In this article we will take a look at Barry Ritholtz’s and Josh Brown’s top 10 stock picks. You can skip our detailed analysis of Ritholtz’ and brown’s history, and investment philosophy, and go directly to 5 Best Stocks To Buy According to Barry Ritholtz and Josh Brown.
Barry Ritholtz and Josh Brown are well-known in the investing space. Barry Ritholtz, 59, started The Big Picture in 1998, while Brown is the founder of Reformed Broker. The two co-founded Ritholtz Wealth Management which currently has an asset portfolio of around $2 billion under management.
Ritholtz Wealth Management avoids individual client portfolio customization except in cases of complex estate and tax planning problems. Barry Ritholtz’s and Josh Brown’s stock picks include companies like Sony Group Corporation (NYSE: SONY), Apple Inc. (NASDAQ: AAPL), and Microsoft Corporation (NASDAQ: MSFT).
Sony Group Corporation (NYSE: SONY) has partnered with Discord to introduce the gaming-centric social app into its PlayStation console. Through the deal, Sony Interactive Entertainment will become a minority investor in Discord’s $100M Series H funding round. Sony Group Corporation (NYSE: SONY) shares are up 56% over the last 12 months.
Rosenblatt Securities has maintained its Buy rating for Sony Group Corporation (NYSE: SONY), saying its distribution deal with Walt Disney works out as a modest positive for the company. The deal with Disney came shortly after signing a similar distribution deal with Netflix to distribute Sony films in the lucrative “Pay 1” release window.
Apple Inc. (NASDAQ: AAPL), a notable holding of Barry Ritholtz and Josh Brown, recently announced a 54% increase in revenue to $89.6 billion in Q1 2021. International sales accounted for 67% of the total revenue in Q1 2021. Apple Inc. (NASDAQ: AAPL) is reportedly working to launch its in-house cellular modems to replace QUALCOMM Incorporated (NASDAQ: QCOM) in its devices. According to Apple analyst Ming-Chi Kuo, Apple Inc. (NASDAQ: AAPL) is likely to start using its own 5G baseband as early as 2023. Apple’s move into modems is not entirely surprising as it bought Intel’s smartphone modem business in 2019 for $1 billion.
Microsoft Corporation (NASDAQ: MSFT) is also one of the best stocks to buy based on the portfolio of Barry Ritholtz and Josh Brown. Microsoft Corporation’s (NASDAQ: MSFT)’s cloud solution is seeing a continued rise in adaption and has become a formidable competitor for AWS and Google Cloud. The company established data centers in Malaysia, Indonesia, and Taiwan and is expected to generate more than $21 billion in new revenue and create an additional 100,000 jobs. Microsoft Corporation’s (NASDAQ: MSFT) has partnered with cybersecurity firm Darktrace to offer self-learning AI for cybersecurity within cloud applications and Microsoft environments. Microsoft Corporation (NASDAQ: MSFT) shares are up 38% over the last 12 months.
Picking profitable stocks is becoming difficult by the day, even for the experts. 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 26th 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 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start out list of the best stocks to buy based on the portfolio of Barry Ritholtz and Josh Brown.
10. Visa Inc. (NYSE: V)
Barry Ritholtz and Josh Brown’s Stake Value: $3,751,000
Percentage of Barry Ritholtz and Josh Brown’s 13F Portfolio: 0.31%
Number of Hedge Fund Holders: 164
Visa Inc. (NYSE: V) is a global payment company that offers payments technology to financial institutions, businesses, merchants, strategic partners, and government entities worldwide.
The company reported $3.1 billion or $1.42 per share in GAAP and non-GAAP net income in Q1 2021, while net revenue was $5.7 billion.
Visa Inc. (NYSE: V) is also making in-roads into the cryptocurrency industry and recently introduced USD Coin (USDC), a stablecoin whose value is pegged at the US dollar to be used in transactions using Visa over Ethereum. To offer smooth USDC settlement capability, Visa has partnered with Crypto.com, one of the world’s largest crypto platforms.
