In this article we discuss the top 5 stocks to invest in for beginner investors. If you want to read our detailed analysis of these stocks, go directly to Top 10 Stocks to Invest In For Beginner Investors.
5. Upwork Inc. (NASDAQ: UPWK)
Number of Hedge Fund Holders: 34
With freelancers adding $1.2 trillion to the U.S. economy and 36% of the total workforce in the country doing freelance work, online jobs platform Upwork is bound to thrive as the company remains a market leader in a growing industry.
Analysts believe that the freelancing trend will continue to rise as companies find it more cost effective and results-oriented. Upwork posted an upbeat fourth quarter after which several analysts boosted their price targets for UPWK stock. Stifel increased its price target for the stock from $40 $60, while MKM Partners hiked its price target from $52 to $69.
As of the end of the fourth quarter, 34 hedge funds in Insider Monkey’s database of 887 funds held stakes in Upwork, compared to 27 funds in the third quarter. Ancient Art (Teton Capital) is the biggest stakeholder in the company, with 3.3 million shares, worth $115.3 million.
Spree Capital Advisers in their Q4 2020 Investor Letter said that they were able to maintain a bullish insight for Upwork Inc. (NASDAQ: UPWK), and so they increased their position in the company. Here is what Spree Capital Advisers has to say about Upwork Inc. in their Investor Letter:
“Early in the fourth quarter we meaningfully increased our position size in Upwork (UPWK). Upwork is a global employment marketplace that enables businesses to vet, hire, and manage talent as part of their distributed workforce. Upwork facilitates labor and demand side connectivity on a global scale by providing the infrastructure to create trust and to streamline talent sourcing, contracting, analysis and payment. Freelancers benefit from having a reputation ranking system that feeds their marketing channels, allowing them to have access to quality, flexible work and on time compensation. Businesses on the demand side benefit by having extensive access to specialized talent, enabling faster and more cost effective hiring, and by having the strategic optionality inherent in the ability to flex a portion of their workforce based on changing demand requirements.
Labor markets have long had unnecessary frictional inefficiencies driven by regional talent imbalances and long-term trends of increased specialization of labor and declining labor mobility. Meanwhile, innovations in communication and global connectivity have transformed the way work gets done. Knowledge workers seek the flexibility and geographic advantages of on demand work, but the barrier to adoption has historically been established habits and work standards on the demand side. The Covid-19 global pandemic has broken down those barriers. We see three steps in the path to enterprise usage and shareholder value creation.
First, Upwork is reducing frictional barriers to on demand labor adoption on the demand side by modularizing the most common jobs served on the platform. Project Catalog is a collection of predefined projects that businesses purchase through an e-commerce purchase experience. Users on the demand side benefit from a frictionless way to purchase well defined, quality verified tasks to augment more complex work being done by full time employees. On demand workers on the supply side benefit from having a new avenue to market and sell the services they consistently perform. Importantly, Project Catalog widens the customer acquisition funnel by providing an easy on ramp for new customers to source and connect with talent, enabling businesses to quickly start with small projects and scale to larger and longer-term projects and relationships.
Second, Upwork is shifting its go to market strategy to target large enterprises. Currently, enterprise customers with more than 100 employees account for 20% of Upwork’s $2.7 billion in gross services volume. As part of shifting the go to market strategy, small and medium sized business customers will move to a fully self-service offering, allowing Upwork’s sales force to focus on capturing the $3.5 trillion in gross services volume that large enterprise customers currently spend on contingent labor. As Upwork’s sales team targets the large underserved market opportunity presented by enterprise customers and raises awareness of the quality verified modular work units available in Project Catalogue, there is a long runway for Upwork to power offline to online conversion in the on demand labor marketplace while breaking down the barriers to adoption and growing the overall size of the market.
4. Capri Holdings Limited (NYSE: CPRI)
Number of Hedge Fund Holders: 42
Capri Holdings is a luxury fashion brands giant which is behind Versace, Jimmy Choo and Michael Kors. The company is set to gain from its timely ecommerce penetration and the upcoming economic recovery in the world as people are desperate to go back to the luxury shopping experience. In February, the company said its ecommerce sales soared by a whopping 65% sequentially in the fiscal third quarter. The company said that it expects EPS and revenue to exceed pre-pandemic levels by 2023. Jim Cramer and Bob Lang from Explosive Options said in March that high-end retail stocks have more room to run. The analysts specifically mentioned Capri stock and gave bullish comments based on their technical analysis.
A total of 42 hedge funds tracked by Insider Monkey were bullish CPRI at the end of the fourth quarter, up from 36 funds a quarter earlier.
Avory & Co, in their Q4 2020 investor letter, said that they have a positive outlook on Capri Holdings Limited (NYSE: CPRI) because of the commendable efforts of its management. Here is what Avory & Co has to say about Capri Holdings Limited in their Investor Letter:
“John Idol, was amongst the most nimble and resilient CEOs in 2020. Capri, as most of the retail sector, faced various challenges; 1) Supply disruptions in their leather goods as a result of the large impact covid had on Italy, 2) Dwindling demand as brick and mortar locations were forced to shut down globally and 3) Debt due in December of 2020. John acted quickly and reduced his cost base through global furloughs, delayed reopenings, turned to social selling and clienteling, was able to refinance all the debt in 2020 and pushed it out multiple years, along with getting their three brands, Jimmy Choo, Versace, and Michael Kors to positive or mid negative single-digit comparable sales by August. Coming out of Covid Capri is a leaner business. Versace is realizing positive sales, and they now expect 2020 to be a profitable year. We believe that this type of management execution can and should totally transform the narrative around this company for many years to come.”
