In this piece, we will take a look at the ten best stocks to buy for high returns. For more stocks, head on over to 5 Best Stocks to Buy for High Returns.
2023 so far is shaping out to be a see saw of a year for the stock market. Battered and bruised by high inflation and interest rates last year, growth and technology companies had a good start with significant share price gains after big chunks of their market values were wiped off between January and December 2022. This wipeout also affected those that had invested in such firms, with their biggest cheerleader, Cathie Wood’s Ark Invest’s flagship Ark Innovation fund taking a beating that is the stuff of nightmares. As trading ended in December 2022, this flagship fund which has invested in big ticket names such as Tesla, Inc. (NASDAQ:TSLA) and others such as Zoom Video Communications, Inc. (NASDAQ:ZM) had dropped by a whopping 67% year to date, 3x the losses posted by the S&P 500 stock market index. These losses were fueled by the Federal Reserve’s aggressive interest rate hike policies, which increased the returns offered by safe investments and reduced the growth premium of the stock market.
Entering 2023, the stock market was in for some much-needed returns. Tesla, whose shares were among the worst performers last year, is now up 81% year to date. Another widely talked about example is Meta Platforms, Inc. (NASDAQ:META) whose shares had dropped by an eye popping 61% in 2022 gained 36% year to date. However, just as the growth industry started to make a comeback, inflation reared its head again. Data released by the United States Department of Commerce on February 24, 2023, showed that Fed’s preferred consumer prices gauge rose by 5.4% annually and 0.6% sequentially in January, edging higher from December’s reading. Similarly, core inflation which removes the effects of food and energy prices – both of which have soared since the Russian invasion of Ukraine last year – jumped 0.6% sequentially and 4.7% annually during the same month, edging higher once again.
Subsequently, the stock market dropped with Tesla and Meta’s shares going down by 3% and 1.37%, respectively. At the same time, the U.S. dollar – the world’s premium safe haven investment – jumped to a seven week high, posting a two month high against the Japanese Yen and increasing in value against the British Pound and Euro as well. Mazen Issa, an FX strategist at TD Securities summed the current volatility in the market perfectly as he outlined to Reuters:
“I think (Fed Chair Jerome) Powell floated the mission accomplished banner way too soon this month, just ahead of the payrolls report. Certainly, it looks like his comments were poorly placed. And it looks like the markets have priced out any chance of a cut this year, which is a sizable shift given that barely four weeks ago, the market was looking at cuts in the second half of this year. That adjustment is a dollar-positive dynamic.”
As the turmoil continues this year, Fisher Investments’ head Mr. Ken Fisher shared his thoughts on how investors can set their portfolio up for a market recovery in 2023 as he explained in a February 2023 fireside chat:
But what I want you to see is that you can just simply go and look at what was hurt more in the bear market and load up on those categories of things. And in the bounce period, you’ll do better. Diversify amongst it, but you’ll do better. Now I want you to see how much that’s often counter to normal human instincts. Normal human instincts want to say, I wanna buy and own the things that didn’t do badly in the bear market. And so you can see in public commentary a lot of favorability let’s say towards energy. Which did really well in the course of the bear market. The fact of the matter is, those things that did well in the bear market, like energy, tend to do badly in the bounce. There’s reasons for that, I don’t really need to go on the details with energy but you can see it as a juxtaposition off the bottom between energy on the one hand and let’s say growth-y stocks on the other. Tech or not, whether they’re tech stocks or non tech growth-y stocks. So I encourage you to just think in that simple framework of things that got battered more, like consumer durables, that are inherently economically sensitive, things like tech, growth stocks in general. Those, because they got battered more, tend to bounce more. Because they got battered more, you tend to be afraid of them. That fear is actually your friend if you let it be. And that’s the way to think of that in roughly the first third of this next bull market.
He added that if the market drops, then these same stocks will perform badly too but then bounce more later.
Today, we will look at some stocks that have posted high returns lately, with the top picks being S&P Global Inc. (NYSE:SPGI), JPMorgan Chase & Co. (NYSE:JPM), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
Photo by Ruben Sukatendel on Unsplash
Our Methodology
We consulted Insider Monkey’s hedge fund data covering the investments of 943 funds for last year’s final quarter and picked out the top 25 fund favorites. Then, the annual quarterly sales growth for each of these companies was calculated, and the top ten were selected for this list. The stocks are ranked from bottom to top, starting with the lowest revenue growth.
10 Best Stocks to Buy for High Returns
10. Berkshire Hathaway Inc. (NYSE:BRK-B)
Q/Q Sales Growth: 9%
Number of Hedge Fund Holders in Q4 2022: 110
Berkshire Hathaway Inc. (NYSE:BRK-B) is one of the world’s biggest investment holding companies with stakes in a series of lucrative businesses such as construction, technology, insurance, banking, energy, and more. It is headquartered in Omaha, Nebraska.
