In this article, we discuss the 5 stocks better than AMC. If you want to read our detailed analysis of these stocks, go directly to the 10 Stocks Better than AMC According to Hedge Funds.
5. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 44
StoneCo Ltd. (NASDAQ:STNE) is ranked fifth on our list of 10 stocks better than AMC according to hedge funds. The company operates as a financial technology solutions provider and is headquartered in the Cayman Islands.
On September 3, investment advisory HSBC maintained a Buy rating on StoneCo Ltd. (NASDAQ:STNE) stock but lowered the price target to $65 from $85. Neha Agarwala, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in StoneCo Ltd. (NASDAQ:STNE), up from 39 in the previous quarter worth $2.1 billion.
In its Q2 2021 investor letter, JDP Capital Management, an asset management firm, highlighted a few stocks and StoneCo Ltd. (NASDAQ: STNE) was one of them. Here is what the fund said:
“StoneCo (NYSE: STNE) has been in our portfolio since early 2019 and has appreciated 225% since. In the first half of 2021 the stock was down nearly 20% and was a drag on the fund’s performance.
Stone is a leading fintec company in Brazil that provides back-office software, loans and other financial services to small and medium sized businesses (SMBs). We have discussed Stone in past letters and the company’s “ladder up” from a card processor to a supplier of enterprise software used to sell financial products on top of such as working capital loans.
The company generates a lot of cash that it reinvests to acquire or build new financial products for its customer base. Since we invested, the company has grown the number of SMB clients by 3x, revenue by 2.3x, and net income by 2.2×11.
The pandemic’s impact on SMBs in Brazil has been severe, especially for the many retailers who are only now adopting an e-commerce strategy. In the first half of 2021 Stone increased loss provisions on its lending product, and overall growth has slowed somewhat. The stock’s decline earlier this year was not surprising, but investors are now ignoring progress that has enhanced Stone’s position for coming out much stronger when the recovery begins.
StoneCo Q1 2021 Earnings Call: “Based on (i) our learnings with lockdowns last year, (ii) recent client transactional data and (iii) learnings from the dynamics of countries where vaccines are widespread, we expect that once vaccination scale (which we think will happen in the second half of 2021), the economic recovery will be fast and – although delayed – Brazil is moving in the right direction. For these reasons, we have made an informed decision to be ready for recovery by investing in growth…”
“…In the first quarter, we decided to increase our salesforce headcount by 24%, marketing investments by 33%, customer service and logistics headcount by 32% and technology headcount by 20% in order to be the fastest player when our economy comes back to normal levels.”
“I want to start our presentation by highlighting that Brazil went through a second wave of COVID in the first quarter of ’21, which imposed commerce restrictions in several cities throughout the country. Those restrictions were felt by our clients with average TVP reaching a low in the end of March…
…But similar to the behavior we saw in the comeback from the first lockdown in 2020, we already observed significant and quick recovery with average TPV in May achieving levels above January 2021. As Thiago mentioned, we expect that once vaccinations are scaled, the economy recovery of the country will be fast.”
In terms of COVID recovery opportunities within our portfolio, Stone might be the most “coiled” because the impact on Brazilian small businesses has been so traumatic. In addition, Stone is part of a much larger and fast-moving transition happening in Brazil around the digitalization of financial services. The speed of this transition is unique to Brazil because the Central Bank is actively trying to reduce the country’s previous dependency on a small handful of large banks. Important progress in the first half of 2021 included closing on the long-awaited acquisition of Linx, a mature provider of enterprise software with a large footprint across Brazil. The acquisition will provide Stone meaningful cross-selling opportunities and a more diversified customer base.”
4. Bausch Health Companies Inc. (NYSE:BHC)
Number of Hedge Fund Holders: 45
Bausch Health Companies Inc. (NYSE:BHC) is a Canada-based biotechnology company. It is placed fourth on our list of 10 stocks better than AMC according to hedge funds.
On September 21, investment advisory JPMorgan maintained an Overweight rating on Bausch Health Companies Inc. (NYSE:BHC) stock with a price target of $38, noting the shares had 50% upside based on recent growth estimates.
At the end of the second quarter of 2021, 45 hedge funds in the database of Insider Monkey held stakes worth $3.9 billion in Bausch Health Companies Inc. (NYSE:BHC), up from 42 in the preceding quarter worth $4 billion.
