In this article, we will be discussing 5 risky stocks to buy today, in line with the expectation of a soft landing. If you want to read our discussion on the economic stance of JPMorgan’s strategists, you can go directly to “The Fed has Overreacted”: 10 Risky Stocks to Buy Today.
5. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 60
Shopify Inc. (NYSE:SHOP) is an Ottawa, Ontario-based e-commerce company that is known for its namesake proprietary e-commerce platform for online stores and retail point-of-sales platforms. A soft landing would result in the recovery of the e-commerce sector as well.
Shopify Inc. (NYSE:SHOP) stock has lost over 70% of its value since the start of the year. However, the company is working on executing a growth strategy to achieve profitability in the long run. Shopify Inc. (NYSE:SHOP) is also undergoing leadership changes as CFO Amy Shapero will be replaced by a seasoned Morgan Stanley banker Jeff Hoffmeister following the company’s Q3 results on October 27. Meanwhile, COO Toby Shannan will hand over his position to Vice President of Product and Merchant Services, Kaz Nejatian. According to observers, the company has made the move to change the CFO to focus more on investor engagement and might also look into providing financial guidance formally. Following all these developments, Ken Wong at Oppenheimer maintained an Outperform rating on Shopify Inc. (NYSE:SHOP) stock with a target price of $45 on September 8.
Here’s what Rowan Street Capital LLC said about Shopify Inc. (NYSE:SHOP) in its Q2 2022 investor letter:
“Tobias Lutke, Shopify (NYSE:SHOP) Founder and CEO
When Tobias Lütke opened an online snowboarding store in 2004, he realized how painfully cumbersome e-commerce software was. So he decided to create Shopify – a platform that made it easy for anyone to open up an online store.
Tobi has built Shopify into one of the most popular e-commerce platforms in the world, with $175 billion in GMV (Gross Merchandise Value) and $4.6 billion in revenues in 2021. SHOP went public in 2015, when revenues were just lightly above $200 million, and the stock is up 1,233% since its IPO. Shopify stock peaked in November 2021 (traded at astronomical 47x sales), which coincided with peak enthusiasm for the tech-driven, “stay-home” stocks. Since then, the stock is down almost 80% and is currently trading at just 6x 2023E sales. We believe that Mr. Market is offering us an exceptional value, at current price levels, for an exceptional company led by a very talented, visionary founder/CEO.”
ARK Investment Management held over 1 million shares of Shopify Inc. (NYSE:SHOP) as of Q2 2022.
4. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 64
Twilio Inc. (NYSE:TWLO) is a San Francisco, California-based provider of programmable tools that can perform various communication functions through its web service APIs.
In Q2 2022, Twilio Inc. (NYSE:TWLO) posted an EPS of -$0.11, beating the analysts’ estimates by 9 cents. Analysts expect Twilio Inc. (NYSE:TWLO) to achieve profitability in the coming quarters due to the company’s cost-saving strategy. In a research note issued on September 15, Matt VanVliet at BTIG gave Twilio Inc. (NYSE:TWLO) stock a target price of $105 and maintained a Buy rating. The analyst believes that the company has been prudent in reframing its cost structure by lowering its headcount by 11%. This action will also result in improving margins in the longer term. Twilio Inc.’s (NYSE:TWLO) higher emphasis on the go-to-market strategy will continue to provide more upside for the stock. The company plans to increase its focus on the sale of its software solutions portfolio.
Here’s what Carillon Tower Advisers said about Twilio Inc. (NYSE:TWLO) in its Q1 2022 investor letter:
“Twilio (NYSE:TWLO), the messaging and marketing automation software platform, sold off along with other highly valued software-as-a-service providers. Although the company management team expects continued strong growth, investors have grown concerned that demand could slow following the surge in digital communication during the pandemic.”
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is a Texas-based designer, manufacturer, and seller of electric vehicles led by Elon Musk.
