10 Best Stocks to Buy According to Chris James’ Engine No. 1

Published June 24, 2021 at 10:09 am EDT Updated September 7, 2026 at 1:29 pm EDT

In this article, we discuss the 10 best stocks to buy according to Chris James’ Engine No. 1.

Activist investor Chris James is the founder of Engine No. 1 LLC, a diversified investment firm that focuses on sustainable capitalism. The hedge fund was founded in December 2020 and now manages a portfolio of around $270 million in assets. Chris James is in the limelight these days after Engine No. 1 won three seats on the board of Exxon Mobil Corporation (NYSE: XOM) in a bid to force the company’s leadership to bear the consequence of failing to reconfigure its business strategy to match global efforts to fight climate change.

Chris James started his investing career beginning in 1991 as he worked for a range of investment firms. In 2001, James co-founded Andor Capital Management, L.L.C., an investment management firm in New York, where he oversaw the fund’s technology portfolio. The fund was short-lived since it only lasted until the financial crisis of 2008 and investors received their $2 billion in assets under management. In 2004, Chris James set up San Francisco-based Partner Fund Management (PFM), an investment firm focusing on global equities in the health care sector. The fund also invests in industrials, information technology, consumer staples, and transportation sectors. In 2018-2019, the fund managed approximately $6 billion in assets. As of March 31, 2021, Partner Fund Management holds a portfolio value of $3,274,505,000.

Despite the fact that James began his career as an analyst, he evolved into a big-picture investor over time. Engine No. 1 arose from James’ attempt to open a new coal mine near Harrisburg, Illinois, in the mid-2000s. With Engine No. 1, James intends to take advantage of institutional investors’ emerging focus on funds that seek to have a beneficial impact on the environment. According to a regulatory filing made on May 28, Chris James’ Engine No. 1 plans to establish the Transform 500 ETF, a socially conscious exchange-traded fund. The fund will invest in a variety of industries, including consumer goods, energy, financial services, healthcare, technology, and utilities. Chris James’ Engine No. 1 currently runs a $272 million portfolio with major stakes in Exxon Mobil Corporation, Deere & Company (NYSE: DE), Square Inc (NYSE: SQ), General Motors Company (NYSE: GM), Shopify Inc (NYSE: SHOP) and Microsoft Corporation (NASDAQ: MSFT).

As of the end of the first quarter, Engine No. 1 LLC has a significant holding in Exxon Mobil Corporation. The hedge fund run by Chris James owns 917,400 shares in the company worth over $51.3 million, representing 18.8% of their investment portfolio. Exxon Mobil Corporation reported first-quarter revenue of $2.6 billion, up 376% from $536 million in the first quarter of 2020. Exxon Mobil Corporation pays its shareholders an annual dividend of $3.48 per share, with a 5.61% dividend yield. As of June 18, Exxon Mobil Corporation shares trade at $60.40. The 52-week price range of XOM is $31.11 – $64.80. The stock has returned more than 31% to investors in the past year. On June 15, Credit Suisse maintained a Neutral rating on Exxon Mobil Corporation, with a price target of $72 per share.

Another notable company in the fund’s holdings is the farm and heavy equipment manufacturer Deere & Company. The fund owns 76,336 shares in the company worth $28.6 million representing 10.48% of the fund’s holdings. Agriculture is one of the industries seeing massive growth in 2021 with a 24% increase to $9.4 billion in soybean cash receipts and a 14% increase to $6.7 billion in corn cash receipts in the US, according to the forecast of the Department of Agriculture. Deere & Company plans to take advantage of this industry growth by commercializing digital farm technologies, agricultural equipment, and farming management software. Deere & Company’s (NYSE: DE) second-quarter revenue came in at $12.1 billion, an increase of 30% from $9.3 billion in the same period in 2020. The company pays its shareholders an annual dividend of $3.60 per share, with a 1.07% dividend yield. As of June 18, Deere & Company shares traded at $328.97. The 52-week price range of DE is $148.19 – $400.34. The stock has returned more than 112% to investors in the last twelve months. On May 25, Jefferies maintained a Buy rating on Deere & Company, with a price target of $450 per share.

