In this article, we will discuss the 10 High-Flying Stocks to Buy Now.
The equity markets are priced for a soft landing. This means that even the fear of a mild recession might trigger a significant equity-market correction. The broader economic data aids the soft-landing thesis, but a slowdown consistent with soft landing might still lead to a downturn, explains Chief Investment Strategist of Russell Investments. As of now, a soft landing appears to be a more likely outcome. Inflation continues to decline, growth in wages has been moderating, and labor-market pressures are cooling. Importantly, the US Fed started easing before the clear signs of economic stress emerged.
Factors Driving Volatility- Caution for Investors
As per Allianz Global Investors, the interest rate cut by the US Fed in September made a watershed moment for the broader markets. While the opportunities for investors might reverse overnight, the company believes that it marks the beginning of the end of a period in which tech stocks and cash (or cash-like instruments) were the go-to instruments for market players.
Overall, the firm remains optimistic about the months ahead, while admitting that this period is a period of below-potential growth in which downside risks are expected to naturally increase. Geopolitics might act as a continuing source of volatility as and when events unfold in the Middle East and Ukraine. This can be a threat to another potential surge in energy prices. The risk of the US election looms large, with the policies of the winner expected to leave a lasting market impact. There are risks in Europe, where France and Germany are impacted by domestic issues while growth and financial stability remain vulnerable. The investment management firm believes that there is a danger of broader instability in the eurozone, with implications for bond markets.
The equity markets anticipate an aggregate of 135 bps of global cuts over the next year as compared to only 75 bps at the end of June. The firm expects that a significant chunk is expected in the US, more than what was expected in the soft-landing scenario. This might lead to a repricing of expectations, resulting in volatility.
Amidst such uncertainties, market investors are required to be focused on quality and growth companies. With global economic growth decelerating, this should not be treated as a bearish signal for the broader equities. As inflation and rates come down, the path is expected to be positive for quality and growth, with the investment management firm expecting such styles to outperform over the coming months. Even though the performance of the global economy remains highly dependent on whether the balance between rates, growth, and prices is achieved, some signs point towards a favorable outcome.
Since the final part of the year might see some volatility, looking selectively to some defensive options will ensure that portfolios remain as balanced as possible.
What Lies Ahead?
The technology stocks led the equity market rally for much of 2024, with investors seeing the AI euphoria in full effect. However, investors continue to question whether this enthusiasm has been exhausted or if there is any heat left. BlackRock believes that the momentum in technology is expected to continue and that the summer setback was just temporary. Having said that, the asset manager sees a greater differentiation throughout technology stocks.
The firm believes that earnings growth is expected to remain healthy for the technology sector broadly, as a result of the build-out of AI and a commitment to cost prudence from tech firms.
Morningstar believes that the rotation into small-cap and value stocks should continue to see a decent rally as each remains undervalued on an absolute basis and relative to the market valuation.
A professional focused on the markets, monitoring investments in a busy trading floor.
Our methodology
To list 10 High-Flying Stocks to Buy Now, we conducted an extensive online search and sifted through online rankings and different screeners. After extracting the list of 20-30 stocks, we filtered out the stocks having the highest upside potential and which have performed well on a YTD basis. Finally, we ranked the stocks according to their upside potential, as of October 1.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 High-Flying Stocks to Buy Now
10) Semtech Corporation (NASDAQ:SMTC)
% Increase on a YTD Basis: ~94%
Expected Upside Potential: 24.76%
Number of Hedge Fund Holdings: 37
Semtech Corporation (NASDAQ:SMTC) is engaged in designing, developing, manufacturing, and marketing analog and mixed-signal semiconductors and advanced algorithms.
Wall Street analysts are particularly optimistic about the infrastructure and high-end consumer segments. While Semtech Corporation (NASDAQ:SMTC)’s LoRa-enabled solutions and IoT systems business segments saw healthy sequential growth, it remains confident about the potential of its Low Power Optical (LPO) technology in the optical transceiver market.
