In this article, we will look at the 11 best money-making stocks to buy now. If you want to explore similar stocks, you can also take a look at 5 Best Money-Making Stocks To Buy Now.
Investors are finding it hard to park cash in equities this year, amid consistently high inflation, a hawkish Fed, and global supply disruptions. As of October 19, the S&P 500 has tanked 23% since the beginning of 2022, the Nasdaq has lost about a third of its value year to date, and the Dow is down 17% for the year. Further sell-offs in the market may cause the S&P 500 to plunge to as low as 3,000 points by year-end, said American billionaire entrepreneur and founder of Interactive Brokers, Thomas Peterffy, on October 19. Wall Street giants including Morgan Stanley, Goldman Sachs, Credit Suisse, and Citi, among others, have slashed their year-end forecasts for the S&P 500 as inflation is showing no signs of coming down and the Fed is also not showing any signs of a pivot.
The incessant rate hikes from the Fed have impacted markets negatively, triggering major sell-offs. However, this is an optimal time for long-term investors to rack up shares of world-class companies into weakness. Companies with strong balance sheets, solid free cash flows, and promising growth catalysts can be profitable long-term investments and help investors make money in the stock market. Moreover, strong free cash flow allows a company to make money for shareholders by way of share repurchases and dividend payouts. We will discuss some of the best money-making stocks in this article which include Pioneer Natural Resources Company (NYSE:PXD), Devon Energy Corporation (NYSE:DVN), and Vale S.A. (NYSE:VALE).
Photo by Sharon McCutcheon on Unsplash
Our Methodology
To determine the best money-making stocks to buy now, we screened for stocks of companies that were profitable and had a preference for stocks with high dividend yields. We did a comprehensive assessment of each company’s balance sheet and look at various metrics including operating margin, free cash flow, and return on equity among others to gauge profitability. We narrowed down our selection to stocks with positive market sentiment, attractive valuations, and promising growth catalysts. We ranked these stocks according to their popularity among elite hedge funds.
Best Money-Making Stocks To Buy Now
11. Eni S.p.A. (NYSE:E)
Number of Hedge Fund Holders: 8
Eni S.p.A. (NYSE:E) is a leading Italian energy company that is involved in the exploration, development, and production of crude oil and natural gas. It is one of the best money-making stocks to buy now and, as of October 19, is trading at a PE multiple of 3x and is offering a forward dividend yield of 7.77%. The company is profitable and efficient at making profits for shareholders. The company has a trailing twelve-month operating margin of 18.67% and an ROE of 26.21%. Eni S.p.A. (NYSE:E) has free cash flows of EUR 10 billion.
Wall Street is bullish on Eni S.p.A. (NYSE:E). On August 5, Berenberg analyst Henry Tarr revised his price target on Eni S.p.A. (NYSE:E) to EUR 16.50 from EUR 17.50 and reiterated a Buy rating on the shares. On September 26, JPMorgan analyst Christyan Malek raised his price target on Eni S.p.A. (NYSE:E) to EUR 19 from EUR 18.50 and maintained an Overweight rating on the shares.
At the end of Q2 2022, 8 hedge funds held stakes in Eni S.p.A. (NYSE:E). The total value of these stakes amounted to $137.65 million. This is compared to 8 positions in the previous quarter with stakes worth $128.76 million. As of June 30, Arrowstreet Capital is the largest shareholder in Eni S.p.A. (NYSE:E) and has stakes worth $57.8 million in the company.
10. Gerdau S.A. (NYSE:GGB)
Number of Hedge Fund Holders: 13
Gerdau S.A. (NYSE:GGB) is one of the largest steel producers in the world and has steel mills that span Brazil, Argentina, Canada, Colombia, Mexico, Peru, the United States, Uruguay, and Venezuela. At the close of Q2 2022, 13 hedge funds were bullish on Gerdau S.A. (NYSE:GGB) and held stakes worth $160.37 million in the company. As of June 30, Contrarian Capital is the top shareholder in Gerdau S.A. (NYSE:GGB) and has stakes worth $93.98 million in the company.
Gerdau S.A. (NYSE:GGB) has free cash flows of over R$12.8 billion and, as of October 19, is offering a forward dividend yield of 11.95% and is trading at a PE multiple of 2x. The company has a trailing twelve-month operating margin of 24.29% and an ROE of 39.19%. Gerdau S.A. (NYSE:GGB) is one of the best undervalued money-making stocks to invest in right now.
Some of the best money-making stocks that are popular among elite investor circles include Pioneer Natural Resources Company (NYSE:PXD), Devon Energy Corporation (NYSE:DVN), and Vale S.A. (NYSE:VALE).
9. SFL Corporation Ltd. (NYSE:SFL)
Number of Hedge Fund Holders: 13
SFL Corporation Ltd. (NYSE:SFL) is a leading maritime company that is involved in the ownership and operation of vessels for the transportation of crude oil and natural gas. On August 24, DNB Markets analyst Joergen Lian upgraded SFL Corporation Ltd. (NYSE:SFL) to Buy from Hold and reiterated his $13.50 price target on the shares. The analyst sees “ample upside potential” and an attractive risk/reward for SFL Corporation Ltd. (NYSE:SFL).
