In this article, we discuss the 11 best rebound stocks to buy now. If you want to read about some more rebound stocks, go directly to 5 Best Rebound Stocks To Buy Now.
Recession fears have loomed large over the United States stock market this year due to high inflation, tight labor markets, and fiscal tightening by the Federal Reserve. However, due to timely interventions by the central bank, and considering the resilient nature of the US market, experts are now predicting that the worst may be behind the US and the economy is on a much better footing heading into the new year compared to last year. A lot of numbers back this point of view. For example, the US economy grew nearly 5% in the third quarter of 2023.
This was the fastest growth pace for the economy in nearly two years. Higher wages from the tight labor market actually fueled a rise in consumer spending, forcing large businesses to restock to meet increasing demand. Latest data from the US government indicates that retail sales registered a modest increase in November despite predictions of a slump. Deep discounting helped the holiday season get off to a brisk start, per reports. The markets were further buoyed by indications of stable interest rates for the coming months.
Kathy Bostjancic, the chief of financial services firm Nationwide, told news agency Reuters that there was a chance that the central could achieve a soft landing. She noted that the resilience of the consumer provided credibility to the Fed achieving a soft landing, but should also be a signal to markets that the Fed was not likely to cut rates as quickly and as much as the markets now had priced in. Bostjancic added that the stronger economic activity remained, the slower inflation would decline, and the slower the Fed would respond with rate cuts.
Some of the risks that investors should continue to monitor heading into 2024 include inflation and elevated interest rates. Although inflation is on the decline, it reached a high of over 9% for the first time in four decades in the summer of 2022. As of November 2023, inflation numbers are around 3%. The decision of the central bank to raise interest rates to highs not seen in two decades was aggressive but appears to have paid off. Since March 2022, the Fed has raised interest rates eleven times. This policy is now set to change from next year.
Investors eager to profit from the economic rebound should consider investing in companies like Amazon.com, Inc. (NASDAQ:AMZN), The Walt Disney Company (NYSE:DIS), and Booking Holdings Inc. (NASDAQ:BKNG). These firms have strong catalysts and long-term plans in place to achieve sustained growth. Glenn Fogel, the CEO of Booking Holdings Inc. (NASDAQ:BKNG), recently outlined some of these plans during the third quarter earnings call, commenting on how artificial intelligence would help the firm grow customers.
“Given current trends, we expect customers and consumers will continue to prioritize travel over other discretionary spend in 2024. I firmly believe we are well positioned to continue our work attracting customers and partners to our platform while making progress on several important initiatives, which will help strengthen our business over the long term. These initiatives include: one, advancing our Connected Trip vision; two, further integrating AI technology into our offerings; three, continuing to grow alternative accommodations and four, building more direct relationships with our traveler customers.”
Our Methodology
The companies that can benefit from upcoming economic conditions and have positive analyst coverage were selected for the list. The businesses featured vary by size and industry but are all well positioned to benefit from an expected shift from bear to bull market in the coming months as interest rates decline. Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
An experienced investor staring at a wall of monitors displaying stocks and mortgaged securities.
Best Rebound Stocks To Buy Now
11. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 44
Airbnb, Inc. (NASDAQ:ABNB) operates a platform that enables hosts to offer stays and experiences to guests worldwide. On October 31, Mizuho analyst James Lee maintained a Neutral rating on Airbnb, Inc. (NASDAQ:ABNB) stock and lowered the price target to $130 from $150.
Among the hedge funds being tracked by Insider Monkey, Florida-based Citadel Investment Group is a leading shareholder in Airbnb, Inc. (NASDAQ:ABNB) with 3 million shares worth more than $422 million.
Just like Amazon.com, Inc. (NASDAQ:AMZN), The Walt Disney Company (NYSE:DIS), and Booking Holdings Inc. (NASDAQ:BKNG), Airbnb, Inc. (NASDAQ:ABNB) is one of the best rebound stocks to buy now.
In its Q3 2023 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Airbnb, Inc. (NASDAQ:ABNB) was one of them. Here is what the fund said:
“Top contributors to performance for the quarter included global online travel marketplace Airbnb, Inc. (NASDAQ:ABNB). Airbnb again defied fears about weaker travel demand as it experienced continued recovery in cross-border and urban nights and resilient pricing trends, though travel volumes remain mixed.”
10. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 47
United Parcel Service, Inc. (NYSE:UPS) provides letter and package delivery services. On November 8, investment advisory Loop Capital maintained a Hold rating on United Parcel Service, Inc. (NYSE:UPS) stock and lowered the price target to $162 from $172.
Among the hedge funds being tracked by Insider Monkey, Chicago-based Citadel Investment Group is a leading shareholder in United Parcel Service, Inc. (NYSE:UPS) with 1.9 million shares worth more than 306 million.
In its Q3 2023 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and United Parcel Service, Inc. (NYSE:UPS) was one of them. Here is what the fund said:
“A higher-for-longer rate mentality taking hold was a headwind for economically sensitive stocks. Rising wages have been one of the main drivers of inflation, and this has proved to be a sticky area, keeping the Fed’s attention and weighing on share prices. For example, United Parcel Service, Inc. (NYSE:UPS) renegotiated a wage increase for its union-backed workforce this summer, which weighed on margins that were already being constricted by slowing volumes. While the new union deal will dampen profits over the next 12 months due to the front-end-loaded nature of the new five-year contract, management gained increased flexibility to deploy automation, which we think should further enhance UPS’s strong competitive position and provide a long-term tailwind to profitability.”
9. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 52
Expedia Group, Inc. (NASDAQ:EXPE) operates as an online travel firm. On December 20, investment advisory Argus maintained a Buy rating on Expedia Group, Inc. (NASDAQ: EXPE) stock and raised the price target to $171 from $158.
At the end of the third quarter of 2023, 52 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Expedia Group, Inc. (NASDAQ:EXPE), compared to 57 in the previous quarter worth $2.1 billion.
In its Q2 2023 investor letter, Patient Capital Management, an asset management firm, highlighted a few stocks and Expedia Group, Inc. (NASDAQ:EXPE) was one of them. Here is what the fund said:
“We like other names mostly ignored by the market for similar reasons. Names like Expedia Group, Inc. (NASDAQ:EXPE), General Motors (GM) and Delta Air Lines. These companies have strong returns on capital (14%+), good competitive positions, cheap valuations (all double-digit free cash flow yields), and are returning capital to shareholders. We trust the managements to take advantage of their depressed stock prices and create long-term shareholder value.”
8. The TJX Companies, Inc. (NYSE:TJX)
Number of Hedge Fund Holders: 71
The TJX Companies, Inc. (NYSE:TJX) operates as an off-price apparel and home fashions retailer. On November 16, investment advisory Telsey Advisory maintained an Outperform rating on The TJX Companies, Inc. (NYSE:TJX) stock and raised the price target to $105 from $100.
At the end of the third quarter of 2023, 71 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in The TJX Companies, Inc. (NYSE:TJX), compared to 59 in the previous quarter worth $2 billion.
ClearBridge Investments, in their Q2 2023 investor letter, mentioned The TJX Companies, Inc. (NYSE:TJX). Here is what the fund said:
“Top heavy leadership has overshadowed weakness across much of the equity market. We took advantage of the narrow breadth in the second quarter to increase our exposure to the consumer discretionary sector with two purchases that further enhance portfolio diversification and should help support consistent performance through a full cycle.
The TJX Companies, Inc. (NYSE:TJX) is the leading off-price apparel and home furnishings retailer known for its TJ Maxx, Marshalls and HomeGoods brands, with 4,800 global locations. We see TJX as a differentiated retailer offering shoppers a combination of value and convenience with continued share gain opportunity against large addressable U.S. markets for apparel and home decor. We also see room for TJX to modestly expand margins on the back of sales leverage and as freight, shrink and wage pressures ease. While TJX is not immune to macro risks, we see the company as relatively well-positioned even in the event of an economic deterioration as benefits from better inventory availability and consumer trade-down accrue.”
7. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 63
Lowe’s Companies, Inc. (NYSE:LOW) operates as a home improvement retailer. On October 18, Piper Sandler analyst Peter Keith maintained an Overweight rating on Lowe’s Companies, Inc. (NYSE:LOW) stock and lowered the price target to $240 from $262.
At the end of the third quarter of 2023, 63 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Lowe’s Companies, Inc. (NYSE:LOW), compared to 64 in the preceding quarter worth $3.7 billion.
In its Q3 2023 investor letter, Madison Investments, an asset management firm, highlighted a few stocks and Lowe’s Companies, Inc. (NYSE:LOW) was one of them. Here is what the fund said:
“The bottom five individual contributors were Dollar Tree, Fiserv, Analog Devices, Lowe’s Companies, Inc. (NYSE:LOW), and Alcon. Both Analog Devices and Lowe’s Companies saw end-market demand moderate (in semiconductors and home improvement products, respectively) relative to the strong levels over the last couple of years. Despite these near-term trends, we remain very confident in the long-term trends within both markets.”
6. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 65
Costco Wholesale Corporation (NASDAQ:COST) engages in the operation of membership warehouses. On December 19, investment advisory Bank of America maintained a Buy rating on Costco Wholesale Corporation (NASDAQ:COST) stock and raised the price target to $740 from $655.
At the end of the third quarter of 2023, 65 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Costco Wholesale Corporation (NASDAQ:COST), compared to 67 in the preceding quarter worth $2.2 billion.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), The Walt Disney Company (NYSE:DIS), and Booking Holdings Inc. (NASDAQ:BKNG), Costco Wholesale Corporation (NASDAQ:COST) is one of the best rebound stocks to buy now.
In its Q3 2023 investor letter, Madison Investments, an asset management firm, highlighted a few stocks and Costco Wholesale Corporation (NASDAQ:COST) was one of them. Here is what the fund said:
“Costco Wholesale Corporation (NASDAQ:COST) moved higher during the quarter with solid sales and traffic trends and waning inflation. As the consumer faces a tougher economic backdrop, we see Costco continuing to gain share with its strong value proposition.”
Click to continue reading and see 5 Best Rebound Stocks To Buy Now.
Suggested Articles:
- Jim Cramer Stock Portfolio
- Top Dividend Stocks To Invest In
- 15 Best Cloud Computing Stocks To Invest In
Disclosure. None. 11 Best Rebound Stocks To Buy Now is originally published on Insider Monkey.
