In this article, we will be taking a look at the top 11 stocks to buy for the next 3 months. To skip our detailed analysis of changing stock market dynamics today, you can go directly to see the 5 Best Stocks to Buy for the Next 3 Months.
The stock market narrowly averted an “earnings apocalypse” after the release of third-quarter results, creating a favorable backdrop for potential gains as the year concludes. In mid-November, there was a surge in stocks driven by optimism sparked by an inflation report, suggesting that the Federal Reserve’s efforts to control inflation might have reached their limits. On November 14, the S&P 500 rose by 1.9%, and the Russell 2000 index, which tracks smaller companies more sensitive to economic fluctuations, experienced an approximate 5% increase. These stock gains were fueled by the expectation that the Federal Reserve might not need to raise interest rates further, following new data indicating a slowdown in consumer price inflation for October. The consumer price index, gauging a diverse array of commonly used goods and services, recorded a 3.2% increase from the previous year, remaining unchanged for the month, as per seasonally adjusted figures reported by the Labor Department on November 14. Economists surveyed by Dow Jones had anticipated readings of 0.1% and 3.3%, respectively. In response to the news, markets experienced a significant surge. In a similar fashion to the S&P 500 and the Russell 2000 index, the Dow Jones Industrial Average surged by nearly 500 points, accompanied by a sharp decline in Treasury yields.
In a recent note regarding the market rally, BMO chief investment strategist Brian Belski stated:
“Despite an impressive month-to-date gain thus far, there is still a fair amount of negativity and concern regarding stock market direction. We continue to view this as a bull market and that the path of least resistance is higher stock prices through year-end. The extremely strong start to 2023 provided a buffer for recent weakness and starts that strong have typically led to continued gains even with bumps along the way.”
With third-quarter earnings results from 94% of S&P 500 companies now available, an impressive 83% surpassed profit estimates by a median of 7%, surpassing the usual average. Additionally, analysis conducted by Goldman Sachs chief U.S. equity strategist David Kostin and his team reveals that third-quarter margins, excluding the energy sector, increased to 11.6% from 11.1% in the second quarter.
As the market rallies, we’ve chosen to examine some of the best stocks to buy that could be well-suited for inclusion in an investment portfolio. These selections include the likes of Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), among others listed below.
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Our Methodology
To make our list of the best stocks to buy for the next 3 months, we chose the 11 most popular stocks among the 910 hedge funds part of Insider Monkey’s Q3 2023 database. Apart from gaining favor among hedge funds, these stocks have recently reported strong earnings, coupled with favorable analyst ratings and average analyst price targets that suggest potential upside.
11. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 116
Berkshire Hathaway Inc. (NYSE:BRK-B) operates as a diversified multinational conglomerate holding company with global investments in the insurance, freight rail transportation, and utility sectors through its various subsidiaries. One notable entity in the Berkshire Hathaway Inc. (NYSE:BRK-B) portfolio is Berkshire Hathaway Energy.
During the third quarter, Berkshire Hathaway Inc. (NYSE:BRK-B)’s operating earnings surged by 40% to a record $10.8 billion after taxes, surpassing Wall Street estimates on a per-share basis. The conglomerate, led by Warren Buffett, experienced significantly higher profits in insurance underwriting and increased investment income on its substantial cash holdings. The previous peak in operating profits occurred in the second quarter, totaling $10 billion.
In the third quarter, data from Insider Monkey’s database revealed that 116 hedge funds held positive positions in Berkshire Hathaway Inc. (NYSE:BRK-B), compared to 109 funds in the previous quarter. The Bill & Melinda Gates Foundation Trust emerged as the largest shareholder in the company, with holdings of 22.52 million shares valued at $7.89 billion.
Much like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Berkshire Hathaway Inc. (NYSE:BRK-B) ranks as a top-rated stock.
10. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 122
Salesforce, Inc. (NYSE:CRM), headquartered in San Francisco, California, is an American cloud-based software company. Specializing in customer relationship management, the company offers software and applications tailored for sales, customer service, marketing automation, e-commerce, analytics, and application development.
