5 Best Roth IRA Stocks To Buy According To Hedge Funds

In this article, we discuss the 5 best Roth IRA stocks to buy according to hedge funds. If you want to see more stocks in this selection, go directly to the 10 Best Roth IRA Stocks To Buy According To Hedge Funds.

5. Apple, Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 140

Apple, Inc. (NASDAQ:AAPL) is a Cupertino, California-based tech giant. The company is also spearheading the field of digital streaming and mobile payment services through its offerings.

Given the tension between the US and China, Apple, Inc. (NASDAQ:AAPL) is now reducing its reliance on components manufactured in Asia. According to a report published by Bloomberg on November 15, Apple, Inc. (NASDAQ:AAPL) is preparing itself to source chips from its facility in Arizona. CEO Tim Cook shared this update during his recent visit to Europe, where he met the engineering and retail workers.

On November 14, Samik Chatterjee at JPMorgan highlighted how iPhone 14’s demand is expected to outstrip supply during the coming quarters. The analyst thinks the company’s short-term supply challenges provide investors with an attractive opportunity to go long on one of the stock.

Here’s what Wedgewood Partners said about Apple, Inc. (NASDAQ:AAPL) in its Q3 2022 investor letter:

“Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”

4. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 165

Visa Inc. (NYSE:V) is a San Francisco, California-based provider of digital payment services through its payment gateway network.

On November 17, the company announced the appointment of Ryan McInerney as CEO, effective from February 2023. Notable hedge funds like Ray Dalio’s Bridgewater Associates and Chase Coleman’s Tiger Global increased their stake in the company during Q3 2022, reflecting a bullish take on Visa Inc. (NYSE:V) stock by some of the world’s leading hedge funds.

Following the positive Q3 2022 results, Visa Inc. (NYSE:V) announced an increase in quarterly dividends by 20% to 45 cents. The company also announced a new $12 billion share buyback plan to further boost shareholder returns. Visa Inc. (NYSE:V) was able to report strong quarterly results, despite the headwinds caused by the US dollar gaining strength against major currencies of the world, making it one of the best Roth IRA stocks to buy.

Baron Funds discussed its outlook on Visa Inc. (NYSE:V) in its Q3 2022 investor letter. Here’s what the firm said:

“Shares of global payment network Visa Inc. (NYSE:V) fell despite reporting financial results that beat Street forecasts and sustained volume growth in recent months. Revenue grew 19% and EPS grew 33% in the most recent quarter, and double-digit payment volume growth persisted through August. Share price weakness represented a reversal of outperformance earlier this year and may be due to foreign exchange headwinds and concerns about a potential weakening of consumer spending. We continue to own the stock due to Visa’s long runway for growth and significant competitive advantages.”

Of the 920 hedge funds in Insider Monkey’s database, Visa Inc. (NYSE:V) was held by 165 funds as of Q3 2022.

3. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 196

Alphabet Inc. (NASDAQ:GOOGL) is a Mountain View, California-based diversified technology company leading in emerging themes like artificial intelligence, cloud computing, smartphones, and software.

Alphabet Inc. (NASDAQ:GOOGL) could be forced to focus on cutting costs as activist investor TCI Fund Management has urged the company to lower its expenses and reduce employee headcount. The London-based hedge fund has a “strong conviction” on the future of Alphabet Inc. (NASDAQ:GOOGL) as it holds a stake of over $6 billion in the company. The hedge fund believes that the company could trim its headcount by 20%. Furthermore, the median salary offered by the Silicon Valley giant is 67% higher than its competitor Microsoft Corporation (NASDAQ:MSFT). Reducing the workforce is expected to boost the company’s margins, making it one of the best Roth IRA stocks.

Here’s what Mayar Capital said about Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2022 investor letter:

“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?

“Google it!”

This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.

Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to’ something. Second the reason Biden’s advice was met with such opprobrium was because Googling something has become almost second nature to us now.

These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.

Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate’ is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate’ as well as that from its other properties such as Mail, Maps, and so on, totaled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…” (Click here to see the full text)

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 269

Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based e-commerce giant that has also diversified into cloud computing, consumer electronics, digital streaming, and healthcare. The company is at the second position on our list of the ten best Roth IRA stocks to buy according to hedge funds.

Amazon.com, Inc. (NASDAQ:AMZN) is working on streamlining its workforce as it will continue to slash its headcount into 2023, according to CEO Andy Jassy. The company has recently cut jobs across the books and devices business units. Furthermore, the rapid Amazon Web Services (AWS) segment has extended a hiring freeze until Q1 2023.

MoffettNathanson LLC, a New York-based research firm, highlighted Amazon.com, Inc. (NASDAQ:AMZN) as a winner in the e-commerce segment on November 15. The research firm has shown confidence in the growth outlook of e-commerce businesses despite macroeconomic uncertainty. The report pinpoints Amazon.com, Inc. (NASDAQ:AMZN) as a market share gainer and considers it a cheap business for investors at the current levels.

Here’s what Baron Funds said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-overyear. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”

As of Q3 2022, Amazon.com, Inc. (NASDAQ:AMZN) was held by 269 hedge funds.

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based technology giant co-founded by Bill Gates in 1975.

Microsoft Corporation (NASDAQ:MSFT) is on its way to becoming a member of the Dividend Aristocrat list. The company has increased its dividends for the past 20 consecutive years and offers an annual forward dividend yield of 1.10% as of November 25. The company is relying upon cloud computing, gaming, and enterprise software as the next growth frontier.

Furthermore, Microsoft Corporation (NASDAQ:MSFT) has entered into a multi-year partnership with NVIDIA Corporation (NASDAQ:NVDA) to develop a “massive” artificial intelligence (AI) computer, which will be powered on the infrastructure of Microsoft Azure. The company is also working on getting the go-ahead from the regulatory authorities regarding its $69 billion acquisition of Activision Blizzard, Inc. (NASDAQ:ATVI) which was announced in January 2022. The deal is expected to further strengthen the company’s operations. Microsoft Corporation’s (NASDAQ:MSFT) strong business fundamentals merit the company’s inclusion in the list of 10 best Roth IRA stocks to invest in.

Here’s what Carillon Tower Advisers said about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2022 investor letter:

“Despite reporting very good quarterly results, Microsoft Corporation (NASDAQ:MSFT) underperformed the overall market in August. Technology stocks in general underperformed in August due to fears over slowing global economic growth, potentially leading to cuts in corporate information technology budgets.”

You can also take a peek at the 10 Best Safe Dividend Stocks for Retirement Portfolios and Gabelli’s 11 High Dividend Stocks.

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