In this article, we will be taking a look at the 10 debt-free halal stocks to invest in right now.
Debt-Free Halal Stocks to Invest in Amid High Interest Rates
The current economic conditions with elevated interest rates have made debt-free stocks increasingly valuable to investors. Companies without debt responsibilities avoid spending their funds on interest costs from loans or different types of borrowing. Due to their enhanced financial flexibility, corporate funds can be directed toward research and development, strategic growth projects, and business expansion initiatives that boost long-term business worth. Debt-free flexibility stands as an essential factor because high interest rates create better business models and financial results that matter during recessions.
Low-debt stocks experience lower price volatility in challenging economic circumstances. Economic slowdowns, together with inflationary pressures, bring about elevated interest rates that result in market instability and increased investor concern. Companies without debt stand as more secure financial investments since they encounter a reduced probability of financial problems or bankruptcy. A turbulent market can find potential protection from negative effects through investing in shares with minimal debt which provides stability to uneasy investors.
Investors who buy debt-free stocks receive the advantage of potentially better dividend payments at times when interest rates are elevated. Companies with robust cash reserves together with no debt hold better chances of allocating dividends to investors. The market value of debt-free stocks tends to be higher when interest rates are elevated.
Jeffrey Gundlach shared his thoughts on market reactions to the Federal Reserve’s recent meeting through his CNBC interview on January 30. Gundlach explained that the Fed declared no rush in interest rate suppression but investors interpreted it as moderate hawkishness. He stated the federal funds rate aligns perfectly with the two-year Treasury yield showing that the Fed maintains its current financial policy in response to economic conditions. Gundlach expressed skepticism about data-driven Federal Reserve policy because it potentially creates short-term monetary choices.
He further observed unique market patterns after the Federal Reserve made its first interest rate reduction in September. Gundlach believes bond prices ascended after rate reductions but this situation features two-year Treasury yields increasing by 60 basis points together with ten-year Treasury yields growing by 85 basis points. The bond market displays unexpected behavior after Federal Reserve policy changes because investors observe both this market pattern and falling long bond ETF values. According to Gundlach, the ongoing Federal Reserve pause signifies market stability because they need more evidence before making decisions.
In addition, Gundlach noted that the stock market faces difficulties due to the broader index’s CAPE ratio of around 35. His comparison between the present CAPE ratio and the ratio that stood at 10 during Ronald Reagan’s time shows that future value expansion is quite limited. Profitability stands as the chief determinant to boost stock market performance rather than multiple business expansions.
With interest rates unlikely to decline soon, debt-free stocks remain attractive for their stability, resilience, and strong financial positioning. With that in context, let’s take a look at the 10 debt-free halal stocks to invest in right now.
Our Methodology
To compile this list, we chose the top 10 stocks from the S&P Shariah ETF, which includes all Shariah-compliant constituents of the broader index. After this, we compared their market caps with their enterprise value to gauge which ones are debt-free. The companies listed below may not be entirely debt-free, but they maintain a solid financial standing with low net debt and substantial cash reserves, ensuring they can comfortably meet their debt obligations. From that list, we picked 10 companies with the highest number of hedge funds having stakes in them, as per Insider Monkey’s database of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Here is our list of the 10 debt-free halal stocks to invest in right now.
10. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 107
Market Cap as of March 27: $307.16 billion
Enterprise Value as of March 27: $285.83 billion
Alibaba Group Holding Limited (NYSE:BABA), based in China, is a multinational conglomerate operating across e-commerce, retail, internet, and technology sectors. Among its main operations are local consumer services like food delivery, international commerce via AliExpress and Lazada, and China commerce, which includes sites like Taobao and Tmall. Additionally, the business operates digital media platforms, including Youku, Alibaba Cloud for cloud computing services, and Cainiao for logistics.