“Visa Inc. (NYSE: V) payment volume recovered along with consumer spending habits, finishing up +5% during the December quarter; but it skewed heavily toward online purchases, particularly with debit. Historically, Visa has had a meaningful portion of its volume derived from higher-yielding credit card spending related to cross-border travel and entertainment (T&E). As many countries maintain closed borders, Visa Inc. (NYSE: V)’s cross-border T&E segment has stayed depressed. However, we expect this business will rebound as borders inevitably reopen to COVID-19 vaccinated populations. In the meantime, we trimmed Visa to help fund a reestablished position in Booking Holdings, which should disproportionately benefit from the aforementioned reopening as well.”
9. JPMorgan Chase & Co. (NYSE: JPM)
Barry Ritholtz and Josh Brown’s Stake Value: $3,795,000
Percentage of Barry Ritholtz and Josh Brown’s 13F Portfolio: 0.32%
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE: JPM) is a U.S investment bank and financial services company with its headquarters in New York City.
In January BofA Securities upgraded the stock to “Buy” from “Neutral” and set a price target of $181.
“After a strong performance in 2019, we wrote this about our bank stocks in last year’s report: ‘There will be another recession sooner than later, and our banks will see larger loans losses, but we think this is more than priced into the stock, and our banks are well reserved for that eventuality.’ Little did we know ‘sooner’ really meant ‘a few weeks from now.’ Despite the economic shock, the banks still have huge capital cushions that can absorb large loan losses. Our remaining bank investments, JPMorgan Chase & Co. (NYSE: JPM) and Bank of America, increased their reserves significantly at the beginning of the Covid-19 crisis in anticipation of imminent loan defaults, but with the government stimulus and perhaps a more resilient economy than many would have guessed, actual loan losses are up only slightly. They might happen later in 2021, but with an additional stimulus package and the vaccine rolling out, the large-scale losses may not be as bad as most people predicted. The bigger drag on the banks’ earnings power is lower rates, which in our opinion will persist for a long time. Despite this drag, we estimate both JPMorgan and Bank of America will continue to grow revenue and earnings over the next few years, while we believe their stocks remain bargains in a somewhat expensive market. JPMorgan Chase & Co. (NYSE: JPM)’s earnings per share declined 17% last year, and its stock returned -5.5%. Bank of America’s earnings, which are more sensitive to interest rates, were down 32%, and its stock returned -11.6%.”
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Barry Ritholtz and Josh Brown’s Stake Value: $3,482,000
Percentage of Barry Ritholtz and Josh Brown’s 13F Portfolio: 0.29%
Number of Hedge Fund Holders: 76
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) specializes in the production and sale of integrated circuits and semiconductors.
The company, which has its headquarters in Taiwan, recently reported NT$111.32 billion in net revenue on a consolidated basis for April 2021, a 13.8% drop from what was reported in March 2021 and a 16.0% increase from the same period in 2020.
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is set to benefit from a Chinese government program seeking a stable supply for crucial goods like semiconductors. In a statement, President Tsai Ing-wen said the government is working with the European Union and other democracies to increase access to chips amid a global shortage that has affected several industries.
Like Sony Group Corporation (NYSE: SONY), Apple Inc. (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT), TSM is one of the best stocks to buy in the portfolio of Barry Ritholtz and Josh Brown.
In response to growing demand, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) has announced it will set up five additional chipmaking fabs in Arizona to expand its $12 billion plant. The expansion is at the request of the U.S government and is expected to be completed in the next three years. Atlantic Equities initiated a coverage of Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and has rated it as “Neutral.”
7. Tesla, Inc. (NASDAQ: TSLA)
Barry Ritholtz and Josh Brown’s Stake Value: $5,092,000
Percentage of Barry Ritholtz and Josh Brown’s 13F Portfolio: 0.42%
Number of Hedge Fund Holders: 62
Tesla, Inc. (NASDAQ: TSLA) is one of the top stock picks of Barry Ritholtz and Josh Brown.
During Q1 2021, Tesla, Inc. (NASDAQ: TSLA)’s sales from digital assets amounted to $272 million with a “positive impact” of $101 million.
