In this article, we discuss the 5 best stocks to buy for your child. If you want to read our detailed analysis of these companies, go directly to the 10 Best Stocks to Buy for Your Child.
5. NVIDIA Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 80
NVIDIA Corporation (NASDAQ: NVDA) ranks 5th on the list of 10 best stocks to buy for your child. The California-based tech firm manufactures GPU used in high-end video games and crypto mining. The chip-maker is expanding its way in the field of artificial intelligence and high tech. Over the last year, the company spent 22.5% of its sales on research and development, one of the highest rates among tech behemoths. NVIDIA Corporation pays an annual dividend of $0.64 per share with a yield of 0.09%.
The company has a market cap of $439 billion. NVDA stock has offered more than 100% returns to investors in the past twelve months. The company’s revenue in the first quarter that ended on May 2, 2021, came in at $5.7 billion, an increase of 84% from $3.1 billion in the same period in 2020. On May 27, Truist Securities maintained a Buy rating on NVIDIA Corporation, with a price target of $768 per share. The stock currently trades at $704.76 per share.
NVIDIA Corporation (NASDAQ: NVDA) announced in September 2020 that it will pay $40 billion to Softbank for Cambridge-based semiconductor and software business Arm Ltd., making it one of the largest tech acquisitions ever.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based hedge fund company Citadel Investment Group is a leading shareholder in NVIDIA Corporation (NASDAQ: NVDA) with 2.56 million shares worth more than $574 million.
In its Q1 2021 investor letter, SaltLight Capital Management, an investment management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ: NVDA) was one of them. Here is what the fund said:
“In this letter, we highlight one ‘bet’: a follow-up on our December letter where we wrote extensively about our broad thesis about the Artificial Intelligence opportunity. We present a case study of NVIDIA who we believe is delightfully positioned to capture this opportunity.
Unfortunately, for some readers, again this letter tends to overflow in technical IT jargon. Part of our mission is to educate co-investors about our thinking over the long term. We attempt our best to moderate complexity, however, sometimes the technical analysis is the only way to reinforce the thesis.
Encouragingly, we continue to find global opportunities to deploy capital. We remain cautious on South Africa and believe that, overall, the distribution of outcomes is skewed to the downside despite the recent mean reversion in share prices. We believe that we own the best of the South African opportunity set. Therefore, the majority of incremental capital in the fund is being deployed into global opportunities.
Notwithstanding, we’ve increased our position in one South Africa business that will directly benefit as the population is vaccinated. We’ve also participated in two special situations that are still yielding satisfactory returns on capital.
A quick read of our factsheet will show high cash balances. This is slightly misleading as a substantial portion of the cash is backing derivative exposures that are not reflected in the disclosure.
NVIDIA is one of our portfolio companies that, we believe, has considerable potential. Their recent GTC conference confirmed some elements of our long term thesis:
• As leading enterprise customers started to find competitive advantages adopting AI solutions, their competitors would need to heavily invest in keeping up.
• NVIDIA is creating layers of ‘tools’ to solve the input and output bottleneck challenges that we mentioned in our December letter.
• On top of this, and fortunately for us, geopolitical and COVID-related factors added further tailwinds and a well-known shortage of semiconductors across the industry ensued.
Speak to your brother-in-law who works in IT and he would probably associate NVIDIA as a gaming hardware company. However, over the last few years, NVIDIA has been building an AI platform company with integrated hardware, developer ‘middleware’ and AI applications. Gaming has funded this platform, but AI is likely to define NVIDIA over the next decade.
As an aside, we think co-founder and CEO Jensen Huang, is one of the most impressive CEOs that we’ve come across. It is customary amongst tech CEOs to have a signature clothing ensemble; Jensen is no different and he frequently sports a ‘glossy’ black leather jacket. Since the COVID-era, Jensen has presented all of NVIDIA’s product launches from his kitchen. For those not familiar with the sector, it is worthwhile contextualizing how they got here.
One of the key inputs in AI is the hardware for computational power – particularly deep learning models. Compute power is determined by semiconductor architecture, packaging, and the software layer to extract maximum performance.
Gaming has funded the future AI platform
Whilst Intel will be associated with dominating the central processing unit (CPU), NVIDIA almost already owns the space for Graphics Processing Units (GPUs); the primary reason – gamers.
Toward the end of last year, the company………..[read the complete letter here]
4. Apple Inc. (NASDAQ: AAPL)
Number of Hedge Fund Holders: 127
Ranking 4th on the list of 10 best stocks to buy for your child is Apple Inc. (NASDAQ: AAPL). On Aug. 2, 2018, the California-based tech corporation made history by becoming the first public company in the United States to reach a market capitalization of $1 trillion. Today, AAPL’s market cap is over $2.1 trillion. The company manufactures and sells iPhones, iPads, Macs, and wearables worldwide. After a 17-year break, Apple reinstated its dividend in 2012, and it has since become a dividend giant. AAPL currently pays a quarterly dividend of $0.22 per share.
AAPL stock has offered more than 51% returns to investors in the past twelve months. The company’s second-quarter revenue increased 54% to $89.5 billion, up from $58.3 billion in the same period in 2020. Apple Inc.’s iPhone sales in the second quarter of 2021 totaled $48 billion. Currently, 27 analysts posted a Buy rating on Apple Inc., with an average price target of $157.10 per share. AAPL currently trades at $125.90 per share.