Chris James’ Engine No. 1 LLC owns 71,177 shares of Microsoft Corporation worth $16.8 million, representing 6.16% of its investment portfolio. The hedge fund trimmed its stake in MSFT by 26% in the first quarter of 2021. Revenue for the fiscal third quarter of 2021 was $41.7 billion, up 19% from $35.02 billion the previous year. Microsoft Corporation currently pays an annual dividend of $2.24 per share with a 0.86% dividend yield. MSFT stock has offered more than 33% returns to investors in the past twelve months. As of June 18, Microsoft Corporation shares traded at $259.43 and have a P/E ratio of 35.35. The 52-week price range of MSFT is $193.55 – $263.19. KGI Securities initiated coverage on Microsoft Corporation on June 2 with an Outperform rating and a $300 per share price target.

Chris James is an exception in an industry reeling from losses. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26, 2021, our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16. That’s why we believe hedge fund sentiment is a handy indication that investors should consider. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Best Stocks to Buy According to Chris James' Engine No. 1

With this background in mind, let’s start our list of the 10 best stocks to buy according to Chris James’ Engine No. 1. We used Engine No. 1 13F portfolio for the first quarter for this analysis. These are the top 10 holdings of the hedge fund. We ranked these stocks based on the number of hedge funds having stakes in each company.

Best Stocks to Buy According to Chris James’ Engine No. 1

10. Bunge Limited (NYSE: BG)

James’ Stake Value: $18,271,000
Percentage of Chris James’ 13F Portfolio: 6.7%
Number of Hedge Fund Holders: 44

We start our list of 10 best stocks to buy according to Chris James’ Engine No. 1 with Bunge Limited (NYSE: BG). The Missouri-based agri-food company produces and distributes agricultural commodities, edible oil, wheat flours, and bakery mixes, sugar, and fertilizer products. Bunge Limited pays its shareholders an annual dividend of $2.10 per share and yields at 2.61%. Bunge Limited has returned more than 90% to investors in the past twelve months.

Bunge Limited and TARGET, a technology consulting business, teamed together to commercialize the Vector app, a standalone truck freight contracting platform aimed at digitizing truck freight hiring and other services in Brazil. With the app’s success since its launch last year, Bunge Limited and TARGET decided to expand the tech innovation by providing logistics services to other businesses, resulting in the formation of a separate logistics firm named Vector.

Bunge Limited has a market cap of nearly $11 billion. The company’s first-quarter net revenue came in at $12.9 billion, up 40% from $9.2 billion in the same period in 2020. As of June 18, Bunge Limited’s (NYSE: BG) shares traded at $77.20 and have a P/E ratio of 5.35. The 52-week price range of BG is $38.00 – $92.38. On May 10, Morgan Stanley maintained an Equal-Weight rating on Bunge Limited and raised its price target to $92 per share.

The hedge fund Engine No. 1 owns 230,494 shares in the company worth over $18.3 million. At the end of the first quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $653 million in Bunge Limited, down from 51 the preceding quarter worth $937 million.

Like Exxon Mobil Corporation, NXP Semiconductors N.V. (NASDAQ: NXPI), Square Inc, General Motors Company, Shopify Inc and Microsoft Corporation, Bunge Limited is one of the best stocks to buy based on Chris James’ Engine No. 1.s portfolio.

9. Aptiv PLC (NYSE: APTV)

James’ Stake Value: $20,794,000
Percentage of Chris James’ 13F Portfolio: 7.63%
Number of Hedge Fund Holders: 50

Aptiv PLC (NYSE: APTV) ranks 9th on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. The Dublin-based auto parts manufacturer designs and assembles a vehicle’s electrical component from wiring and cable management systems. Aptiv PLC also creates system integration and software for self-driving cars. Aptiv PLC was founded in 2011 and was formerly known as Delphi Automotive PLC. APTV stock has returned more than 89% to investors in the past twelve months.

Aptiv PLC has a market cap of $39.8 billion. The company’s first-quarter revenue grew 25% to $4.2 billion, up from $3.2 billion in the same quarter in 2020. As of March 31, 2021, the company has total assets amounting to $17.5 billion versus total liabilities of $9.2 billion. As of June 18, Aptiv PLC shares traded at $147.27 and have a P/E ratio of 82.64. The 52-week price range of APTV is $73.36 – $160.14. On May 13, Morgan Stanley maintained an Overweight rating on Aptiv PLC and raised its price target to $205 per share.

Engine No. 1 holds 150,794 shares in the company worth $21 million, representing 7.63% of the fund’s portfolio. Out of the hedge funds being tracked by Insider Monkey, Impax Asset Management is a leading shareholder in Aptiv PLC with 2.91 million shares worth more than $402 million.

Like Exxon Mobil Corporation, NXP Semiconductors N.V., Square Inc, General Motors Company, Shopify Inc and Microsoft Corporation, Aptiv PLC is one of the best stocks to buy based on Chris James’ Engine No. 1.s portfolio.