After a year of transition, Alibaba Group Holding Limited (NYSE:BABA) demonstrated significant momentum across its key businesses in 2024, which was propelled by an AI-powered, user-first strategy focused on cloud services and e-commerce. With revenue up 11% (excluding Alibaba-consolidated subsidiaries), the cloud business reported strong growth, and for the sixth consecutive quarter, revenue from AI-related products continued to increase at triple digits. Platforms like Taobao and Tmall saw significant increases in order volumes and new users in e-commerce, with VIP memberships reaching 49 million and customer management income rising 9% year over year. The international e-commerce business also continued to grow steadily, and AIDC is expected to announce its first profitable quarter in the next fiscal year. Given its strong performance, Alibaba is also considered among the best halal stocks for investors seeking Shariah-compliant opportunities.
Over the next three years, Alibaba Group Holding Limited (NYSE:BABA) intends to greatly increase expenditures in three crucial areas: cloud infrastructure and artificial intelligence (AI), native applications and foundational AI models, and incorporating AI into its current operations. The business stated that its anticipated expenditures for cloud and AI infrastructure will surpass its whole investment in this field during the previous ten years. With a healthy net cash position and ongoing attempts to reduce its balance sheet through asset sales, share buybacks, and careful debt management, the company’s finances are still sound.
9. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 117
Market Cap as of March 27: $164.39 billion
Enterprise Value as of March 27: $163.52 billion
The ninth stock on our list of the best halal stocks is Adobe Inc. (NASDAQ:ADBE). It is a global leader in creative and digital marketing software. Its main products—Photoshop, Illustrator, and Acrobat, for example—have established themselves as industry standards for document management and content production, catering to a wide spectrum of clients from small businesses to individual producers. Digital experience creation, collaboration, and enhancement are made possible via the company’s Creative Cloud, Document Cloud, and Experience Cloud platforms.
Adobe Inc. (NASDAQ:ADBE) recently released Q2 guidance that matched market forecasts and posted better-than-expected Q1 2025 earnings. Analysts were concerned, meanwhile, about modifications to its disclosure of subscription revenue. The new reporting strategy makes it more difficult to monitor Creative Cloud’s core business performance, according to a Citi analyst who has a neutral rating on the company.
Matthew Swanson, an analyst at RBC Capital, on the other hand, had a positive assessment of the impressive Q1 performance. He emphasized Adobe Inc. (NASDAQ:ADBE)’s initiatives to implement fresh indicators that provide investors with a better understanding of the company. Swanson also said that focus is turning to the next Adobe Summit, where the business is anticipated to reveal more information regarding how it plans to make money off of its AI technologies. The analyst took a cautious stance, lowering his price objective for the stock from $550 to $530, even though he still maintained an Outperform rating.
8. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Market Cap as of March 27: $878.52 billion
Enterprise Value as of March 27: $852.15 billion
Tesla, Inc. (NASDAQ:TSLA) operates as a business that creates markets and then produces solar products while manufacturing battery energy storage systems and electric cars, along with their related services. The company builds five consumer vehicles, including the Model 3, as well as the Y, S, X, and Cybertruck models. It operates primarily as a technology firm, with EV production as a secondary focus due to its significant contributions to electric vehicle technology, autonomous systems, and artificial intelligence.
The stock price of Tesla, Inc. (NASDAQ:TSLA) has experienced a maximum 50 percent drop since the U.S. President took office on January 20. CEO Elon Musk’s increased involvement with the Department of Government Efficiency (DOGE) has led investors to believe that his focus on the company has been affected, contributing to significant share price declines this fall. Cold market conditions, along with a decline in product demand, continue to push the stock price lower.
A March 21 research report from Morgan Stanley analyst Adam Jonas revealed revised estimates, as he reduced Tesla, Inc. (NASDAQ:TSLA)’s price objective from $430 to $410. However, his outlook for the corporation remains unchanged at Overweight. He stated that automobile delivery projections for 2024, which fell below expectations, do not impact the potential returns on investment. Tesla, Inc. (NASDAQ:TSLA), often highlighted among the best halal stocks, is currently navigating a slowdown due to its transition from a traditional automobile manufacturer to a broader AI and robotics company.
7. Berkshire Hathaway Inc. (NYSE:BRK-A)
Number of Hedge Fund Holders: 131
Market Cap as of March 27: $1.41 trillion
Enterprise Value as of March 27: $933.47 billion
Berkshire Hathaway Inc. (NYSE:BRK-A) is a diversified global conglomerate holding corporation focused mostly on the insurance industry. It allocates the money it makes from insurance operations to a wide variety of companies, stock holdings, and securities across multiple industries.