Along with healthy demand projections, Semtech Corporation (NASDAQ:SMTC) anticipates a shipment ramp-up in Q4 FY 2025 and throughout FY 2026.
Market experts opine that growth should continue in infrastructure and high-end consumer markets. Its PerSe proximity sensing products saw significant traction with a key Korean smartphone manufacturer. Also, Semtech Corporation (NASDAQ:SMTC)’s infrastructure segment continues to experience healthy demand, mainly in hyperscale data centers. The company has maintained its focus on expanding industry reach and customer engagement.
Strategic initiatives, like the expansion of its AirLink Management Service in Canada and the development of its LPO technology, exhibit Semtech Corporation (NASDAQ:SMTC)’s commitment to innovation and market expansion. For Q3 2025, the company expects net sales of $233.0 million (+/- $5.0 million) and a gross margin of 52% (+/- 50 bps).
Susquehanna upped the price objective on shares of Semtech Corporation (NASDAQ:SMTC) from $45.00 to $55.00, giving a “Positive” rating on 6th June. As per Insider Monkey’s Q2 2024 database of 912 hedge funds, Semtech Corporation (NASDAQ:SMTC) was in the portfolios of 37 hedge funds.
9) Novavax, Inc. (NASDAQ:NVAX)
% Increase on a YTD Basis: ~166%
Expected Upside Potential: 26.58%
Number of Hedge Fund Holdings: 27
Novavax, Inc. (NASDAQ:NVAX) is a biotechnology company, which promotes improved health by discovering, developing, and commercializing vaccines to protect against serious infectious diseases.
Novavax, Inc. (NASDAQ:NVAX) continues to focus on cost reduction and is planning for a more efficient R&D model for 2025 and beyond. In its recent earnings call, the company highlighted its commercial strategy for the upcoming U.S. vaccination season, which includes partnerships with major retail pharmacies. The company expects to lower its combined R&D and SG&A expenses by 34%.
Novavax, Inc. (NASDAQ:NVAX) has been exploring the sale of its Czech Republic manufacturing facility to reduce its operating costs. Novavax, Inc. (NASDAQ:NVAX) expects total revenue in the range of $700 million – $800 million for FY 2024, with the majority of product sales anticipated to take place in Q4 2024. Market experts are optimistic about the company’s partnership with Sanofi. This is because this partnership provides mid-term milestones of $350 million, royalty streams, and long-term royalties from future vaccines.
Therefore, the partnership with Sanofi provides a significant financial boost and a promising avenue for future vaccine developments. With a strong emphasis on cost reduction and efficiency, Novavax, Inc. (NASDAQ:NVAX) continues to strategically position itself for long-term growth and market competitiveness. As the company advances the late-stage pipeline and focuses on new partnerships, its commitment to innovation and financial health demonstrates a healthy outlook.
Bank of America upped its target price on shares of Novavax, Inc. (NASDAQ:NVAX) from $12.00 to $18.00, giving a “Neutral” rating on 14th June.
8) Onto Innovation Inc. (NYSE:ONTO)
% Increase on a YTD Basis: ~38%
Expected Upside Potential: 30.86%
Number of Hedge Fund Holdings: 39
Onto Innovation Inc. (NYSE:ONTO) is engaged in designing, developing, manufacturing, and supporting process control tools that perform optical metrology.
Wall Street analysts believe that long-term demand for Onto’s Dragonfly systems should continue to aid moving forward. Such systems, that are used in advanced packaging, are anticipated to benefit from the growing AI market.
Onto Innovation Inc. (NYSE:ONTO) announced the launch of its Packaging Applications Center of Excellence (PACE) in Wilmington, Massachusetts. This center will help foster innovation in panel-level packaging (PLP), which is a critical component of advanced AI and memory packages. Onto Innovation Inc. (NYSE:ONTO) rolled out a new suite of products, including the JetStep X500 lithography system and the Firefly G3 inspection system. These products are designed to help the industry’s shift to glass core panels for advanced IC substrates and panel-level packaging.