Shares of SFL Corporation Ltd. (NYSE:SFL) have pulled back and are now presenting an attractive entry point for investors. As of October 19, the stock has a trailing twelve-month PE ratio of 5.89 and is awarding shareholders with a forward dividend yield of 9.42%. SFL Corporation Ltd. (NYSE:SFL) is ranked high among the best money-making stocks to buy now.
At the end of Q2 2022, 13 hedge funds disclosed ownership of stakes in SFL Corporation Ltd. (NYSE:SFL). These funds held collective stakes of $75.16 million in the company. This is compared to 16 positions in the previous quarter with stakes worth $59.28 million.
8. British American Tobacco plc (NYSE:BTI)
Number of Hedge Fund Holders: 17
British American Tobacco plc (NYSE:BTI) is a leading global provider of tobacco and nicotine products. British American Tobacco plc (NYSE:BTI) is trading cheaply relative to earnings and is offering investors an opportunity to rack up shares into weakness. As of October 19, the stock has a trailing twelve-month PE ratio of 14.51 and is offering a forward dividend yield of 7.96%. The company is cash-rich and has free cash flows of GBP 9.96 billion. British American Tobacco plc (NYSE:BTI) is among the best money-making stocks to buy now.
This July, RBC Capital analyst James Edwardes Jones raised his price target on British American Tobacco plc (NYSE:BTI) to 3,500 GBP from 3,100 GBP and maintained a Sector Perform rating on the shares. On August 30, Barclays analyst Gaurav Jain raised his price target on British American Tobacco plc (NYSE:BTI) to 4,500 GBP from 4,400 GBP and reiterated an Overweight rating on the shares.
At the close of Q2 2022, British American Tobacco plc (NYSE:BTI) was spotted on 17 investment portfolios. The total stakes of these hedge funds amounted to $2.34 billion, up from $2.27 billion in the previous quarter with 19 positions. As of June 30, GQG Partners is the leading shareholder in British American Tobacco plc (NYSE:BTI) and has stakes worth $1.46 billion in the company.
Here is what Distillate Capital Partners LLC had to say about British American Tobacco p.l.c. (NYSE:BTI) in its first-quarter 2022 investor letter:
“Distillate Capital’s International FSV Strategy is less expensive, more fundamentally stable, and less levered than the benchmark All Country World Ex U.S. (ACWI-EX US) Index.The largest new position is British American Tobacco (NYSE:BTI), which was not owned previously due to leverage, but now passes that threshold and offers an 11% free cash flow to market cap yield.”
7. BHP Group (NYSE:BHP)
Number of Hedge Fund Holders: 19
BHP Group (NYSE:BHP) is a leading Australian mining company that has operations across the globe. The company is involved in the mining of copper, silver, zinc, uranium, gold, iron ore, and metallurgical & energy coal. As of June 30, Fisher Asset Management is the most prominent investor in BHP Group (NYSE:BHP) and has stakes worth $1.01 billion in the company.
BHP Group (NYSE:BHP) is cash-rich, profitable, and is awarding investors with a hefty dividend. The company has free cash flows of $26.3 billion and a trailing twelve-month operating margin of 50.36%. The stock is trading at bargain levels and as of October 19, BHP Group (NYSE:BHP) has a trailing twelve-month PE ratio of 6.29 and is offering a forward dividend yield of 13.19%. The stock is ranked high among the best money-making stocks to buy now.
This October, Deutsche Bank analyst Liam Fitzpatrick revised his price target on BHP Group (NYSE:BHP) to 2,100 GBP from 2,200 GBP and maintained a Hold rating on the shares. On October 14, JPMorgan analyst Lyndon Fagan revised his price target on BHP Group (NYSE:BHP) to 2,310 GBP from 2,410 GBP and reiterated a Neutral rating on the shares.
At the end of Q2 2022, 19 hedge funds were long BHP Group (NYSE:BHP) and held stakes worth $1.38 billion in the company.
6. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 24
Rio Tinto Group (NYSE:RIO) is one of the best money-making stocks to buy now and is presenting an attractive entry point for investors. As of October 19, the stock is trading at a PE multiple of 5x and is awarding shareholders with a forward dividend yield of 12.50%. Rio Tinto Group (NYSE:RIO) has an ROE of 32.83% and has free cash flows of $14.96 billion.
On October 5, Deutsche Bank analyst Liam Fitzpatrick revised his price target on Rio Tinto Group (NYSE:RIO) to 5,700 GBP from 5,800 GBP and reiterated a Hold rating on the shares. This October, JPMorgan analyst Lyndon Fagan raised his price target on Rio Tinto Group (NYSE:RIO) to 5,480 GBP from 5,450 GBP and maintained a Neutral rating on the shares.
At the close of Q2 2022, Rio Tinto Group (NYSE:RIO) was a part of 24 hedge fund portfolios. These funds held collective stakes of $1.72 billion in the company. As of June 30, Fisher Asset Management is the top shareholder in Rio Tinto Group (NYSE:RIO) and has stakes worth $905.65 million in the company.
In addition to Rio Tinto Group (NYSE:RIO), Pioneer Natural Resources Company (NYSE:PXD), Devon Energy Corporation (NYSE:DVN), and Vale S.A. (NYSE:VALE) are other cash-rich companies that are offering strong dividend payouts and have the potential to capture more market share in the long term.
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Disclosure: None. 11 Best Money-Making Stocks To Buy Now is originally published on Insider Monkey.