There were 127 hedge funds that reported owning stakes in Apple Inc. (NASDAQ: AAPL) at the end of the first quarter, down from 146 funds a quarter earlier. The total value of these stakes at the end of Q1 is $131 billion.
In its Q1 2021 investor letter, Distillate Capital, an investment management firm, highlighted a few stocks and Apple Inc. (NASDAQ: AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
3. The Walt Disney Company (NYSE: DIS)
Number of Hedge Fund Holders: 134
The Walt Disney Company (NYSE: DIS) ranks 3rd on the list of 10 best stocks to buy for your child. The California-based entertainment giant owns and operates amusement parks, film studios, television stations, and streaming services. After more than a year of being closed, Disneyland and Disneyland Adventure reopened their doors to the public in April. The Walt Disney Company owns direct-to-consumer entertainment channels namely Disney+, ESPN+, and Hulu with current paying subscribers amounting to 103.6 million, 13. 8 million, and 41.6 million respectively.
The stock has returned over 42% to investors over the past twelve months. The company has a market cap of $322 billion and second-quarter revenues came in at $15.6 billion. Although Disneyland and The company posted earnings for the second fiscal quarter, with earnings per share of $0.79, which was $0.53 higher than market expectations. On May 18, Deutsche Bank maintained a Buy rating on The Walt Disney Company, with a price target of $213 per share. DIS stock currently trades at $176.99 per share.
There were 134 hedge funds that reported owning stakes in The Walt Disney Company (NYSE: DIS) at the end of the first quarter, down from 146 funds a quarter earlier. The total value of these stakes at the end of Q1 is $12.6 billion.
In its Q4 2020 investor letter, Harding Loevner, an investment management firm, highlighted a few stocks and The Walt Disney Company (NYSE: DIS) was one of them. Here is what the fund said:
“One of the original constituents of the Nifty Fifty holds a place in our portfolio today. When we bought Disney three years ago, we wrote that “we view Disney theme parks in the US, Europe, and China as resistant to online substitution.” We did not reckon on a pandemic, which closed all of them, and sent all of us to our couches. Disney, however, was ready for us, brilliantly illustrating the importance of management foresight and change management. Or, as Louis Pasteur said, “chance favors the prepared mind.”
A century after its founding in 1923, Disney is in the middle of a bold shift from its legacy media networks & entertainment model—with cable TV, theme parks, and theater films dominating its earnings—to a direct-to-consumer streaming media model. The keys to Disney’s transition: matchless storytelling, coupled with financial strength. The company reliably creates content that people all over the world are eager to consume. It also hastened spending on original content to attract subscribers to its new streaming platform. These factors have allowed Disney to weather the pandemic having expanded its direct engagement with customers. Such connections yield a rich harvest of insights used to customize offerings on a mass scale, reinforcing that engagement in a virtuous circle and thereby raising the lifetime value of each customer. Subscribers to Disney+ reached 86.8 million one year after launch, compared to the 60 – 90 million management projected to reach in 2024. To be sure, Netflix, Apple, and Amazon remain formidable competitors in new-era streaming entertainment (mind what we said about everyone standing up at once), but there’s fight left in this old dog.”
2. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 251
Ranking 2nd on the list of 10 best stocks to buy for your child is Microsoft Corporation (NASDAQ: MSFT). The Washington-based tech behemoth specializes in software for laptops and desktops, but Microsoft Corporation is also engaged in cloud computing and artificial intelligence. The company also pays an annual dividend of $2.24 per share, making it one of the few prominent tech stocks that do so. The stock offers a dividend yield of 0.89%.
The company has a market cap of $1.91 trillion. MSFT stock has offered more than 35% returns to investors in the past twelve months. The company’s third-quarter revenue came in at $41.7 billion, up 19% from $35.02 billion in the same period in 2020. On June 2, KGI Securities initiated coverage on Microsoft Corporation with an Outperform rating, with a price target of $300 per share. MSFT stock currently trades at $253.81 per share.
Out of the hedge funds being tracked by Insider Monkey, hedge fund company Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ: MSFT) with 23.9 million shares worth more than $5.65 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
1. Facebook, Inc. (NASDAQ: FB)
Number of Hedge Fund Holders: 257
Topping the list of the 10 best stocks to buy for your child is Facebook, Inc. (NASDAQ: FB). The California-based tech firm operates and develops social media and instant messaging apps such as Facebook, Instagram, WhatsApp, and Messenger. As of March 2021, Facebook, Inc. recorded a 10% year-over-year increase on monthly active users totaling 2.85 billion. On top of maintaining his social media empire, Facebook, Inc. (NASDAQ: FB) founder and CEO Mark Zuckerberg is driving the next generation of technologies through his AI and augmented and virtual reality (AR/VR) investments. The company is also working on a platform and tools to assist the creator economy, including monetization opportunities for content creators.
The company has a market cap of $937 billion. The company’s revenue in the first quarter of 2021 increased 48% to $26.2 billion, up from $18 billion in the same period in 2020. Shares of FB jumped 43% over the past twelve months. On June 2, KGI Securities initiated coverage on Facebook, Inc. with an Outperform rating and a price target of $420 per share. FB stock currently trades at $336.58 per share.
There were 257 hedge funds that reported owning stakes in Facebook, Inc. (NASDAQ: FB) at the end of the first quarter, up from 242 funds a quarter earlier. The total value of these stakes at the end of Q1 is $40.9 billion.
You can also take a peek at the 15 Biggest E-Commerce Companies in China and 10 Bankrupt Companies That Came Back.