Market experts believe that Onto Innovation Inc. (NYSE:ONTO) is expected to see strong growth as a result of its involvement with Nvidia’s primary suppliers, TSMC and SK Hynix. Onto Innovation Inc. (NYSE:ONTO)’s tools are critical for advanced packaging and HBM applications. These areas continue to experience rapid expansion.
In Q2 2024, Onto Innovation Inc. (NYSE:ONTO) saw revenues of $242 million, outpacing the high end of guidance. This was aided by additional pilot line expansions for high-performance computing using gate-all-around transistor architecture and HBM aiding the AI market growth. For Q3 2024, the company expects revenue in the range of $245 million – $255 million and GAAP diluted EPS of between $0.98 to $1.08.
Analysts at Benchmark reissued a “Buy” rating on the shares of Onto Innovation Inc. (NYSE:ONTO), issuing a price target of $230.00 on 9th August. Artisan Partners, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“During the quarter, we initiated new GardenSM positions in Liberty Formula One, Elastic and Onto Innovation Inc. (NYSE:ONTO). Onto Innovation provides process control solutions and inspection systems needed for advanced semiconductor packaging inspection and optical metrology. Wafer-level packaging inspection is a small yet rapidly growing segment within process control tied to increasing chipset sales from AI, edge computing and wearable technology advancements. Optical metrology growth is driven by a transition to 3D architecture, which requires greater numbers of sensitive layers to be measured and tracked. This growth is further supported by gross margin and operating margin expansion, as increasing complexity should drive pricing power.”
7) Select Medical Holdings Corporation (NYSE:SEM)
% Increase on a YTD Basis: ~42%
Expected Upside Potential: 32.28%
Number of Hedge Fund Holdings: 20
Select Medical Holdings Corporation (NYSE:SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the US.
On the YTD basis, the company’s stock saw an increase of ~42%, serving as an affirmation of its strong market position and potential for future growth. Select Medical Holdings Corporation (NYSE:SEM) wrapped up an IPO of Concentra on July 26 and still has a majority stake of ~82.23%. However, it has plans to distribute the remaining interest to shareholders in a year. Select Medical Holdings Corporation (NYSE:SEM) continues to advance its growth strategy by opening new facilities and reporting revenue increases in its hospital divisions.
Furthermore, Select Medical Holdings Corporation (NYSE:SEM) witnessed labor cost improvement, with lower RN agency costs and sign-on bonuses. The company continues to focus on clinical efficiencies and scheduling improvements. Also, wage rates for permanent staff in critical illness hospitals have been stabilizing to pre-COVID-19 levels.
Select Medical Holdings Corporation (NYSE:SEM)’s strategic developments and operational efficiencies have placed it well for continued growth. With hospital divisions surpassing revenue expectations and effective management of labor costs, Select Medical Holdings Corporation (NYSE:SEM) has been tackling the challenges of the broader healthcare industry while pursuing expansion strategies.
For FY 2024, the company anticipates revenue of between $6.9 billion – $7.1 billion and adjusted EBITDA of between $845 million – $885 million. Analysts at Benchmark reissued a “Buy” rating on the shares of Select Medical Holdings Corporation (NYSE:SEM), setting a price objective of $48.00 on 6th September.
As per Insider Monkey’s Q2 2024 database, 20 hedge funds were long Select Medical Holdings Corporation (NYSE:SEM).
6) Diebold Nixdorf, Incorporated (NYSE:DBD)
% Increase on a YTD Basis: ~52%
Expected Upside Potential: 33.50%
Number of Hedge Fund Holdings: 18
Diebold Nixdorf, Incorporated (NYSE:DBD) is engaged in providing software and hardware services for financial and retail industries.