Berkshire Hathaway Inc. (NYSE:BRK-B)’s third quarter ending in September 2022 allowed it to earn $76 billion in revenue through its stakes in holding companies. These reflected the wise nature of the investments, as they enabled a 9% growth in a turbulent economy. 110 of the 943 hedge funds part of Insider Monkey’s Q4 2022 survey had bought its shares.
Berkshire Hathaway Inc. (NYSE:BRK-B)’s largest investor is Michael Larson’s Bill & Melinda Gates Foundation Trust which owns 24 million shares that are worth $7.6 billion.
JPMorgan Chase & Co. (NYSE:JPM), S&P Global Inc. (NYSE:SPGI), and Advanced Micro Devices, Inc. (NASDAQ:AMD) join Berkshire Hathaway Inc. (NYSE:BRK-B) as one great stock that’s growing in these troubling times.
10. Adobe Inc. (NASDAQ:ADBE)
Q/Q Sales Growth: 9.7%
Number of Hedge Fund Holders in Q4 2022: 110
Adobe Inc. (NASDAQ:ADBE) is a software company that caters to the needs of businesses and professionals. The firm sells productivity software for engineers and designers, alongside a business division for the needs of the advertising and publishing industry. It is headquartered in San Jose, California.
Adobe Inc. (NASDAQ:ADBE) earned $4.5 billion in revenue during its fiscal quarter ending in November 2022, which marked a 9.7% annual growth over the firm’s year ago quarter. By the end of December 2022, 10 pf the 943 hedge funds part of Insider Monkey’s survey had held a stake in the company.
Adobe Inc. (NASDAQ:ADBE)s largest investor is Ken Fisher’s Fisher Asset Management which owns 5 million shares that are worth $1.7 billion.
8. Bank of America Corporation (NYSE:BAC)
Q/Q Sales Growth: 11%
Number of Hedge Fund Holders in Q4 2022: 100
Bank of America Corporation (NYSE:BAC) is an American bank and one of the oldest of its kind which was set up in 1784 and is headquartered in Charlotte, North Carolina. It offers products and services to all kinds of customers, including retail, institutional, corporate, and government.
Bank of America Corporation (NYSE:BAC)’s December 2022 quarter saw it bring in $24.5 billion in revenue which allowed it to post an 11% annual growth. During the same time period, 100 of the 943 hedge fund portfolios studied by Insider Monkey had bought the bank’s shares.
Out of these, Warren Buffett’s Berkshire Hathaway is Bank of America Corporation (NYSE:BAC)’s largest shareholder. It owns 1 billion shares that are worth $33 billion.
7. Mastercard Incorporated (NYSE:MA)
Q/Q Sales Growth: 11%
Number of Hedge Fund Holders in Q4 2022: 139
Mastercard Incorporated (NYSE:MA) is a payments platform products and services provider with debit and credit cards for consumers and payment collections services for retailers. It also provides analytics and identity services and is headquartered in Purchase, New York.
Mastercard Incorporated (NYSE:MA)’s full year and fourth quarter of 2022 results revealed that it had earned $22 billion and $5.8 billion during the periods, respectively. For the quarterly figures, this marked an 11% growth. 139 of the 943 hedge funds polled by Insider Monkey during Q4 2022 had invested in the bank.
Mastercard Incorporated (NYSE:MA)’s largest investor is Charles’ Akre’s Akre Capital Management which owns 5.8 million shares that are worth $2 billion.
6. Visa Inc. (NYSE:V)
Q/Q Sales Growth: 12%
Number of Hedge Fund Holders in Q4 2022: 177
Visa Inc. (NYSE:V) is another payment platform provider. It also offers credit and debit cards alongside payment collection products. Additionally, the firm also lets customers run analytics, authentication, and other services. It is based in San Francisco, California.
Visa Inc. (NYSE:V) first quarter for the fiscal year 2023 saw the firm earn $7.9 billion in revenue, higher than Mastercard’s revenue and one that represented a 12% annual growth. As of last year’s December quarter, 177 of the 943 hedge funds polled by Insider Monkey had invested in the firm.
Out of these, Chris Hohn’s TCI Fund Management is Visa Inc. (NYSE:V)’s largest investor with a $4 billion stake that comes via 19.9 million shares.
S&P Global Inc. (NYSE:SPGI), Visa Inc. (NYSE:V), JPMorgan Chase & Co. (NYSE:JPM), and Advanced Micro Devices, Inc. (NASDAQ:AMD) are some of the best return making stocks.
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Disclosure: None. 10 Best Stocks to Buy for High Returns is originally published on Insider Monkey.