3. DraftKings Inc. (NASDAQ: DKNG)
Number of Hedge Fund Holders: 48
DraftKings is added in our list of top stocks to invest in for beginner investors because it remains the market leader in the sports betting industry which is set to thrive as states legalize online sports betting platforms. Loop Capital in March said DraftKings is one of the biggest beneficiaries of the $3 billion market opportunity in New York. DraftKings is now reaching 25% of the US population, and remains the top choice for sports betting for average users. The company is also increasing its partnerships with industry leaders. It recently became the official partner of WWE. The company also has partnerships with ESPN, Major League Baseball and the PGA Tour.
Tybourne Capital Management is one of the 48 hedge funds tracked by Insider Monkey having stakes in DKNG at the end of the fourth quarter. The fund owns over 1.9 million shares of the company.
Carillon Tower Advisers, in their Q4 2020 investor letter, mentioned DraftKings Inc. (NASDAQ: DKNG). Here is what Carillon Tower Advisers has to say about DraftKings Inc. in their Q4 2020 investor letter:
“DraftKings is a digital sports entertainment and gaming company that provides online and retail sports wagering, online daily fantasy contests, and online casino games. The firm’s shares underperformed, despite reporting strong earnings and outlook with its most recent quarterly update. The stock pulled back meaningfully from its highs in October as it needed to work through a notable share lockup expiry. We remain bullish on the future growth prospects of the online sports gambling industry and believe DraftKings is positioned exceptionally well to capitalize on what appears to be a long-term secular trend.”
2. Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX)
Number of Hedge Fund Holders: 53
Vertex Pharmaceutical is one of the top stocks to invest in for beginner investors. The company makes treatment for various diseases including cystic fibrosis (CF), antitrypsin deficiency, kidney diseases, sickle cell disease and beta thalassemia. The company recently received positive recommendation from the European Medicines Agency’s Committee for Medicinal Products for Human Use for its treatment of cystic fibrosis. Citi recently added the stock to its Focus list, with a price target of $325. The firm said that Vertex has many growth catalysts, including VX-864 Phase 2 proof-of-concept study in Alpha-1 Antitrypsin deficiency data expected in the first half of 2021.
A total of 53 hedge funds tracked by Insider Monkey were bullish VRTX at the end of the fourth quarter, down from 55 funds a quarter earlier.
Alger Spectra Fund, in their Q4 2020 investor letter, mentioned Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX). Here is what Alger Spectra Fund has to say about Vertex Pharmaceuticals Incorporated in their Q4 2020 investor letter:
“Vertex Pharmaceuticals has become the world’s leading cystic fibrosis company by introducing the first drugs that treat the underlying disease rather than just the symptoms. Cystic fibrosis is caused by genetic abnormalities. Vertex has been able to target the proteins made by defective genes and allow them to function more normally. The shares detracted from portfolio performance when Vertex announced a disappointment in its drug discovery efforts for VX-814, one of two treatments the company is developing for Alpha-1Antitrypsin Deficiency (AATD), a genetic disorder that causes lung and liver disorders. The very surprising results were released three months earlier than expected and are delaying the development of the AATD drug.”
1. Square, Inc. (NYSE: SQ)
Number of Hedge Fund Holders: 89
Square is one of the top stocks to invest in for beginner investors. Even though the SQ stock has gained over 400% over the last 12 months, analysts believe the stock still has a huge room to run amid the company’s foray into new products and lucrative markets. KBW analyst Sanjay Sakhrani recently upgraded the stock to Outperform, citing the company’s presence and growth in the market and Square’s Seller and Cash App ecosystems. The analyst has a $250 price target for SQ. Square is set to benefit from the ecommerce boom across the world because the company now offers a complete ecosystem of services for ecommerce players, including web hosting, PoS software and accepting payments.
As of the end of the fourth quarter of 2020, Catherine Wood’s ARK Investment Management owns 7.08 million shares of Square Inc. worth $1.5 billion. SQ accounts for 4.1% of ARK’s total portfolio.
Baron FinTech Fund, in their Q4 2020 investor letter, mentioned Square, Inc. (NYSE: SQ). Here is what Baron FinTech Fund has to say about Square, Inc. in their Q4 2020 investor letter:
“Square, Inc. was the top contributor due to strong performance from its Cash App business and expectations for an improvement in its Seller business as consumers return to restaurants, coffee shops, and retail stores.
Square, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. The stock increased after the company reported strong financial results for the most recent quarter. Cash App’s gross profit increased 212%, driven by record new users and engagement while the Seller business was resilient despite headwinds from COVID-19.We continue to own the stock due to, in our view, Square’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”
You can also take a peek at Ricky Sandler’s Top 10 Stock Picks and 10 Best 5G Stocks to Buy Now.