Emmanuel Rosner at Deutsche Bank increased the target price for Tesla, Inc. (NASDAQ:TSLA) from $375 to $400 and maintained a Buy rating on the stock in an investment note issued on September 16. The analyst anticipates an expansion in the company’s gross profit margin during 2023. This would be driven by significant cost benefits due to the ramp-up in production from the Texas and Berlin gigafactory and the impact of the IRA related to US manufactured battery production credit coming into effect.
Tesla, Inc.’s (NASDAQ:TSLA) improvement in the gross profit margin slowed down in 2022 due to cost-push inflation and inefficiencies at the Chinese gigafactory due to the COVID-19-related lockdowns. Rosner now anticipates gross profit margin to expand by three percentage points (ppts) in 2023.
In its Q1 2022 investor letter, Fiduciary Management shared its stance on Tesla, Inc. (NASDAQ:TSLA). Here’s what the firm said:
“Remarkably, the Nasdaq-100 and Russell 2000 indices are up 6.25% and 3.90% through 3/31/22, respectively, since the war started. Tesla, Inc. (NASDAQ:TSLA) went up 57% from its low on February 24 ($700) to the close on March 29th ($1099), which equates to an advance of $413 billion. To put that in perspective, the 24-trading day gain in Tesla was greater than the entire market value of Walmart, Inc.! Tesla trades for 120 times estimated 2022 GAAP2 earnings, compared to Walmart’s (NYSE:WMT) 21.8 multiple (1/2023 fiscal year).”
As of Q2 2022, Tesla, Inc. (NASDAQ:TSLA) was held by 72 hedge funds.
2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) is an Hangzhou, China-based diversified technology giant led by Jack Ma. The company excels in artificial intelligence (AI), cloud computing, e-commerce, and many other fields in the technology sector.
Alibaba Group Holding Limited (NYSE:BABA) is at a critical junction as auditors from the US are expected to come to Hong Kong to review the audit material of Alibaba this week. The review will include on-site inspection, interviews, and review of documents. If the company passes the audit, it will unlock significant upside potential for the shares as it would reiterate the fact that Alibaba Group Holding Limited (NYSE:BABA) is a solid business with stellar margins and strong historical growth. On the other hand, if the audit raises any red flags, it could unlock further downside potential for Alibaba Group Holding Limited’s (NYSE:BABA) stock. These factors make Alibaba Group Holding Limited (NYSE:BABA) one of the suggested risky stocks to buy today.
Here’s what First Eagle Investments said about Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2022 investor letter:
“The shares of Chinese e-commerce giant Alibaba advanced on signs that the Chinese government may be starting to relax its regulatory crackdown on the technology sector. There have been reports that Beijing’s more accommodative stance may re-open the door to the initial public offering of Ant Group, a leading Chinese online payment platform whose planned 2020 IPO was scuttled by regulators. Alibaba owns about one-third of Ant. We continue to like Alibaba’s core assets, including its cloud business, which continues to generate strong cash flows.”
1. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 109
The Walt Disney Company (NYSE:DIS) is a California-based diversified media and entertainment conglomerate.
The Walt Disney Company (NYSE:DIS) is in the middle of the streaming war against notable players like Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), and Apple Inc. (NASDAQ:AAPL). Disney Plus has become the biggest streaming service in the world by surpassing Netflix with 152 million paying subscribers as of Q2 2022. The company saw its subscribers increase by 31% YoY.
The Walt Disney Company (NYSE:DIS) is also looking into merging Hulu with Disney Plus. Presently, Hulu is a joint venture between Disney, with a majority interest of 67% of the company, and Comcast Corporation (NASDAQ:CMCSA), owning the rest. Disney Plus is also aggressively trying to bring additional users into its platform by launching an advertisement-based streaming service.
Oakmark Funds discussed its outlook on The Walt Disney Company (NYSE:DIS) in its Q2 2022 investor letter. Here’s what the firm said:
“Disney (NYSE:DIS) is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney, Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”
Overall, 109 funds held a stake in The Walt Disney Company (NYSE:DIS) as of Q2 2022.
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