In this article, we discuss 10 best bargain stocks to buy right now.
Oaktree Capital’s co-founder and hedge fund manager, Howard Marks, announced on June 26 that the market is hot to invest in “bargains” amid the market-wide selloff. He noted that stocks are significantly cheaper as compared to the previous year, and waiting for the market to bottom is not a wise strategy. He pointed towards the cheap valuations, and said that he would purchase more assets if the market dipped further. He is aggressively in favor of bargain hunting in the current stock market.
Similarly, amid concerns of an upcoming recession in the United States, some investors are gravitating towards the star growth stocks of last year that have taken a heavy beating so far in 2022. Growth names tend to be less affected by the overall macro environment, and prominent players in the market that have stumbled amid the broad selloff do have the underlying assets to survive and thrive in uncertain economic conditions.
Saira Malik, chief investment officer at the Chicago-based asset manager Nuveen, recently said that outperformers and top companies in the tech space are positioned to do well, while revealing her bullish stance on Amazon and Salesforce. Some of the most prominent bargain stocks to watch right now include Booking Holdings Inc. (NASDAQ:BKNG), PayPal Holdings, Inc. (NASDAQ:PYPL), and Pinterest, Inc. (NYSE:PINS).
Our Methodology
We selected market names that have suffered YTD share price declines of more than 25% as of June 30, but received positive analyst ratings in the past few weeks. In addition to that, the underlying business is significant and the companies have strong fundamentals. We have mentioned the hedge fund sentiment around the holdings as of Q1 2022 as well.
Best Bargain Stocks To Buy Right Now
10. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 22
YTD Share Price Decline as of June 30: 66.39%
SoFi Technologies, Inc. (NASDAQ:SOFI) is a California-based digital personal finance and online banking company. The company facilitates customers with student loans, home loans, personal loans, stock brokerage, wealth management, and credit cards. On June 14, the stock rose 4.72% after its director, Harvey Schwartz, purchased 53,500 common shares. CEO and director Anthony Noto also bought 46,500 shares of the common stock at $5.3664 per unit, for a total transaction of $0.55 million. Overall, SoFi Technologies, Inc. (NASDAQ:SOFI) stock has fallen over 66% year to date as of June 30.
On June 16, Mizuho analyst Dan Dolev reiterated a Buy rating on SoFi Technologies, Inc. (NASDAQ:SOFI) with a $9 price target. The analyst observed that SoFi Technologies, Inc. (NASDAQ:SOFI) defied macro concerns in terms of demand for consumer loans. He thinks that SoFi Technologies, Inc. (NASDAQ:SOFI)’s “diversified” revenue channels, “durable” business model, and Galileo’s service offerings should positively contribute to business fundamentals in the long-term.
In Q1 2022, 22 hedge funds reported long positions in SoFi Technologies, Inc. (NASDAQ:SOFI), compared to 24 funds in the earlier quarter. Silver Lake Partners is the biggest position holder in the company, with 31.15 million shares worth $294.40 million.
In addition to Booking Holdings Inc. (NASDAQ:BKNG), PayPal Holdings, Inc. (NASDAQ:PYPL), and Pinterest, Inc. (NYSE:PINS), elite hedge funds are monitoring SoFi Technologies, Inc. (NASDAQ:SOFI).
Here is what Altron Capital Management has to say about SoFi Technologies, Inc. (NASDAQ:SOFI) in its Q4 2021 investor letter:
“We have been building our position in SoFi over the last two quarters but have not yet written about our thesis until now. SoFi is an online financial technology company that started off refinancing student loans. This segment remains a big part of the company’s business, but they have more recently expanded their products to offer an entire suite of financial services including personal banking, investing, and credit. While their collection of products is still evolving and not yet complete, we believe the company is in the early stages of its inflection. The company nearly doubled its member count over the past year and is growing 50%+ despite its loan refinancing business taking a hit due to the COVID-related loan moratorium. Furthermore, the company is close to obtaining a bank charter through its acquisition of Golden Pacific Bancorp, a community bank based in Sacramento. A bank charter would allow SoFi to take in its own customer deposits, lowering its cost of capital and expanding the company’s breadth of financial offerings.
