5 Best Aggressive Stocks to Buy Now

4. Unity Software Inc. (NYSE:U)

Number of Hedge Fund Holders: 34     

Unity Software Inc. (NYSE:U) creates and operates an interactive real-time 3D content platform. On November 8, ironSource, an Israeli ad tech company, said that it completed its merger with Unity Software in a deal that values the former at $4.4 billion, 74% below the valuation at which it had listed in June last year. 

On November 28, Morgan Stanley analyst Matthew Cost resumed coverage of Unity Software Inc. (NYSE:U) stock with an Equal Weight rating and $27.50 price target, highlighting that there exists a balanced risk reward with strong continued momentum in the create graphics engine business which is likely to be offset by operate segment and advertisement weakness.

At the end of the third quarter of 2022, 34 hedge funds in the database of Insider Monkey held stakes worth $790.9 million in Unity Software Inc. (NYSE:U), compared to 23 in the preceding quarter worth $1.9 billion.

In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Unity Software Inc. (NYSE:U) was one of them. Here is what the fund said:

“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still underpenetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands a single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.”