On August 30, Salesforce, Inc. (NYSE:CRM) disclosed its fiscal 2024 second-quarter results, revealing earnings of $2.12 per share. This represented a notable 78% increase compared to the same quarter in the previous year, driven by an 11% rise in revenue, reaching just over $8.6 billion.
122 out of the 910 hedge funds part of Insider Monkey’s Q3 2023 database had invested in the company. Salesforce, Inc. (NYSE:CRM)’s biggest shareholder during the time period was Ken Fisher’s Fisher Asset Management courtesy of its $2.87 billion investment.
Harding Loevner Global Equity Strategy made the following comment about Salesforce, Inc. (NYSE:CRM) in its Q2 2023 investor letter:
“Salesforce, Inc. (NYSE:CRM), a company we’ve owned since 2019, recently added ChatGPT-like capabilities onto its existing Al module, Einstein, to support its internal sales efforts and customer-facing software. For example, Einstein GPT can help generate marketing emails tailored to specific clients by using Salesforce’s customer database and past email correspondence to learn the most effective approach for each client. Einstein GPT is also different from off-the-shelf LLMS in three important ways: It keeps personal identifiable information private and secure, compared with external tools that retain anything a user enters. It employs the latest data in Salesforce’s system, as opposed to the sometimes-stale public data that train generic models. And generative Al capabilities can be integrated with other Salesforce offerings; the company has already introduced Slack GPT and Tableau GPT, Al-equipped versions of its workplace collaboration and analytics tools.”
9. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Apple Inc. (NASDAQ:AAPL), a leading American multinational technology company, has exhibited notable performance with a year-to-date gain of 52.96% in 2023. Renowned for its consumer electronics, including smartphones and laptops, Apple Inc. (NASDAQ:AAPL) is actively seeking to diversify its supply chain beyond China. As part of this effort, one of Apple’s suppliers is making a significant investment of $330 million in a plant located in Vietnam.
As of September 2023 end, 133 out of the 910 hedge funds polled by Insider Monkey had bought and owned the firm’s shares. Apple Inc. (NASDAQ:AAPL)’s largest shareholder in the third quarter remained Warren Buffett’s Berkshire Hathaway which owned 915.56 million shares that are worth $156 billion.
RiverPark Advisors made the following comment about Apple Inc. (NASDAQ:AAPL) in its Q3 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL): Apple shares were a top detractor in the quarter following reports of the Chinese government banning iPhone use by government employees. Additionally, while the iPhone 15 rollout went generally as expected, the market was underwhelmed by the upgrades in the new phone. Despite these overhangs, early reports from the supply chain seem to indicate demand for the new phone is in line with or better than investor expectations. In August, the company reported a broadly in-line fiscal 3Q23 with $82 billion of revenue and $24 billion of free cash flow. High margin Services Revenue continues to grow faster than the overall business leading to gross and operating margin expansion.
With an installed base of 2 billion active devices and significant growth of the company’s recurring revenue Services segment (now 18% of revenue), we believe that Apple remains one of the most innovative, best positioned and most profitable companies in the mobile technology industry.”
8. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 140
Ranked as the second-largest payment-processing corporation globally, Mastercard Incorporated (NYSE:MA) is headquartered in Purchase, New York, providing a diverse array of financial services such as credit and debit cards, along with offerings in data analytics, settlements, payment deferrals, and more. The company issues a quarterly dividend of $0.57 per share, resulting in a dividend yield of 0.56% as of November 23. With a noteworthy history of dividend growth spanning 10 consecutive years, Mastercard Incorporated (NYSE:MA) is a strong contender for our list of the best stocks to buy.
On October 26, Mastercard Incorporated (NYSE:MA) reported its Q3 2023 financial results. The company’s net revenue rose by 14% year-over-year to $6.5 billion, and net earnings increased by 28% year-over-year to $3.2 billion. The earnings per share (EPS) came in at $3.39, exceeding the consensus by $0.16. Following the earnings release, BMO Capital analyst James Fotheringham adjusted the price target to $472 from $488 while maintaining an ‘Outperform’ rating.