Diebold Nixdorf, Incorporated (NYSE:DBD) continues to target a free cash flow conversion rate of more than 25% of adjusted EBITDA. In Q2 2024, the company’s retail service business saw healthy growth, thanks to the expansion of the install base and improved product profitability. Diebold Nixdorf, Incorporated (NYSE:DBD) remains optimistic regarding long-term investment in self-service and automation at the checkout. In the recent earnings call, the company highlighted a strong value creation story, with a $1 billion product backlog and gross margin expansion. Also, it expects to achieve greater FCF conversion over the upcoming 12 to 24 months.
The company’s management is optimistic about the potential for growth in recycling technology, primarily among smaller banks in North America and large government banks in Brazil. Diebold Nixdorf, Incorporated (NYSE:DBD) focuses on strengthening its business model to drive more profitable and linear revenue. This should enable the company to optimize working capital and report more consistent cash flow on a quarter-by-quarter basis.
Diebold Nixdorf, Incorporated (NYSE:DBD) raised its full-year adjusted EBITDA guidance to between $435 million to $450 million. This improvement reflects higher profitability for the year as a result of continuous improvement efforts.
DA Davidson upped its target price on the shares of Diebold Nixdorf, Incorporated (NYSE:DBD) from $55.00 to $65.00, giving a “Buy” rating on 9th August. At the end of Q2 2024, 18 hedge funds reported owning stakes in Diebold Nixdorf, Incorporated (NYSE:DBD) according to Insider Monkey’s database.
5) Pure Storage, Inc. (NYSE:PSTG)
% Increase on a YTD Basis: ~40%
Expected Upside Potential: 38.40%
Number of Hedge Fund Holdings: 38
Pure Storage, Inc. (NYSE:PSTG) is engaged in the provision of data storage and management technologies, products, and services in the US and internationally.
The Purity operating system, which provides customers with a consistent user experience by using a single software layer throughout the portfolio, offers Pure Storage, Inc. (NYSE:PSTG) a durable competitive advantage. The company’s innovative storage solutions and aggressive expansion into the enterprise and hyperscaler markets should continue to aid its overall business momentum. Pure Storage, Inc. (NYSE:PSTG) rolled out next-gen Fusion architecture and AI storage-as-a-service for GPU clouds.
The company continues to gain market share and focuses on replacing traditional storage in hyperscaler data centers. Its new customer acquisition was strong with 261 new customers in Q2 2024. Hyperscalers are considering the company’s technology to replace high- and low-performance workloads. Moreover, Pure Storage, Inc. (NYSE:PSTG)’s direct flash technology and purity software remain well-positioned amidst NAND pricing volatility. The 150-terabyte flash module is expected to enhance margins and create new opportunities.
Pure Storage, Inc. (NYSE:PSTG)’s platform strategy and innovation are targeted at transforming the storage industry and empowering enterprises to address data silos. Given its strong ARR growth and strategic market expansion, Pure Storage, Inc. (NYSE:PSTG) is well-placed to continue its trajectory of growth and market penetration. Its focus on energy efficiency and sustainability remains aligned with global trends and customer demands. This solidifies its competitive stance in the enterprise storage landscape.
Analysts at Wedbush reiterated an “Outperform” rating on the shares of Pure Storage, Inc. (NYSE:PSTG), setting a $80.00 target price on 26th August.
4) Abercrombie & Fitch Co. (NYSE:ANF)
% Increase on a YTD Basis: ~49%
Expected Upside Potential: 40.08%
Number of Hedge Fund Holdings: 48
Abercrombie & Fitch Co. (NYSE:ANF) operates as an omnichannel retailer in the US and internationally.
In Q2 2024, Abercrombie & Fitch Co. (NYSE:ANF) saw better-than-expected sales growth and profitability. The strength of its brand portfolio and improvements made in global capabilities led to broad-based growth throughout regions, brands, and channels. Abercrombie & Fitch Co. (NYSE:ANF) posted record Q2 2024 net sales of $1.1 billion, exhibiting a rise of 21% from last year, with comparable sales growth increasing 18%.