While maintaining a Buy recommendation on the company, UBS analyst Brian Meredith increased Berkshire Hathaway Inc. (NYSE:BRK-A)’s price target from $796,021 to $803,444 on January 24. The shift occurs as UBS incorporates the expected effects of the Los Angeles fires into their forecasts. An insured loss of $1 billion is anticipated for the company’s reinsurance division, while a less substantial impact of $150 million is anticipated for the company’s core insurance business. The 2026 earnings per share estimate for the corporation is expected to rise somewhat, according to Meredith’s forecast.
Berkshire Hathaway Inc. (NYSE:BRK-A)’s insurance businesses were primarily responsible for the notable increase in Q4 2024 earnings announced by the business, while cash holdings reached a new high. The company’s operating profit for the quarter increased by 71% to $14.53 billion. Insurance underwriting profits increased by 302% to $3.41 billion, and insurance investment income increased by around 50% to $4.09 billion, which drove this gain. The stock is placed seventh among the best halal stocks.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Market Cap as of March 27: $3.363 trillion
Enterprise Value as of March 27: $3.32 trillion
Apple Inc. (NASDAQ:AAPL) produces a diverse range of innovative products, including the iPhone, iPad, Mac computers, Apple Watch, and Apple TV. The company also delivers the iOS and macOS operating systems, along with iCloud services, advertising features, payment services, Apple Music access, and the App Store.
The delay of essential Siri virtual assistant features has led to a decline in Apple Inc. (NASDAQ:AAPL)’s stock shares. According to Bloomberg, quality issues have caused delays, with assessments indicating that the technology experiences malfunction rates exceeding 80%. Since June 2024, several features initially planned for release in April with iOS 18.4 have been postponed. The company aims to resolve these technical issues by 2026, but the extended wait period has raised concerns among investors about the company’s competitiveness in artificial intelligence development. In the current market, the stock value has dropped approximately 15% since the initial announcement.
According to Erik Woodring from Morgan Stanley, the postponement could potentially weaken upcoming iPhone product upgrades for 2024. The analyst has lowered his iPhone shipment projections for 2025 and 2026 by 1% to 5%. While other features may drive unit growth, he remains skeptical about the impact of AI features. The absence of a revolutionary AI application could hinder substantial upgrade rate increases unless such features are introduced before the release of the iPhone 17. Despite maintaining an Overweight rating on the stock, Woodring has reduced his price target from $275 to $252. This revised target reflects strong market potential for Apple Inc. (NASDAQ:AAPL), although it remains close to the $255 consensus average target.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
Market Cap as of March 27: $2.776 trillion
Enterprise Value as of March 27: $2.69 trillion
NVIDIA Corporation (NASDAQ:NVDA) is a leader in accelerated computing, providing a comprehensive platform that includes GPUs, software, and tools. The company’s technology offers solutions for a wide range of industries, supporting AI, data analysis, scientific computing, and 3D graphics.
Deep learning applications in autonomous systems achieve success through the NVIDIA Corporation (NASDAQ:NVDA)’s GPU processing power, which serves as the primary backbone for these AI applications. The company’s GPUs power more than 75% of the world’s advanced supercomputing systems. Additionally, NVIDIA enhances gameplay for players and content developers through its AI-focused investments in autonomous driving.
The combination of powerful AI infrastructure, data center solutions, and gaming technologies positions the company for continued growth. The business asserts that its technology has lasting practicality. Over the past two fiscal years, NVIDIA Corporation (NASDAQ:NVDA) has experienced a revenue increase of more than 100%. As one of the best halal stocks, the company currently holds exceptional bargaining power, demonstrated by its recently achieved operating margin of 62.4%. Industry experts anticipate the business advancing at an increasing pace in the coming years. The company projects its sales to grow at an annual rate of 23.7% over the next four fiscal years.