In its Q4 2020 investor letter, Sound Shore Management, an investment management firm, mentioned Aptiv PLC and emphasized their views on the company. Here is what the fund said:

“As mentioned earlier, periods of uncertainty often create the best opportunities for our strategy. Sound Shore’s ability to remain nimble while preserving a long-term view is a definitive competitive advantage, and increasingly rare in the investment industry. Though we reduced our portfolio’s exposure to original equipment auto manufacturers (OEM) during the selloff in March, we pivoted to opportunities our team identified in the speciality suppliers to the OEMs. One such company is Aptiv, our strongest contributor for the year. Formerly Delphi Automotive, Aptiv is a global technology and parts supplier to the transportation industry that makes electrical and active safety solutions for legacy vehicles as well as for the electric and automated cars of the future. We initiated our position in Aptiv during the market sell-off in March 2020 when the stock pulled back more than 60%. Our investment team has been following the company for a number of years and, given the opportunity to add the name at less than ten times normalized earnings, we acted quickly. Aptiv is a technology-driven business with excellent growth prospects. As global auto demand recovers, Aptiv’s content per vehicle will continue to increase and its business will benefit from the evolution of the automotive industry.”

8. Deere & Company (NYSE: DE)

James’ Stake Value: $28,560,000
Percentage of Chris James’ 13F Portfolio: 10.48%
Number of Hedge Fund Holders: 51

Deere & Company ranks 8th on the list of 10 best stocks to buy according to Chris James’s Engine No. 1. The Illinois-based farming and heavy equipment company manufacture and sells everything from farm tractors to dump trucks, excavators, and surface miners. The company also owns a financing division that helps customers buy or lease agricultural and construction equipment. Deere & Company pays its shareholders an annual dividend of $3.60 per share, with a 1.07% dividend yield. DE stock has returned more than 112% to investors in the past twelve months.

The company has a market cap of $103 billion. Deere & Company’s (NYSE: DE) fiscal second-quarter revenue came in at $12.1 billion, an increase of 30% from $9.3 billion in the same period in 2020. Deere & Company recorded a net income of $1.8 billion, up 169% from $666 million in the second quarter of 2020. As of June 18, Deere & Company shares traded at $328.97. The 52-week price range of DE is $148.19 – $400.34. The stock has returned more than 112% to investors in the last twelve months. On May 25, Jefferies maintained a Buy rating on Deere & Company, with a price target of $450 per share.

Chris James’ Engine No. 1 owns 76,336 shares in the company worth $28.6 million, representing 10.48% of the fund’s holdings. At the end of the first quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $2.05 billion in Deere & Company, down from 54 the preceding quarter worth $1.8 billion.

ClearBridge Investments, in its Q1 2021 investor letter, mentioned Deere & Company and shared their insights on the company. Here is what the fund said:

“Lead performers in the portfolio included Deere, which delivered a phenomenal first fiscal quarter ended in January and revealed impressive and previously undisclosed margins in its large equipment segment. Investors also welcomed Deere’s strong pricing power and technology leadership, particularly in precision agriculture, where it has separated itself from competitors.”

7. NXP Semiconductors N.V. (NASDAQ: NXPI)

James’ Stake Value: $29,170,000
Percentage of Chris James’ 13F Portfolio: 10.71%
Number of Hedge Fund Holders: 53

NXP Semiconductors N.V. ranks 7th on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. The Dutch semiconductor manufacturer designs and sells microcontrollers, radio frequency amplifiers, and different kinds of sensors. The company was founded in 2006 and was formerly known as KASLION Acquisition B.V. NXP Semiconductors N.V. pays its shareholders an annual dividend of $2.25 per share, with a 1.12% dividend yield. NXPI stock has returned more than 65% to investors in the past twelve months.

NXP Semiconductors N.V. has a market cap of $53 billion. The company’s first-quarter revenue grew 27% to $2.6 billion, up from $2.02 billion in the same quarter in 2020. As of June 18, NXP Semiconductors N.V. shares traded at $193.10 and have a P/E ratio of 128.56. The 52-week price range of NXPI is $106.75 – $216.43. On April 28, Jefferies maintained a Buy rating on NXP Semiconductors N.V., with a price target of $235 per share.

Engine No. 1 owns 144,881 NXP Semiconductors N.V. shares worth $29 million, representing 10.71% of the fund’s holdings. At the end of the first quarter of 2021, 53 hedge funds in the database of Insider Monkey held stakes worth $1.72 billion in NXP Semiconductors N.V., down from 66 the preceding quarter worth $2.26 billion.