For FY 2024, Abercrombie & Fitch Co. (NYSE:ANF) expects net sales growth of between 12% – 13% from $4.3 billion in FY 2023. This reflects an increase from the previous outlook of ~10%. The company anticipates that Abercrombie brands should continue to outperform Hollister brands, with Americas leading the regional performance. Also, Abercrombie & Fitch Co. (NYSE:ANF) plans to continue to invest in brand and infrastructure. Moving forward, it plans to open 60 new stores, remodel or right-size 60 stores, and close 40 stores.
Abercrombie & Fitch Co. (NYSE:ANF)’s digital channel continues to experience double-digit growth, and this trend is expected to continue. The company has been managing its inventory closely and anticipates it to be well-controlled for the holiday season. Abercrombie & Fitch Co. (NYSE:ANF) is aging up its Abercrombie brand, aiming for mid-20s clients, with positive results in customer retention and new customer acquisition.
Wall Street remains optimistic about Abercrombie & Fitch Co. (NYSE:ANF) as its expansion plans and adjustments to the brand demographics demonstrate a forward-looking approach to market demands. Telsey Advisory Group reissued an “Outperform” rating, issuing a price objective of $190.00 on 11th September.
Carillon Tower Advisers, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Abercrombie & Fitch Co. (NYSE:ANF) is a global multi-brand omnichannel specialty retailer that offers a broad assortment of apparel, personal care products, and accessories for men, women and kids. The stock was a strong performer during the quarter following an impressive earnings report that exceeded expectations and raised guidance amid a rough patch for the retail industry. The management team has made powerful strides in reenergizing the brand and transforming the concept to a different and larger audience.”
3) Blue Bird Corporation (NASDAQ:BLBD)
% Increase on a YTD Basis: ~78%
Expected Upside Potential: 40.43%
Number of Hedge Fund Holdings: 24
Blue Bird Corporation (NASDAQ:BLBD) is engaged in designing, engineering, manufacturing, and selling school buses in the United States, Canada, and internationally.
Wall Street analysts remain optimistic about Blue Bird Corporation (NASDAQ:BLBD) as it has a backlog of firm orders, which sits at over 5,200 units. This equates to ~$775 million in potential revenue. The company continues to invest in expanding its production capacity, which is backed by an $80 million grant from the Department of Energy (DOE). This will allow Blue Bird Corporation (NASDAQ:BLBD) to produce up to 14,000 buses annually and create ~400 new jobs.
Moving forward, the company remains optimistic about the future, expecting revenue growth and higher adjusted EBITDA over the upcoming years. Blue Bird Corporation (NASDAQ:BLBD) expects to win ~30% of federal funding for clean school buses. This translates to ~2,600 electric buses over the upcoming 2 years. The analysts’ optimism also stems from the fact that its propane and gasoline engines meet strict future emissions requirements.
Blue Bird Corporation (NASDAQ:BLBD) has plans to develop a chassis business, with a commercial product anticipated on the road in 2025. Recently, the company highlighted that its national fleet business continues to grow, with higher accounts receivable as a result of more business and increased demand for electric and propane buses. Blue Bird Corporation (NASDAQ:BLBD) has been focusing on capitalizing on the growing demand for clean transportation solutions.
DA Davidson increased their price objective on the shares of Blue Bird Corporation (NASDAQ:BLBD) from $66.00 to $67.00, giving a “Buy” rating on 9th August. Insider Monkey’s Q2 2024 database revealed that 24 hedge funds held Blue Bird Corporation (NASDAQ:BLBD).
2) SoundHound AI, Inc. (NASDAQ:SOUN)
% Increase on a YTD Basis: ~122%
Expected Upside Potential: 51.35%
Number of Hedge Fund Holdings: 15
SoundHound AI, Inc. (NASDAQ:SOUN) operates as a software company. It is engaged in developing voice AI, speech recognition, natural language understanding, sound recognition, and search technologies.
