11 Best Money-Making Stocks To Buy Now

In this article, we will look at the 11 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).

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. has free cash flows of EUR 10 billion.

Wall Street is bullish on Eni S.p.A.. On August 5, Berenberg analyst Henry Tarr revised his price target on Eni S.p.A. 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. 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.. 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. 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. and held stakes worth $160.37 million in the company. As of June 30, Contrarian Capital is the top shareholder in Gerdau S.A. and has stakes worth $93.98 million in the company.

Gerdau S.A. 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. 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, Devon Energy Corporation, and Vale S.A..

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. 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..

Shares of SFL Corporation Ltd. 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. 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.. 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 and has stakes worth $1.01 billion in the company.

BHP Group 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 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 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 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 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 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 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 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 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 and has stakes worth $905.65 million in the company.

In addition to Rio Tinto Group, Pioneer Natural Resources Company, Devon Energy Corporation, and Vale S.A. are other cash-rich companies that are offering strong dividend payouts and have the potential to capture more market share in the long term.

5. Vale S.A. (NYSE:VALE)

Number of Hedge Fund Holders: 27

Wall Street is positive on Vale S.A.. On September 12, RBC Capital analyst Tyler Broda raised his price target on Vale S.A. and upgraded the stock to Outperform from Sector Perform. This October, Deutsche Bank analyst Liam Fitzpatrick revised his price target on Vale S.A. to $19 from $20 and reiterated a Hold rating on the shares.

Vale S.A. is one of the best money-making stocks to buy now. The company has free cash flows of over R$11.72 billion and a trailing twelve-month ROE of 50.59%. The stock has pulled back and is giving investors an opportunity to rack up shares while it still trades at an attractive valuation. As of October 19, Vale S.A. is trading at PE multiple of 3x and is awarding shareholders with a forward dividend yield of 10.35%.

At the end of Q2 2022, 27 hedge funds were bullish on Vale S.A. and held stakes worth $1.78 billion in the company. As of June 30, Fisher Asset Management is the top shareholder in Vale S.A. and has stakes worth $324.5 million in the company.

Here is what GMO LLC had to say about Vale S.A. in its first-quarter 2022 investor letter:

“Let’s look at Vale (NYSE:VALE), the world’s largest iron ore producer, as a case study for how shareholders can be rewarded. Vale’s stock price is about where it was at the beginning of last year. Despite the market’s lack of enthusiasm, the company generated about $20 billion of free cash flow last year. Not bad for a company with a market cap of a little over $100 billion and no substantive debt as of the end of March. ⁴ What did the company do with all that cash? Last year, Vale paid out about $9 billion in regularly scheduled dividends and distributed another $10 billion between extra dividends and share repurchases. Combined with dividends distributed in the first quarter of this year and a recently announced share repurchase, Vale has returned or announced the return of over $33 billion since the beginning of last year, almost a 32% yield relative to the market cap of the company. Not a bad way to win.”

4. Energy Transfer L.P. (NYSE:ET)

Number of Hedge Fund Holders: 36

Energy Transfer L.P. (NYSE:ET) is undervalued and is offering a strong dividend yield. The stock has a trailing twelve-month PE ratio of 9.43 and is offering a forward dividend yield of 7.80%, as of October 19. The company has free cash flows of $5.87 billion and is up 36.39% for the year, as of October 19. Energy Transfer L.P. is ranked high among the best money-making stocks to buy now.

On September 12, the executive chairman of Energy Transfer L.P., Kelcy Warren, disclosed the purchase of roughly 2.42 million shares of the company’s common stock. On October 19, Morgan Stanley analyst Robert Kad raised his price target on Energy Transfer L.P. (NYSE:EP) to $17 from $15 and reiterated an Overweight rating on the shares.

At the close of Q2 2022, Energy Transfer L.P. was spotted on 36 hedge fund portfolios. The collective stakes of these hedge funds in the company amounted to $598.5 million. As of June 30, Abrams Capital Management is the largest investor in Energy Transfer L.P. and has stakes worth $220.8 million in the company.

3. Lumen Technologies, Inc. (NYSE:LUMN)

Number of Hedge Fund Holders: 42

Lumen Technologies, Inc. (NYSE:LUMN) is a leading American telecommunications company that provides communications, network services, security solutions, and cloud solutions among other services. At the end of Q2 2022, 42 hedge funds were long Lumen Technologies, Inc. and held stakes worth $1.02 billion in the company. This is compared to 30 positions in the previous quarter with stakes worth $904.85 million. The hedge fund sentiment for the stock is positive.