While SoFi is not the only online banking platform out there, we believe it could take a decent share of the financial services market. Banking is a notoriously sticky business, as the inconvenience and hassle of switching banks prevent consumers from jumping to competitors regardless of cost. This is one of the reasons that traditional banks are one of the few businesses to have truly been disrupted by technology. We think SoFi is well on its way to changing that and creating a new paradigm for the future of consumer banking and financial services.
The factors that will ultimately drive consumer adoption of online banking are cost and convenience. In our opinion, SoFi is best positioned to drive consumers away from the legacy banking model. Their one-stop-shop approach for financial services and their lack of a brick-and-mortar branch network to maintain may eventually propel them into becoming one of the larger players in the banking industry in the United States…” (Click here to see the full text)
9. EPAM Systems, Inc. (NYSE:EPAM)
Number of Hedge Fund Holders: 38
YTD Share Price Decline as of June 30: 54.10%
EPAM Systems, Inc. (NYSE:EPAM) is a Pennsylvania-based software engineering company that specializes in software product development, digital platform engineering, application development, enterprise application platforms, application testing, and application maintenance and support. As of June 30, the stock has plummeted about 54% from its highs YTD.
Wedbush analyst Moshe Katri on June 6 raised the price target on EPAM Systems, Inc. (NYSE:EPAM) to $400 from $380 and reiterated an Outperform rating on the shares. According to the analyst, the company should keep on benefiting from moderating disruption from the Russian/Ukraine war, notably lower employee relocation and recruitment costs, robust demand trajectory for digital/SMAC based services, and bill rate increases.
EPAM Systems, Inc. (NYSE:EPAM) was part of 38 hedge fund portfolios in the first quarter of 2022, with collective stakes worth $669 million. Cliff Asness’ AQR Capital Management held a prominent stake in the company, comprising 326,028 shares worth $96.70 million.
Here is what Harding Loevner Emerging Markets Equity Fund has to say about EPAM Systems, Inc. (NYSE:EPAM) in its Q1 2022 investor letter:
“The losses in Russia accounted for over 500 bps—roughly half—of our total underperformance. IT services business EPAM Systems, Inc. (NYSE:EPAM) developed market-listed companies that have significant operations in Russia, Ukraine, and Belarus—together cost a further 200 bps in underperformance. By sector, the wipe out of our Russian and Russia-related holdings appeared as severe negative stock selection across IT (NYSE:EPAM).
We continue to hold EPAM in IT. EPAM’s core advantage is its engineering capability that allows it to provide highly complex and valuable services to its customers. While recognizing that its business prospects are uncertain due to the displacement of many of its engineers by the conflict and potential client and staff defections, we believe it will be difficult for its clients to switch providers in the near term notwithstanding their preferences. EPAM should thus have time to adjust its geographic footprint.”
8. Pinterest, Inc. (NYSE:PINS)
Number of Hedge Fund Holders: 56
YTD Share Price Decline as of June 30: 50.12%
Pinterest, Inc. (NYSE:PINS) is an American social media platform where ideas are shared by putting up images, animated GIFs, and videos. These ideas are saved in the form of pinboards. As of June 30, the stock has stumbled over 50% YTD. On June 10, the company announced the acquisition of the fashion shopping platform, THE YES.
On June 29, Citi analyst Ronald Josey maintained a Neutral rating on Pinterest, Inc. (NYSE:PINS) with a $24 price target. The analyst observed that Pinterest, Inc. (NYSE:PINS) appointed Bill Ready, Google’s President of Commerce, Payments, and Next Billion Users, as the CEO. The last CEO, co-founder, and President, Ben Silbermann, will now take up the Executive Chairman role. Since the new CEO is highly experienced in terms of payments and e-commerce, the appointment will result in Pinterest, Inc. (NYSE:PINS) developing its full-funnel personalized shopping platform, the analyst told investors.
