In this article, we discuss the 5 best stocks to buy for financial independence. If you want to read our detailed analysis of these companies, go directly to the 10 Best Stocks to Buy for Financial Independence.
5. Mastercard Incorporated (NYSE: MA)
Number of Hedge Fund Holders: 154
Mastercard Incorporated (NYSE: MA) is a New York-based financial services company founded in 1966. It is ranked fifth on our list of 10 best stocks to buy for financial independence. Mastercard stock has returned more than 26% to investors over the course of the past twelve months. The firm is most famous for payment-related products but also markets services such as cyber and intelligence solutions, information and analytics services, consulting services, loyalty and reward programs, as well as open banking services, among others.
On April 29, Mastercard Incorporated (NYSE: MA) posted earnings for the first quarter of 2021, reporting a revenue of more than $4.2 billion and earnings per share of $.174. The EPS beat market predictions by $0.18.
Out of the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE: MA) with 5.8 million shares worth more than $2 billion.
In its Q4 2020 investor letter, Bretton Fund, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE: MA) was one of them. Here is what the fund said:
“While consumers resumed much of their spending by summer, what and how they used their Visas and Mastercards changed. For obvious reasons, people shifted to contactless payments—one of the Covid-era changes we think is permanent—and replaced travel purchases with online shopping and food delivery. Consumers spent more on their debit cards and less on their credit cards; Visa and Mastercard make more per transaction on the latter. They also make more on cross-border transactions that come mostly from international travel, which ground to a halt early in the pandemic. Visa’s and Mastercard’s earnings per share fell by 7% and 16%, respectively, compared to their usual mid-teens growth. We’re not too worried, and we think they’ll catch up nicely in the post-vaccine world. Visa’s stock returned 17.1% and Mastercard’s 20.2%.”
4. CVS Health Corporation (NYSE: CVS)
Number of Hedge Fund Holders: 56
CVS Health Corporation (NYSE: CVS) is a Rhode Island-based healthcare firm founded in 1963. It is placed fourth on our list of 10 best stocks to buy for financial independence. CVS stock has offered investors returns exceeding 42% in the past year. The firm has diverse interests within the health sector, with major stakes in big pharmacy brands and health insurance providers. The firm operates at close to 10,000 retail locations across the US and also runs more than 1,000 clinical facilities.
On May 4, CVS Health Corporation (NYSE: CVS) stock gained more than 3% on the back of strong quarterly results and an improved guidance for the rest of the fiscal year. In the results posted earlier, total revenues for the company had increased 3.5% year-on-year to $69.1 billion.
3. The Goldman Sachs Group, Inc. (NYSE: GS)
Number of Hedge Fund Holders: 76
The Goldman Sachs Group, Inc. (NYSE: GS) is a New York-based investment bank and financial services company founded in 1869. It is ranked third on our list of 10 best stocks to buy for financial independence. Goldman stock has returned more than 104% to investors in the past year. The company also pays a regular dividend. The company provides several investment banking services such as strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs.
The Goldman Sachs Group, Inc. (NYSE: GS) recently set up a cryptocurrency trading desk and also invested in a $15 million Series B funding round for Coin Metrics, a firm that provides crypto asset-related financial data.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Crake Asset Management is a leading shareholder in The Goldman Sachs Group, Inc. (NYSE: GS) with 158,014 shares worth more than $51 billion.
Just like NVIDIA Corporation (NASDAQ: NVDA) and Mastercard Incorporated (NYSE: MA), The Goldman Sachs Group, Inc. (NYSE: GS) is one of the best stocks to buy for early retirement.
2. NVIDIA Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 88
NVIDIA Corporation (NASDAQ: NVDA) is a California-based technology company that markets high-powered hardware for computers, laptops, and other devices. It is placed second on our list of 10 best stocks to buy for financial independence. NVIDIA stock has offered investors returns exceeding 72% over the past year. The company has explosive growth potential as online games increase in popularity, handheld devices become more powerful, and a chip shortage in the industry drives up the prices of the products the firm markets.
NVIDIA Corporation (NASDAQ: NVDA) stock was given an Outperform rating by investment advisory Baird on May 5 with a price target of $800. The advisory claimed that the company was well placed to dominate the data centre space in the artificial intelligence market.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ: NVDA) was one of them. Here is what the fund said:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
1. Fidelity National Financial, Inc. (NYSE: FNF)
Number of Hedge Fund Holders: 40
Fidelity National Financial, Inc. (NYSE: FNF) is a Florida-based insurance and settlement services company founded in 1847. It is ranked first on our list of 10 best stocks to buy for financial independence. Fidelity stock has returned more than 70% to investors over the past year. The company serves the real estate and mortgage industries and has a market cap of over $13 billion. Some of the services the company offers include trust activities, trustee sales guarantees, recordings and reconveyances, and home warranty insurance, among others.
Fidelity National Financial, Inc. (NYSE: FNF) is a solid bet for income investors as the firm has a good dividend history. On May 6, the company declared a quarterly dividend of $0.36 per share, in line with previous. The forward yield was 3.11%.
Out of the hedge funds being tracked by Insider Monkey, Houston-based investment firm Windacre Partnership is a leading shareholder in Fidelity National Financial, Inc. (NYSE: FNF) with 11 million shares worth more than $455 million.
In its Q1 2021 investor letter, Merion Road Capital Management, an asset management firm, highlighted a few stocks and Fidelity National Financial, Inc. (NYSE: FNF) was one of them. Here is what the fund said:
“During the period I added to our position in Fidelity National Financial (“FNF”). FNF is the nation’s largest title insurer with 33% market share. It was built over the last 30 years by Bill Foley, who revolutionized the industry with his emphasis on eliminating bureaucracy, utilizing technology to streamline operations, and maximizing customer service. He is well-regarded as a savvy investor and consummate deal-maker having acquired and divested multiple entities both in title and ancillary fields. He continues to serve as the chairman of FNF with a personal stake in the company worth hundreds of millions.
While title insurance is technically insurance, it is a bit of a unique animal. Being that the insurer writes a policy based on past events, not unknowns in the future, losses are relatively small and predictable. The more data an insurer can analyze, the less likely they are to experience a claim; and the more efficiently they can analyze the data and process the application, the lower their costs will be. FNF has invested in automating its work stream through their ownership of NextAce (automated search), SoftPro (document production and closing), and multiple other cloud-based platforms. Due to these investments, FNF boasts industry leading margins and is able to attract more third party agents who can leverage their service offering.
Last year FNF acquired the outstanding interest in FGL Holdings (“F&G”), a fixed indexed and fixed rate annuity provider. Though this appears to be a financial rather than strategic acquisition, there should be some opportunities to grow the combined business. Notably, the acquisition afforded F&G an improved credit profile which has led to ratings upgrades. These upgrades allow F&G to address new distribution lines, such as in the bank market where FNF has strong relationships through their title and escrow business. The company announced that since launching in July 1st it had already achieved $500mm of sales in this channel (vs. full year sales of ~$4bn).
FNF is likely over-earning right now based on the recent spike in mortgage activity. Looking out to 2022 I estimate that earnings should step down to something a little shy of $5.00/sh. At current prices we are collecting a double digit earnings yield for a business with strong market positioning and a superb capital allocator. Last year they repurchased a bunch of stock in Q1 at depressed prices and have announced their intent to acquire another $500mm over the next 12 months.”
You can also take a peek at Billionaire Izzy Englander’s Top 10 Stock Picks and Billionaire David Abrams’ Top Stock Picks.