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 234
Market Cap as of March 27: $2.024 trillion
Enterprise Value as of March 27: $1.95 trillion
Alphabet Inc. (NASDAQ:GOOG) operates through three distinct segments: Google Services, Google Cloud, and Other Bets. The Google Services division manages an extensive range of products, including Android, Google Maps, Google Play, Chrome, Search, and YouTube. The primary economic driver of the company is its advertising business, which displays relevant ads alongside search results on its Google search engine. Digital advertising has proven to be an incredibly profitable venture for the company, as its Google search page remains one of the most valuable online assets.
The Google Search platform contributed $175.0 billion, or 73.6%, to Alphabet Inc. (NASDAQ:GOOG)’s total ad revenue of $237.9 billion in 2023. The Google Services branch generated $84 billion in revenue for the fourth quarter of 2024, reflecting a 10% increase from the previous year, primarily due to an 11% rise in advertising revenues. The platform saw a 14% increase in advertising revenue driven by heightened U.S. election-related ad spending. Since the previous elections in 2020, total spending by both parties has risen substantially.
Alphabet Inc. (NASDAQ:GOOG) remains a dominant force in digital advertising and technology, frequently recognized among the best halal stocks for its continued innovation. The company rapidly integrates AI advancements into user interactions while expanding its profitable search revenue base. Its new user-oriented features, such as Circle to Search with voice and camera functions, enhance creative search methods, generating more commercial opportunities for advertisers. As part of its expansion strategy, the corporation announced plans to increase capital expenditures from $53 billion to $75 billion in the current year. The business maintains positive stock market forecasts as it implements artificial intelligence solutions across its operations.
Merion Road Capital Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG): We have held GOOG for a long time (since 2018) based on its immense business quality paired with an undemanding valuation, improving treatment of minority shareholders, and multiple options for value creation. Recently we have seen Alphabet bashed for losing the AI race to now heralded for its progress. I remain excited about their prospects with several near-term, mid-term, and long-term tailwinds. Near-term, Google Cloud continues its rapid growth and their latest large language model, Gemini 2.0, appears to have made significant progress to better serve consumer needs and improve GOOG’s other product offerings. Mid-term, Waymo is on the cusp of becoming a real value driver for the company; there are abundant articles discussing Waymo stealing share from the ride-share economy and launching in new geographies. Long-term, GOOG’s recently announced quantum computing chip positions it well for a future (many, many years away) where computing processes are fundamentally different from today. All of these options are embedded in a company that already has an established and dominant earnings stream.”
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 262
Market Cap as of March 27: $1.548 trillion
Enterprise Value as of March 27: $1.52 trillion
Meta Platforms, Inc. (NASDAQ:META) develops technological products that enable users to share information, build businesses, and create community bonds. These products facilitate human connection through wearable technology, integrating features from virtual reality (VR) and mixed reality (MR) headsets, mobile devices, and personal computers. The company generates most of its revenue through its advertising division. Research from December indicates that Instagram will account for approximately 50% of the company’s U.S. advertising revenue by 2025.
The Family of Apps generated $47.3 billion in revenue during fiscal Q4 2024, reflecting a 21% growth compared to the previous year. Reported and constant currency ad revenue from the Family of Apps also grew by 21%, reaching $46.8 billion in the last quarter. The prices Meta Platforms, Inc. (NASDAQ:META) charged per ad during fiscal Q4 2024 increased by 14%, while ad impression deliveries across its services expanded by 6%.
The company’s increased monetization efficiency contributes to improved revenue performance. The company achieves this by adjusting organic advertisement density levels and strategically placing ads across all media to reach consumers precisely when and where content is most relevant.
The business enhances both marketing performance and monetization efficiency simultaneously. The company continuously advances its advertising ranking structures, which serve as the primary driver of these improvements. Barclays analyst Ross Sandler maintained his positive recommendation for the business, setting a price target of $705.00 on March 21.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6-year holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Market Cap as of March 27: $2.904 trillion
Enterprise Value as of March 27: $2.89 trillion
Microsoft Corporation (NASDAQ:MSFT) is a leading technology company and a major player in the gaming industry. The business is well-known for its gaming services and Xbox systems. The company finalized the $69 billion acquisition of Activision Blizzard in October 2023 to expand its gaming division and acquire well-known properties such as Diablo, Warcraft, and Call of Duty. Through this deal, the corporation established itself as one of the biggest gaming firms in the world and created new income streams for gaming platforms on PCs, consoles, mobile devices, and the cloud.