SoundHound AI, Inc. (NASDAQ:SOUN) announced strategic acquisitions of conversational AI leader Amelia and ordering platform Allset. Wall Street believes that the company continues to aim to enhance its customer service capabilities and establish a voice commerce ecosystem. The acquisitions are anticipated to be accretive to earnings in the latter half of 2025.
SoundHound AI, Inc. (NASDAQ:SOUN)’s technology, particularly its Polaris model, continues to gain traction throughout various industries like the automotive sector, with new contracts from prominent electric vehicle (EV) manufacturers and elevated subscription and bookings backlog. While the market experts remain confident about the company’s growth trajectory, SoundHound AI, Inc. (NASDAQ:SOUN) has plans to continue to innovate in the voice AI market. It is integrating Amelia’s technologies in a bid to enhance its offerings and determine the life cycle value of contracts for growth and margins.
SoundHound AI, Inc. (NASDAQ:SOUN) is positioning itself to reap the benefits of advancements by companies like OpenAI. The company’s billing structure consists of hosting costs, potential revenue-sharing arrangements, and enterprise accounts for APIs.
Cantor Fitzgerald upped its price objective on the shares of SoundHound AI, Inc. (NASDAQ:SOUN) from $5.00 to $7.00 on 9th August. The company also raised its rating from “Neutral” to “Overweight.” As per Insider Monkey’s Q2 2024 database, the company was in the portfolios of 15 hedge funds.
1) Super Micro Computer, Inc. (NASDAQ:SMCI)
% Increase on a YTD Basis: ~40%
Expected Upside Potential: 90.9%
Number of Hedge Fund Holdings: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) is engaged in developing and manufacturing high-performance server and storage solutions based on modular and open architecture in the US and internationally.
Innovation tailored to enterprise, cloud, AI, and 5G telco/edge IT infrastructure are some of the competitive advantages of Super Micro Computer, Inc. (NASDAQ:SMCI). The market experts opine that the deployment of liquid cooling technologies in some of the largest Direct Liquid Cooling (DLC) AI clouds should aid its revenue growth in the upcoming quarters. Overall, Super Micro Computer, Inc. (NASDAQ:SMCI)’s growth is expected to be aided by the AI infrastructure market leadership. The company expects that 25%-30% of new global data center deployments will adopt its DLC solutions within the next year.
Wall Street analysts remain optimistic about Super Micro Computer, Inc. (NASDAQ:SMCI) as a result of expectations of higher gross and operating margins, stemming from product/customer mix, manufacturing efficiencies, and new platform introductions. The company also focuses on balancing growth between enterprise and large-scale data center customers. It targets to regain its gross margin target range by fiscal year-end.
Super Micro Computer, Inc. (NASDAQ:SMCI) has been leveraging its technology and product leadership to aid its growth momentum, mainly in the AI infrastructure market. Given its strong focus on direct liquid cooling solutions and healthy revenue forecast, Super Micro Computer, Inc. (NASDAQ:SMCI) should maintain its upward trajectory.
As per Wall Street analysts, the shares of Super Micro Computer, Inc. (NASDAQ:SMCI) have an average price target of $64.36. Scout Investments, Inc, an affiliate of Carillon Tower Advisers, released a second quarter 2024 investor letter. Here is what the fund said:
“Super Micro Computer, Inc. (NASDAQ:SMCI) was the top detractor to returns in the second quarter. Super Micro designs and manufacturers server solutions based on modular and open-standard architecture. This modular approach combined with a strong engineering culture helps the company to supply the market with advanced servers and rack-scale compute solutions quickly. After an impressive return in the first quarter, the company offered disappointing near-term earnings guidance, though we do not believe its long-term opportunity has diminished. We expect continued strong growth for several years, although the range of outcomes is quite wide; it is difficult to forecast AI server market growth with precision.”
While we acknowledge the potential of SMCI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than SMCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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