Like Exxon Mobil Corporation, Square Inc, General Motors Company, Shopify Inc and Microsoft Corporation, NXP Semiconductors N.V. is one of the best stocks to buy based on Chris James’ Engine No. 1.s portfolio.

ClearBridge Investments, in its Q1 2021 investor letter, mentioned NXP Semiconductors N.V. and shared their insights on the company. Here is what the fund said:

“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns, and one-off production delays as well as demand resilience in areas like autos and smartphones. Two recent additions, specialty semiconductor maker (including) NXP Semiconductors, were among the portfolio’s leading contributors in the first quarter. NXP rose as auto production ramped up and electric vehicle sales continued to expand.”

6. DexCom, Inc. (NASDAQ: DXCM)

James’ Stake Value: $11,572,000
Percentage of Chris James’ 13F Portfolio: 4.24%
Number of Hedge Fund Holders: 56

DexCom, Inc. (NASDAQ: DXCM) ranks 6th on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. The San Diego-based medical device company commercializes continuous glucose monitoring using a wearable sensor that feeds glucose readings to a smartphone or smartwatch. DXCM stock has returned more than 17% to investors in the past month.

DexCom, Inc. has a market cap of $40 billion. In the first quarter of 2021, the medical device company reported revenue of $505 million, up 25% year over year. In the same quarter, the firm earned $40.3 million, or $0.41 per diluted share, compared to $19.9 million, or $0.21 per diluted share, in the previous year. The company increased its revenue growth expectation for the year to between 17% and 22%, or $2.26 billion and $2.36 billion. As of June 18, DexCom, Inc. shares traded at $418.29 and have a P/E ratio of 80.36. The 52-week price range of NXPI is $305.63 – $456.23. On May 28, Wells Fargo upgraded DexCom, Inc. with an Equal-Weight rating and a price target of $380 per share.

Engine No. 1 owns 32,200 shares in the company worth $11.6 million, representing 4.24% of the fund’s investment. At the end of the first quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $1.68 billion in DexCom Inc, up from 52 the preceding quarter worth $1.66 billion.

Like Exxon Mobil Corporation, NXP Semiconductors N.V., Square Inc, General Motors Company, Shopify Inc and Microsoft Corporation, DexCom, Inc. is one of the best stocks to buy based on Chris James’ Engine No. 1.s portfolio.

In the Q4 2020 Investor Letter, RiverPark Advisors, LLC highlighted a few stocks, and DexCom Inc is one of them. Here is what the fund said:

“DXCM shares were our final top detractor for the quarter. The company reported solid third-quarter results that comfortably exceeded expectations at 26% revenue growth, its highest quarterly gross margin in two years at 68%, and $147 million of EBITDA (29% margin), 50% above expectations. However, revenue growth slowed during the quarter (from pricing headwinds) as new patient growth shifted toward the lower-priced pharmacy and Medicare channels. We have expected these headwinds and believe that pricing is simply tracking more quickly towards a broad equilibrium ahead of its new product launch.

DexCom is the leading manufacturer of continuous glucose monitoring (CGM) systems for diabetes, with the most accurate CGM device on the market, as well as a significant new product in development–the G7, which is smaller than a quarter, longer wear, and lower cost than its current G6 monitor. Dexcom’s CGM is a platform technology addressing multiple diabetes populations and providers, and eventually other uses for its sensor technology, providing the company with a long runway for growth (we expect greater than 20% annual revenue growth for years to come). We also believe that the business will be extremely profitable at scale driving its adjusted EBITDA margin from 15% last year to 25% for 2023. We expect the company to generate 40% annual EPS growth over the next few years, while also generating sizable excess free cash flow.”

5. NextEra Energy, Inc. (NYSE: NEE)

James’ Stake Value: $14,260,000
Percentage of Chris James’ 13F Portfolio: 5.23%
Number of Hedge Fund Holders: 63

NextEra Energy, Inc. (NYSE: NEE) ranks 5th on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. The Florida-based utility company is the largest solar and wind energy generator in the US, with approximately 54,727 megawatts of net generating capacity as of December 2020. The company was founded in 1925 and was formerly known as FPL Group, Inc. In 2020, the company invested approximately $14.6 billion in energy infrastructure in the US. By 2022, NextEra Energy, Inc. plans to invest between $50 and $55 billion in new infrastructure. NextEra Energy, Inc. just received approval for the Chesapeake Solar Project, a 118-MW solar project in Virginia that will become operational by the end of 2022. The solar investment costs approximately $135 million. NextEra Energy, Inc. pays its shareholders an annual dividend of $1.54 per share, with a 2.10% dividend yield. NEE stock has returned more than 19% to investors in the past twelve months.