According to Insider Monkey’s Q1 data, 56 hedge funds were bullish on Pinterest, Inc. (NYSE:PINS), with combined stakes worth $1.25 billion. Harris Associates is the leading shareholder of the company, with 18.5 million shares worth $456.7 million.
Here is what Oakmark Fund has to say about Pinterest, Inc. (NYSE:PINS) in its Q1 2022 investor letter:
“We previously had an opportunity to own Pinterest (NYSE:PINS) when the stock sold off during the Covid-19-related downturn, and we were pleased to be able to invest in the company once again at an attractive price during the quarter. Pinterest is an online personal discovery tool that people use to find ideas based on their tastes and interests. Unlike most social media companies, the objectives of users and advertisers are fundamentally aligned on Pinterest. Users find a positive and useful product discovery experience, and advertisers find an audience with high commercial intent and the ability to integrate ads naturally. Although Pinterest had more than 430 million global users as of year-end, the company is still in the early days of monetizing its platform. We believe that its shares trade well below fair value on conventional metrics, such as enterprise value to revenue, as well as when we benchmark its ultimate revenue and margin potential against more mature internet companies.”
7. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 59
YTD Share Price Decline as of June 30: 41.26%
Lam Research Corporation (NASDAQ:LRCX) is a California-based company that distributes semiconductor manufacturing products, such as wafer fabrication equipment, transistors, capacitors, and wiring. Lam Research Corporation (NASDAQ:LRCX) stock has taken a notable hit so far in 2022, falling 41.26% YTD.
BofA analyst Vivek Arya on June 29 assigned a Buy rating to Lam Research Corporation (NASDAQ:LRCX) but lowered the price target on the stock to $540 from $650. According to the analyst, downturns in the semiconductor space are imminent every three to four years, and “we could be due for another one”. However, unit weakness “could be cushioned by richer non-consumer mix, robust pricing, expanding content, and constrained supply,” he pointed out.
Lam Research Corporation (NASDAQ:LRCX) was part of 59 public hedge fund portfolios at the conclusion of the first quarter of 2022, compared to 62 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management held the biggest stake in the company, comprising 1.90 million shares worth over $1 billion.
Here is what Vulcan Value Partners has to say about Lam Research Corporation (NASDAQ:LRCX) in its Q1 2022 investor letter:
“Lam Research Corp. designs and manufactures equipment used in the fabrication of semiconductors. Recent supply chain issues have negatively impacted the industry and have resulted in chip shortages. The industry is performing well, exceeding our expectations, and Lam Research’s fundamentals remain strong. The long-term secular drivers of demand and growth in the industry continue to be very powerful. Lam Research is experiencing increasing returns on capital, higher margins, and more stable results.”
6. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 78
YTD Share Price Decline as of June 30: 42.27%
Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based company that produces computer data storage devices including DRAM, flash memory, and SSDs. On July 1, Evercore ISI analyst C.J. Muse observed that the estimates for Micron Technology, Inc. (NASDAQ:MU) are moving significantly lower after the company’s Q3 results and Q4 guidance. The analyst told investors that since Micron Technology, Inc. (NASDAQ:MU) has a “very new” CFO, he thinks “there is some excess conservatism in the updated outlook” and he now expects an EPS bottom in February. There will be incremental recovery after that and he projects earnings per share of $6.00 in 2023, the analyst added. He likes the risk/reward for Micron Technology, Inc. (NASDAQ:MU) and reiterated his Outperform rating and a long-term price target of $90 on the stock.
According to Insider Monkey’s Q1 data, 78 hedge funds were bullish on Micron Technology, Inc. (NASDAQ:MU), compared to 83 funds in the last quarter. Seth Klarman’s Baupost Group is a prominent shareholder of the company, with 3.11 million shares worth $242.3 million.
Like Booking Holdings Inc. (NASDAQ:BKNG), PayPal Holdings, Inc. (NASDAQ:PYPL), and Pinterest, Inc. (NYSE:PINS), Micron Technology, Inc. (NASDAQ:MU) is on the radar of institutional investors despite significant YTD share price decline.