In its Q1 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Bausch Health Companies Inc. (NYSE:BHC) was one of them. Here is what the fund said:
“Bausch Health Companies (BHC) climbed 55% during the period. Glenview (6% owner) sent a letter to the company in early February arguing the company has not acted to unlock shareholder value and urging the company to sell its eye care business. Shortly after, activist investor Carl Icahn disclosing a 7.83% stake in the company. The company responded to the filing saying that they remain committed to splitting the business into two parts, but are open to pursuing all opportunities. The company reported strong 4Q results with better-than-expected 2021 guidance. 4Q revenue came in at $2,213M slightly ahead of consensus of $2,165M and EPS of $1.34 beat consensus of $1.12. The company guided for 2021 revenue of $8.6-8.8B coming in ahead of expectations of $8.55B with EBITDA of $3.4-3.55B ahead of $3.46B estimated. The company announced the transition of Paul Herendeen to an advisory role to be succeeded by Sam Eldessouky, previously senior vice president, controller and chief accounting officer. Finally, the company announced the sale of Amoun Pharmaceutical for $740M, which was relatively in line with estimates and should help support debt reduction targets ahead of the planned spin-off of Bausch + Lomb eye care business.”
3. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 55
Oracle Corporation (NYSE:ORCL) is a Texas-based firm that markets enterprise software and related services. It is ranked third on our list of 10 stocks better than AMC according to hedge funds.
On September 14, investment advisory Monness Crespi reiterated a Buy rating on Oracle Corporation (NYSE:ORCL) stock and raised the price target to $115 from $113, highlighting the “solid” outlook for the firm in the coming months based on guidance numbers.
At the end of the second quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in Oracle Corporation (NYSE:ORCL), up from 52 in the preceding quarter worth $2.8 billion.
Here is what Ariel Investments has to say about Oracle Corporation (NYSE:ORCL) in its Q1 2021 investor letter:
“A temporary factor might be a downturn in the high-yield bond market driving up LBO financing costs for the decline in 2021 GAAP revenue for Oracle Corporation (ORCL) due to a change in accounting methods. In all these examples, stock prices were driven well-below our calculations of intrinsic value. We invested in each company with good outcomes. Later, we will offer instances when this strategy is not successful.”
2. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 62
Analog Devices, Inc. (NASDAQ:ADI) is placed second on our list of 10 stocks better than AMC. The firm makes and sells semiconductors and is headquartered in Massachusetts.
On September 20, investment advisory JPMorgan upgraded Analog Devices, Inc. (NASDAQ:ADI) stock to Overweight from Neutral and raised the price target to $215 from $119, noting that semiconductor firms with solid market leadership were poised for strong growth.
At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $5.7 billion in Analog Devices, Inc. (NASDAQ:ADI), up from 50 the preceding quarter worth $4.8 billion.
In its Q4 2020 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Analog Devices, Inc. (NASDAQ:ADI) was one of them. Here is what the fund said:
”Analog Devices benefited from several global, long-wave trends such as automation, electric vehicles and the 5G network build-out. The company’s quarterly sales into the auto, industrial and communications sectors exceeded expectations, giving the stock a lift.”
1. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 72
Workday, Inc. (NASDAQ:WDAY) is ranked first on our list of 10 stocks better than AMC according to hedge funds. The company markets enterprise cloud applications and is headquartered in California.
On September 20, investment advisory Wells Fargo initiated coverage of Workday, Inc. (NASDAQ:WDAY) stock with an Overweight rating and a price target of $320, appreciating the second quarter earnings results of the company.
At the end of the second quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $5.18 billion in Workday, Inc. (NASDAQ:WDAY), up from 69 in the previous quarter worth $5.17 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Workday, Inc. (NASDAQ:WDAY) was one of them. Here is what the fund said:
“In addition to the new issue market, we have been tactically adding growth exposure. We took advantage of the selloff in disruptors that comprise a large portion of the portfolio to initiate a position in enterprise software maker Workday.”
You can also take a peek at 10 Cheap Small-Cap Stocks to Buy and 10 Penny Stocks with Upcoming Growth Catalysts.