Shares of Lumen Technologies, Inc. have pulled back in 2022 and are now presenting an attractive buying opportunity for investors. As of October 19, the stock has a trailing twelve-month PE ratio of 3.65 and is awarding shareholders with a forward dividend yield of 14.12%. Lumen Technologies, Inc. has free cash flows of over $3 billion and is one of the best money-making stocks to buy now.

This October, Citi analyst Michael Rollins revised his price target on Lumen Technologies, Inc. to $8 from $11 and reiterated a Neutral rating on the shares.

As of June 30, Knoll Capital Management is the most prominent investor in Lumen Technologies, Inc. and has stakes worth $1.09 million in the company.

Here is what Longleaf Partners had to say about Lumen Technologies, Inc. in its third-quarter 2022 investor letter:

“Lumen Technologies, Inc. (NYSE:LUMN) – Global fiber company Lumen was the top detractor in the quarter. In September, the company announced a new CEO, Kate Johnson, would take over for Jeff Storey. Johnson has a strong track record of delivering organic revenue growth, the primary area where Lumen has struggled. Johnson held previous roles at GE and Microsoft, where she most recently served as head of Microsoft US and doubled her division’s revenue in only four years. Multiple checks through our network vouch for her and suggest this leadership change is a positive upgrade that will bring the discipline and focus on sales that Lumen has been missing. The market reacted negatively with concern over the potential for another dividend cut or strategy change. We are confident the stock price reaction is highly overblown versus any impact that a potential dividend cut would have on value per share. The stock now trades at 4.5x EBITDA, and we believe the best value accretive capital allocation move today is share repurchase. Shortly after quarter end, Lumen closed on the sale of part of its consumer business to Apollo, further improving its balance sheet and business mix.”

2. Pioneer Natural Resources Company (NYSE:PXD)

Number of Hedge Fund Holders: 56

Pioneer Natural Resources Company has free cash flows of more than $6 billion and has a trailing twelve-month ROE of 26.6%. As of October 19, the stock is trading at a PE multiple of 9x and is up 34% for the year. Pioneer Natural Resources Company also pays dividends and is among the best money-making stocks to buy now. The stock is offering a forward dividend yield of 8.32% as of October 19.

Wall Street is bullish on Pioneer Natural Resources Company. This September, KeyBanc analyst Tim Rezvan took coverage of Pioneer Natural Resources Company with an Overweight rating and a $290 price target. On October 18, Piper Sandler analyst Mark Lear raised his price target on Pioneer Natural Resources Company to $346 from $311 and reiterated an Overweight rating on the shares.

At the end of Q2 2022, Pioneer Natural Resources Company was a part of 56 hedge fund portfolios. The total stakes of these hedge funds amounted to $696.13 million. As of June 30, Abrams Bison Investments is the top investor in Pioneer Natural Resources Company and has stakes worth $133.40 million in the company.

1. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders: 57

At the close of Q2 2022, 57 hedge funds disclosed ownership of stakes in Devon Energy Corporation. The total value of these stakes amounted to $1.48 billion. As of June 30, GQG Partners is the leading shareholder in Devon Energy Corporation and has stakes worth $822 million in the company.

Devon Energy Corporation is profitable, cash-rich, and paying a strong dividend. The stock is ranked high among the best money-making stocks to buy now. As of October 19, Devon Energy Corporation has gained 57.87% year to date and is offering a forward dividend yield of 8.89%. The company has a trailing twelve-month operating margin of 38.37% and has free cash flows of over $5.51 billion.

Wall Street sees material upside to Devon Energy Corporation. This September, Citi analyst Scott Gruber raised his price target on Devon Energy Corporation to $77 from $62 and reiterated a Buy rating on the shares. On October 18, Piper Sandler analyst Mark Lear raised his price target on Devon Energy Corporation to $96 from $94 and maintained an Overweight rating on the shares.

Here is what GoodHaven Capital Management had to say about Devon Energy Corporation in its second-quarter 2022 investor letter:

“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”

You can also take a look at 11 Best Nanocap Stocks To Invest In and 11 Best Dividend Stocks To Buy According To Warren Buffett.

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This article is originally published at Insider Monkey.