Mastercard Incorporated (NYSE:MA) is prominently featured in hedge fund portfolios, as indicated by data on 910 hedge funds from Insider Monkey. As of Q3 2023, 140 hedge funds held shares in Mastercard Incorporated (NYSE:MA), with a total value of $14.7 billion. The largest shareholder was Charles Akre’s Akre Capital Management, holding 5.85 million shares valued at $2.31 billion.
7. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 146
Headquartered in San Francisco, California, Uber Technologies, Inc. (NYSE:UBER) operates technology platforms connecting consumers with independent ride service providers. The company extends its services to various forms of transportation, such as public transit, bikes, and scooters. Additionally, Uber provides on-demand food delivery, freight services, business fleet solutions, and same-day delivery options. With a presence in over 70 countries, Uber serves more than 142 million monthly active platform consumers.
On November 20, Uber Technologies Inc (NYSE:UBER) unveiled its intention to issue $1.2 billion in five-year convertible bonds, slated to mature in 2028 and aimed at qualified institutional buyers. The ride-sharing company specified that a portion of the funds would be allocated to cover expenses related to entering capped call transactions, with the goal of mitigating dilution during the conversion into equity. Uber further outlined that the remaining proceeds would be utilized for the repayment, redemption, or repurchase of outstanding debt, including $1 billion of 7.5% notes set to mature in 2025.
At the end of the third quarter of 2023, 146 hedge funds in the database of Insider Monkey held stakes worth $8.1 billion in Uber Technologies, Inc.(NYSE:UBER), up from 144 in the preceding quarter worth $7.66 billion.
Here is what RiverPark Advisors said about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was the top contributor in the quarter following a better-than-expected 2Q23 earnings report and 3Q23 guidance. Gross bookings of $33.6 billion were up 16% year over year. Mobility gross bookings of $17 billion grew 25% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 12% from last year. 2Q Adjusted EBITDA of $916 million, up $552 million year over year, significantly beat Street estimates of $845 million and the company generated $1.1 billion of free cash flow. Management guided to continuing growth in 3Q Gross Bookings (17%-20% growth) and Adjusted EBITDA (of $975-1,025 million).
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its 130 million users (by comparison, Amazon Prime has 200 million members) and penetrate new markets of on-demand services, such as package and grocery delivery, travel, and worker staffing for shift work. Given its $4.3 billion of unrestricted cash and $4.4 billion of investments, the company’s enterprise value of $95 billion equates to just over 20x next year’s estimated free cash flow.”
6. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 163
A significant presence in the technology industry, Alphabet Inc. (NASDAQ:GOOG) is anchored by Google, a search engine processing billions of daily queries. The company owns diverse platforms for video streaming and productivity, with YouTube standing out as a notable asset. Additionally, Alphabet Inc. (NASDAQ:GOOG) engages in the retail of electronic devices, including smartphones, ultra-thin notebooks, and speakers.
As the close of the second quarter of 2023, 163 hedge funds had stakes in Alphabet Inc. (NASDAQ:GOOG). The most significant stakeholder of the company was Ken Fisher’s Fisher Asset Management which owns a $5.72 billion stake in the company.
Ensemble Capital Management made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) (+9.32%): Separate from all the discussion of artificial intelligence, Google’s core Search business, having experienced a significant slowdown in 2022, now shows clear signs of reacceleration. While the future of AI and its impact on Google is still subject to a healthy debate, the company seems to have put to bed investor concerns about any rapid negative impact. With Search revenue growth accelerating, and the company rolling out lots of new AI tools, the investor panic from the beginning of the year about AI immediately hurting Google appears to have been overblown.”
Similar to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Alphabet Inc. (NASDAQ:GOOG) is one of the best stocks to buy for the next 3 months.
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Disclosure: None. 11 Best Stocks to Buy for the Next 3 Months is originally published on Insider Monkey.