The company has a market cap of $143 billion. The company’s revenue in the first quarter of 2021 came in at $3.7 billion, down from $4.6 billion in the same period in 2020. On a GAAP basis, first-quarter net income attributable to NextEra Energy was $1.6 billion, or $0.84 per share, compared to $421 million, or $0.21 per share, in the first quarter of 2020. As of June 18, NextEra Energy, Inc. shares traded at $73.28 and have a P/E ratio of 34.73. The 52-week price range of NEE is $58.44 – $87.69. On May 18, Morgan Stanley maintained its Equal-Weight rating on NextEra Energy, Inc. and upgraded its price target to $75 per share.

Engine No. 1 owns 188,604 shares in the company worth $14.4 million, representing 5.23% of the fund’s investment. Out of the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in NextEra Energy, Inc. with 13.6 million shares worth more than $1.03 billion.

4. Exxon Mobil Corporation (NYSE: XOM)

James’ Stake Value: $51,218,000
Percentage of Chris James’ 13F Portfolio: 18.8%
Number of Hedge Fund Holders: 65

Exxon Mobil Corporation ranks 4th on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. Exxon Mobil Corporation is one of the biggest oil and gas companies in the US. The company sells and transport, oil, gas, and petrochemical products. The Texas-based oil company pays an annual dividend of $3.48 per share with a 5.61% dividend yield. XOM stock has returned more than 30% to investors in the past twelve months.

The company has a market of $256 billion. Exxon Mobil Corporation reported first-quarter revenue of $2.6 billion, up 376% from $536 million in the first quarter of 2020. As of June 18, Exxon Mobil Corporation shares trade at $60.40. The 52-week price range of XOM is $31.11 – $64.80. On June 15, Credit Suisse maintained a Neutral rating on Exxon Mobil Corporation, with a price target of $72 per share.

As of the end of the first quarter, Engine No. 1 LLC has a significant holding in Exxon Mobil Corporation. The hedge fund run by Chris James owns 917,400 shares in the company worth over $51.3 million, representing 18.8% of their investment portfolio. At the end of the first quarter of 2021, 65 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in Exxon Mobil Corporation, up from 63 the preceding quarter worth $2.2 billion.

First Eagle Investment Management, in their Q1 2021 investor letter, mentioned Exxon Mobil Corporation and shared their insights on the company. Here is what the fund said:

“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. Recovering oil prices on improvements in demand for crude and other distillates helped fuel strong performance across the energy complex, including shares of Exxon Mobil. The company’s financial results have improved markedly from the Covid-related demand shocks in 2020, helping ease concerns about the sustainability of Exxon’s dividend, which is among the largest in the S&P 500 Index. In addition, Exxon has reiterated its commitment to reducing capital expenditures, which we believe should further bolster the resilience of its cash flows against future demand slowdowns.”

3. General Motors Company (NYSE: GM)

James’ Stake Value: $21,117,000
Percentage of Chris James’ 13F Portfolio: 7.75%
Number of Hedge Fund Holders: 86

General Motors Company ranks 3rd on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. Since 1908, the Detroit-based automaker has been producing cars, trucks, SUVs, and automobile parts all around the world. Among the brands General Motors Company owns are GMC, Chevrolet, Baojun, Buick, and Cadillac. The old car manufacturer said on June 16 that it has increased its investment in electrified and autonomous vehicles to $35 billion through 2025, up from $27 billion anticipated in November 2020. GM stock has returned more than 123% to investors in the past twelve months.

The company has a market cap of $85 billion. The company’s first-quarter revenue came in at $32.5 billion, down from $32.7 billion in the first quarter of 2020. As of June 18, General Motors Company shares trade at $58.76. The 52-week price range of GM is $23.33 – 64.30. On June 6, Barclays maintained an Overweight rating on General Motors Company, with a price target of $70 per share.

Chris James’ Engine No. 1 recently added General Motors Company in its portfolio where it owns 367,500 shares in the company worth $21 million, representing 7.75% of the fund’s investment portfolio. At the end of the first quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $8.05 billion in General Motors Company, up from 70 the preceding quarter worth $6.33 billion.