Microsoft Corporation (NASDAQ:MSFT) released Black Ops 6 in October 2024, and for the quarter ending December 31, 2024, it was the best-selling game on Xbox and PlayStation. CEO Satya Nadella called this release the “biggest Call of Duty release ever.” Furthermore, more than 4 million players have already embraced the company’s December 2024 release of Indiana Jones and the Great Circle. The corporation’s main goal is to expand its gaming industry by using cloud gaming and content. Its Cloud Gaming achieved a record of 140 million hours streamed during the second quarter of fiscal 2025, which concluded on December 31, 2024.
Ranked second among the best halal stocks on our list, Microsoft Corporation (NASDAQ:MSFT) continues to strengthen its position in gaming and cloud services. According to the company, the Game Pass subscription service also increased its PC member base by more than 30% and set a new quarterly revenue record. The business intends to increase the number of paying customers on all channels.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Market Cap as of March 27: $2.134 trillion
Enterprise Value as of March 27: $2.16 trillion
Amazon.com, Inc. (NASDAQ:AMZN) tops our list of the best halal stocks. It is a major American multinational technology company that engages in a variety of industries, including e-commerce, cloud computing through Amazon Web Services (AWS), online advertising, digital streaming, and artificial intelligence. Using technologies like DynamoDB, Redshift, and EMR, the company has been a pioneer in leveraging data analytics and recommendations for e-commerce.
Youssef Squali, an analyst at Truist Securities, reaffirmed his Buy recommendation and $265 price objective for Amazon.com, Inc. (NASDAQ:AMZN) on February 24. North American revenue is slightly exceeding consensus estimates for the quarter thus far, according to Squali’s analysis, which is based on data through February 17. Squali claims that this helps the company maintain its standing as a significant force in the broadband retail industry while giving it an edge over its smaller rivals.
The financial performance of Amazon.com, Inc. (NASDAQ:AMZN) in the fourth quarter of 2024 demonstrated significant growth, surpassing forecasts with revenues of $187.8 billion and an EPS of $1.86. Additionally, operating income climbed from $13.2 billion to $21.2 billion in Q4 2024, while net income more than doubled to $20 billion, primarily due to AWS.
Polen Focus Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Consistent with our thesis, Amazon.com, Inc. (NASDAQ:AMZN) has continued to see operating margins expand, hitting 11% in the most recent quarter after bottoming around 2% at the end of 2022. This march higher in margins stems from a mix shift towards faster-growing, higher-margin segments like Amazon Web Services (AWS) and Advertising, combined with better fulfillment efficiency in the e-commerce business following significant investments in recent years. Further, speaking to its runway ahead, CEO Andy Jassy noted the company’s AI business is a “multi-billion-dollar business growing triple digits,” 3x faster than AWS did itself at the same stage in its evolution. While we trimmed our position during the quarter, Amazon remains our largest position, as we expect approximately 20% earnings growth over the next five years driven by a mix of solid organic revenue growth and continued margin expansion.
We trimmed our positions in UnitedHealth Group, Amazon, ServiceNow, and Gartner during the quarter. Amazon continues to deliver excellent results with all businesses growing robustly and profit margins expanding. When we significantly increased Amazon’s weighting in the portfolio about two years ago, its operating margins were at 2%, and we anticipated they would expand to the mid-teens over the next few years. Today, they stand at 11%, and we expect them to expand closer to the high-teen level in the next few years. The earnings growth potential from here is roughly 20% per annum based on our expectation for revenue and profit margin expansion. While this still represents excellent potential and Amazon remains our largest position, we no longer feel it merits a maximum position size.”
Overall, Amazon.com, Inc. (NASDAQ:AMZN) ranks first among the 10 debt-free halal stocks to invest in right now. While we acknowledge the potential of debt-free stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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