent expenses in China are greater than 10% of sales on average, which provides a significant umbrella for online marketplaces to take a greater share of GMV through a combination of commission and advertising spending as online retailer cost structures converge with brick‐ and‐mortar retail.
Finally, we continue to be excited about the latent potential in some of Alibaba’s businesses beyond the core e‐commerce marketplaces – particularly the cloud computing business, Aliyun. China’s cloud computing industry remains nascent but is growing nearly 3x faster than its developed market counterparts through a combination of rising IT intensity, rapid cloud penetration, and a gradual moderation in software piracy. Within that market, Aliyun is increasingly dominant (with nearly 50% market share) and will generate dramatic profit growth as margins expand with scale. As one reference point, Aliyun today resembles Amazon’s AWS business five years ago; this is an encouraging comparison given that today, AWS’ operating profits (and estimated enterprise value) exceed Alibaba’s business in its entirety. Ant Financial – in which Alibaba holds a ~30% stake that is worth roughly $70 billion – has announced its intention to go public later this year. Alibaba shares will benefit further should they become accessible to mainland Chinese investors through inclusion in the Southbound Connect.”
3. Facebook Inc. (FB)
Number of HFs: 230
Value of HF Holdings: $29.3 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 21
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.77%
Facebook is another technology company that has a finger in many pies. One of the most exciting projects Facebook is involved in is its digital currency. Facebook’s main business of selling advertisements seems to be recession resistant. Here is what Wedgewood Capital said about it in its 2020 Q3 investor letter:
“Facebook’s revenues grew +12% constant currency despite the near total shutdown of economic activity during the month of April. The vast majority of Facebook’s revenues are derived from small businesses, many of which have borne the brunt of lockdowns. To combat the sudden disappearance of foot traffic, these businesses are initiating or accelerating the adoption of digital customer acquisition strategies provided by Facebook’s vast ecosystem, including instant access to over 2 billion daily users. We continue to carry Facebook as one of our largest holdings as its value proposition is difficult to copy, yet the stock trades at still somewhat reasonable multiples relative to large cap peers,”
2. Microsoft Corporation (MSFT)
Number of HFs: 234
Value of HF Holdings: $42.1 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 9
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.95%
Wedgewood Partners said the following about Microsoft:
Microsoft’s sprawling software and services portfolio has sustainable competitive advantages and durable long-term growth prospects, combined with more reasonable valuation as the stock has sold off from its all-time highs due to COVID19 disruptions. Although the Company ended the quarter at a +9% weighting in the Russell 1000 Growth Index benchmark, we still believe Microsoft is a worthy destination for our clients’ portfolios on an absolute basis.
Microsoft has a formidable position in productivity software, with between 80% and 90% market share, thanks to the multi decade dominance of Microsoft Office in both commercial and personal end markets. Over the past several years, a substantial portion of the Office installed base has converted from perpetual licenses to subscriptions, yet a still meaningful amount of Microsoft Office revenue remains on perpetual terms. We estimate Office 365 subscriptions could generate a two to three times uplift in revenue per user and add an incremental $20 billion in revenue if Microsoft can manage to phase out perpetual licenses over the next several years. In addition, with a cloud-based delivery model, the Company can quickly develop and add new products and services to the Office 365 suite and monetize by adding higher pricing tiers – rather than waiting years at a time for a new product cycle for on-prem deployments. Microsoft’s newfound ability to quickly develop products, helps maintain its position in the productivity market, despite smaller, fast moving competitors. For example, Microsoft Teams is the Company’s business communication platform that was developed internally over the past few years and officially launched in 2017. Teams has already amassed over 44 million active users to date, with 12 million of those users joining in just the past few weeks, as they seek work from-home solutions. Microsoft’s ability to develop and deploy quickly should allow the Company to continue to be in the right place at the right time.
Microsoft has done an excellent job entrenching its position as a mission-critical provider of infrastructure software and services, especially with its Azure cloud platform. Businesses continue to move more workloads onto infrastructure as a service (IaaS) platforms, as IaaS enables more IT flexibility and has lower capital commitments, relative toon-premises hardware and perpetual licenses.
1. Amazon.com Inc (AMZN)
Number of HFs: 245
Value of HF Holdings: $43.8 billion
Rank in ProShares MSCI Transformational Changes ETF (ANEW): 13
Weight in ProShares MSCI Transformational Changes ETF (ANEW): 1.88%
Amazon is by far the most popular stock ever among hedge funds. We have been tracking this measure for 10 years and we have never seen a stock that is owned by more than 30% of all equity hedge funds. If you aren’t familiar with how Amazon became a $100 billion in revenues/quarter company, please read our article “How Amazon Makes Money“. Light Street said the following about Amazon in its 2020 Q1 investor letter:
During this crisis, the Internet has become the core operating system of our partially shuttered economy. eCommerce and logistics businesses like Amazon, UPS, FedEx, Uber Eats, DoorDash, Grubhub, and Instacart are now the backbone of the U.S. economy. Light Street’s largest position is in Amazon. Demand for food and home goods is exploding. People are nesting at home, adjusting to the new realities of working from home, and purchasing furniture and apparel to make the best of it. In-home entertainment services are flourishing, including streaming video and gaming, where Light Street is long Netflix and Activision respectively.
Soma Equity Partners agrees with Light Street:
Amazon is poised to take the reigns as the world’s largest company and may never look back. The COVID-19 crisis is accelerating the adoption of online shopping around the world. Online grocery is hitting a notable inflection, with surveys indicating as high as 55% of consumers now buying online. Amazon Grocery is poised to more than triple from a $20 billion segment in 2019 to $80 billion by 2023. Amazon’s central role in our lives is perhaps best demonstrated by the adoption of Amazon Prime. Almost three in every four households in the U.S. are now members, approaching 90 million in total. We acquired our first ever AMZN stake in March near $1,800 per share, representing the only sizable new long we entered during the sell-off. While we typically look for more contrarian positions, we felt particularly motivated by a 20% discount on the company with the biggest stack of chips in the market. The optionality that comes with Amazon’s scale, including deeper forays into media, logistics, and overseas markets, should provide tailwinds to the stock for years to come.
You can read Third Point’s AMZN comments in its Q2 letter here.
Please also read 11 Best Lithium and Battery Stocks To Buy and 15 Best Technology Stocks To Invest In.
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Disclosure: None. 15 Best Innovative Stocks To Buy is originally published at Insider Monkey.