Tesla, Inc. (NASDAQ: TSLA) is working on expanding its capacity in the highly competitive Chinese automobile market with the expansion of its Shanghai factory, which is used to repair and reproduce crucial components like battery cells and electric motors.
Tesla, Inc. (NASDAQ: TSLA) sold more than 1.3 million electric and plug-in hybrid vehicles in 2020. However, Tesla, Inc. (NASDAQ: TSLA) has been forced to operate in a highly changing regulatory environment in China, with authorities adding new rules to guide EV recycling to protect the environment and save materials.
“Tesla, Inc. (NASDAQ: TSLA) designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla, Inc. (NASDAQ: TSLA)’s full self-driving technology.”
6. Alibaba Group Holding Limited (NYSE: BABA)
Barry Ritholtz and Josh Brown’s Stake Value: $1,814,000
Percentage of Barry Ritholtz and Josh Brown’s 13F Portfolio: 0.15%
Number of Hedge Fund Holders: 135
Alibaba Group Holding Limited (NYSE: BABA) is a Chinese e-commerce company that offers online and mobile commerce businesses to customers in China and worldwide.
The e-commerce giant recently announced its financial results for Q1 2021, with revenues increasing by 63.9% to RMB187.4 billion compared to what the company reported in Q1 2020. The company’s revenue beat projections by RMB6.73 billion.
Alibaba Group Holding Limited (NYSE: BABA) finished the first quarter with 925 million in MAUs, an increase of 23 million compared to what the company had at the end of 2020.
The Chinese internet giant Alibaba has invested $350 million in Trendyol, a Turkish e-commerce firm, in a capital increase. The Turkish e-commerce platform has attracted a lot of support from foreign investors and is one of the leading players in the highly fragmented Turkish e-commerce market.
CICC’s Junhao Fan and Deutsche Bank’s Vitus Leung are the latest to start covering Alibaba Group Holding Limited (NYSE: BABA) and have rated the stock with “Outperform” and “Buy,” respectively. Like Tesla, Inc. (NASDAQ: TSLA), Sony Group Corporation (NYSE: SONY), Apple Inc. (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT), Alibaba is one of the best stocks to buy in the portfolio of Barry Ritholtz and Josh Brown.
“In the case of Alibaba Group Holding Limited (NYSE: BABA), two significant news events impacted the company’s shares in the last few months of 2020. First, the Chinese government intervened to halt–for an undetermined period of time–Ant Group’s IPO. Alibaba owns 33% of Ant Group, and Ant Group’s “Alipay” application facilitates financing and payments around the Alibaba ecosystem. Second, rumors of Chinese regulatory oversight in the internet space were solidified at the end of 2020 when China’s State Administration for Market Regulation announced an investigation under the nation’s AntiMonopoly Law. In combination, these events contributed to a selloff in BABA shares that resulted in a roughly 30% decline from highs in late October 2020.
We view Alibaba Group Holding Limited (NYSE: BABA) as arguably one of the most dominant businesses in the world.
We believe the company is also playing an integral role in China’s ambitions to reorient its economy from one that is export-driven to one that is domestically consumption-driven. Alibaba’s marketplaces—TaoBao and Tmall—in combination with its logistics capabilities may well provide the most efficient way to purchase and receive goods in many of China’s lower-tier cities. Important to the investment case, Alibaba Group Holding Limited (NYSE: BABA)’s core commerce business continues to compound at high rates while enjoying low total addressable market penetration and multiple competitive advantages, not the least of which consist of two-sided network
effects between merchants and consumers. At approximately 19x next twelve month’s earnings, we think Alibaba will provide a
favorable investment outcome even if it must pay fines or modify some business practices. We continue to expect earnings growth in excess of 20% over the next three to five years. Even if earnings growth were to fall to 15%, we think it would still result in a favorable outcome at the price at which we added to the position.”
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Disclosure: None. Barry Ritholtz and Josh Brown’s Top 10 Stock Picks is originally published on Insider Monkey.