Here is what Hazelton Capital Partners has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter:
“It’s hard to explain how shares of Micron Technology, manufacturer of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimated earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
5. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 82
YTD Share Price Decline as of June 30: 38.96%
Intuit Inc. (NASDAQ:INTU) is a California-based company that specializes in financial software, offering products including TurboTax, QuickBooks, Mint, Credit Karma, and Mailchimp. Intuit Inc. (NASDAQ:INTU) stock has dropped about 39% YTD as of June 30.
Stifel analyst Brad Reback on May 25 reaffirmed a Buy rating on Intuit Inc. (NASDAQ:INTU) but lowered the price target on the shares to $465 from $580, citing “solid” fiscal Q3 results regardless of “a somewhat lackluster tax season”, driven by solid growth from Credit Karma and Mailchimp. Management also pointed out that it is not witnessing indicators of economic weakness within its business, though it will be impossible to completely avoid a slowing domestic economy, the analyst added.
According to Insider Monkey’s Q1 data, Intuit Inc. (NASDAQ:INTU) was part of 82 hedge fund portfolios, with combined stakes exceeding $6 billion. Terry Smith’s Fundsmith LLP is the biggest stakeholder of the company, with 3 million shares worth $1.4 billion.
In its Q1 2022 investor letter, Baron Funds mentioned Intuit Inc. (NASDAQ:INTU). Here is what it said:
“At the company-specific level, with 59% of our holdings posting double-digit declines during the quarter, we had no chance to hold up against the Index that was down less than 5%. The good news is that for the most part, this drawdown did not result in a permanent loss of capital and in many cases, we believe fundamentals have remained robust or improved even though stock prices declined. One example is Intuit (NASDAQ:INTU), the leading provider of accounting software, and our second largest detractor in the quarter. The stock lost 25% of its value (or over $45 billion) due to a miss in quarterly revenues, which was driven by a slower start to the tax season, leading the company to miss consensus estimates for consumer revenues by about $190 million. The slower start to the tax season is of course insignificant to the intrinsic value of the business, as everyone knows there are only two certainties in life and one of them is – TAXES! And so, naturally, Intuit reaffirmed its annual projections. Moreover, results in other segments were ahead of expectations. CEO Sasan Goodarzi explained the outperformance during its quarterly conference call by saying:
‘We have a nearly $300 billion addressable market driven by tailwinds that include a shift to virtual solutions, an acceleration to online and omni-channel capabilities, and digital money offerings. This, combined with the team’s excellence and execution is contributing to the strength of our performance.’
More specifically, Intuit is gaining market share in tax filings (“we are on track to gain share overall again this season”), continues expanding its QuickBooks online offering, which was up 35% year-over-year, and is seeing strong synergies from its Credit Karma acquisition, driven by Intuit’s Lightbox technology, which allows better personalization of offerings to customers (for example, it “doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma”). The bottom line is that our estimates of Intuit’s intrinsic value were up while the stock price was down and therefore our future expected return has increased.”
4. Boston Omaha Corporation (NYSE:BOC)
Number of Hedge Fund Holders: N/A
YTD Share Price Decline as of June 30: 28.69%
Boston Omaha Corporation (NYSE:BOC) offers billboard advertising, surety insurance and related brokerage, broadband, and investment services. The company was incorporated in 2009 and as of June 30, the stock has dropped about 29% year to date. Despite that, Wells Fargo analyst Steven Cahall on May 25 reiterated his Outperform rating on Boston Omaha Corporation (NYSE:BOC) but slashed the price target to $27 from $33 on market-to-market assets. The analyst contended that the company’s Q1 revenues exceeded his estimates, including the effect of continued deal-making. He pointed out that the present market volatility should only result in additional investment opportunities. This makes it one of the top bargain stocks to buy right now.
3. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 99
YTD Share Price Decline as of June 30: 28.94%
Booking Holdings Inc. (NASDAQ:BKNG) is an American travel technology firm that offers online accommodation, food, and travel reservations. The stock has declined about 29% YTD recession fears and higher fuel costs, which are leading people to budget more frugally and taking away funds from travel and leisure.
On June 29, JPMorgan analyst Doug Anmuth reiterated an Overweight rating on Booking Holdings Inc. (NASDAQ:BKNG) but lowered the price target on the stock to $2,435 from $2,900. The analyst reduced estimates and price targets to reflect macro pressures, currency movement, and company-specific factors. He said that Booking Holdings Inc. (NASDAQ:BKNG) remains one of his best ideas.
Among the hedge funds tracked by Insider Monkey, 99 funds reported long positions in Booking Holdings Inc. (NASDAQ:BKNG) at the end of March 2022, up from 92 funds in the prior quarter. Harris Associates is the leading position holder in the company, with 665,415 shares worth $1.5 billion.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q4 2021 investor letter:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year, for example, in positioning the portfolio to benefit from a flush consumer eager to return to spending and traveling. New positions included Booking Holdings, an online travel agency with industry-leading margins and a dominant footprint in Europe.”
2. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 100
YTD Share Price Decline as of June 30: 64.17%
PayPal Holdings, Inc. (NASDAQ:PYPL) is an American multinational fintech company that promotes online transactions. The stock has taken a massive year to date hit, yet it remains one of the legacy payment technology names. On June 22, Credit Suisse analyst Timothy Chiodo maintained an Outperform rating on PayPal Holdings, Inc. (NASDAQ:PYPL) but lowered the price target on the shares to $95 from $100. The analyst’s survey of PayPal Holdings, Inc. (NASDAQ:PYPL)’s business mix and transactions supports his projected 2022-2025 TPV CAGR of 16%, gross profit CAGR of 10%, and an EPS CAGR of 16%.
According to Insider Monkey’s database, 100 hedge funds reported bullish positions in PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of March 2022, compared to 110 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management held the largest stake in the company, with 16.7 million shares worth $1.94 million.
Here is what Harding Loevner Global Equity Fund has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2022 investor letter:
“Taking advantage of valuation opportunities created by performance differences, the U.S. FSV strategy increased its weight in underperforming stock PayPal. PayPal (NASDAQ:PYPL) was the second largest new position and similarly lagged the market with a nearly 40% price decline in the first quarter.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
YTD Share Price Decline as of June 30: 37.67%
Amazon.com, Inc. (NASDAQ:AMZN) stock has declined about 38% year to date, yet it remains one of the best bargain stocks due to the quality of its underlying business and sheer size.
Redburn analyst Alex Haissl initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) on June 29 with a Buy rating and a $270 price target, citing his view that Amazon Web Services is worth $3 trillion or “almost 3x Amazon’s current market cap”. Amazon Web Services’ cost and technology leadership generates market share gains in all areas, the analyst added.
Among the hedge funds tracked by Insider Monkey, 271 funds reported long positions in Amazon.com, Inc. (NASDAQ:AMZN) at the end of Q1 2022, compared to 279 funds in the preceding quarter. Skye Global Management is one of the top shareholders of the company, with 740,500 shares worth $2.4 billion.
Here is what Weitz Investment Management Partners III Opportunity Fund has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter:
“Amazon.com’s (NASDAQ:AMZN) stock was down modestly in the quarter, but opportunistic purchases helped the position contribute positively to the Fund. Our index short positions against ETFs tracking market indexes provided helpful ballast during the first quarter drawdown but were otherwise detractors for the fiscal year. During the quarter, we covered roughly 20% of our S&P 500 short and 50% of our Nasdaq 100 short at progressively lower prices. Among our long equities, we added materially to high-conviction holdings Amazon.com.”
You can also take a look at Jim Cramer Recommends These 10 Stocks For Recession and Cliff Asness’ Short Position on AMC and His Top 10 Picks.
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Disclosure: None. 10 Best Bargain Stocks To Buy Right Now is originally published on Insider Monkey.