Like Exxon Mobil Corporation, Deere & Company, and Microsoft Corporation, General Motors Company is one of the best stocks to buy according to Chris James’ Engine No. 1.

2. Square, Inc. (NYSE: SQ)

James’ Stake Value: $34,082,000
Percentage of Chris James’ 13F Portfolio: 12.51%
Number of Hedge Fund Holders: 92

Square, Inc. ranks 2nd on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. The San Francisco-based fintech firm creates a commerce ecosystem that assists businesses with digital inventories, receipts, and sales records. In 2013, Square, Inc. launched the Cash App mobile payment platform to compete with other digital payment services like PayPal Holdings, Inc.’s (NASDAQ: PYPL) Venmo. The fintech firm recently teamed up with Blockstream Mining, a blockchain technology provider, to develop a $5 million open-source, solar-powered bitcoin mining facility. Square, Inc. acquired about 4,709 bitcoins for $50 million in October 2020 and added another $170 million in February. SQ stock has returned more than 127% to investors in the past twelve months.

The company has a market cap of $103 billion. The company’s first-quarter gross profit grew 79% to $936 million, up from $539 million in the first quarter of 2020. As of June 18, Square, Inc. shares trade at $237.05 and have a P/E ratio of 331.54. The 52-week price range of SQ is $98.93 – $283.19. On May 10, BMO Capital maintained a Market Perform rating on Square, Inc., with a price target of $269 per share.

Chris James’ Engine No. 1 owns 150,109 shares in the company worth $34 million, representing 12.51% of the fund’s investment portfolio. At the end of the first quarter of 2021, 92 hedge funds in the database of Insider Monkey held stakes worth $9.20 billion in Square, Inc., up from 89 the preceding quarter worth $8.82 billion.

Like Exxon Mobil Corporation, Deere & Company, and Microsoft Corporation, Square, Inc. is one of the best stocks to buy according to Chris James’ Engine No. 1.

RiverPark Funds, in their Q1 2021 investor letter, mentioned Square, Inc. (NYSE: SQ) and shared their insights on the company. Here is what the fund said:

“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).

The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to passing through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.

We estimate that the company can grow its gross profit more than 30% and EBITDA by more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”

1. Microsoft Corporation (NASDAQ: MSFT)

James’ Stake Value: $16,781,000
Percentage of Chris James’ 13F Portfolio: 6.16%
Number of Hedge Fund Holders: 251

Topping the list of the 10 best stocks to buy according to Chris James’ Engine No. 1 is American tech giant Microsoft Corporation. On top of developing the Windows operating system and providing Microsoft Office products, the Washington-based tech giant offers cloud computing services through Microsoft Azure. In 2016, the company’s cloud infrastructure accounted for only 7% of the market, but in 2020, it has grown by 20%. On the other hand, Microsoft Corporation currently boasts 200 million active business Microsoft 365 users on a monthly basis. The company currently pays an annual dividend of $2.24 per share with a 0.86% dividend yield. MSFT stock has offered more than 33% returns to investors in the past twelve months.

The company has a market cap of $1.95 trillion. Revenue for the third quarter of 2021 was $41.7 billion, up 19% from $35.02 billion the previous year. As of June 18, Microsoft Corporation shares traded at $259.43 and have a P/E ratio of 35.35. The 52-week price range of MSFT is $193.55 – $263.19. KGI Securities initiated coverage on Microsoft Corporation on June 2 with an Outperform rating and a $300 per share price target.

Chris James’ Engine No. 1 LLC owns 71,177 shares of Microsoft Corporation worth $16.8 million, representing 6.16% of its investment portfolio. The hedge fund trimmed its stake in MSFT by 26% in the first quarter of 2021. At the end of the first quarter of 2021, 251 hedge funds in the database of Insider Monkey held stakes worth $60 billion in Microsoft Corporation. Out of the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in Microsoft Corporation with 23.9 million shares worth more than $5.66 billion.

Our calculations show that Microsoft Corporation ranks 2nd in our list of the 30 Most Popular Stocks Among Hedge Funds.

ClearBridge Investments, in its Q1 2021 investor letter, mentioned Microsoft Corporation and shared their insights on the company. Here is what the fund said:

“We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks. The FAANGs and Microsoft delivered mixed results during the quarter and we continue to be mindful of our weighting to these mega-cap growth stocks to ensure they are not limiting our ability to add diversity through new ideas. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”

You can also take a peek at 10 Best Spring Stocks to Buy Now and 10 Best Dividend Stocks to Buy According to Billionaire Ray Dalio.

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