12 Best Big Company Stocks to Buy

Published on October 14, 2023 at 12:28 pm by Fahad Saleem in Hedge Funds, News

In this article, we will take a look at the 12 best big company stocks to buy. To see more such companies, go directly to 5 Best Big Company Stocks to Buy.

As the stock market undergoes rollercoaster swings amid flurry of new data, analysts are still surprised by the outperformance of mega-cap stocks in the tech industry. The now famous “magnificent seven” group of tech stocks account for a major chunk of stock market gains this year. Many analysts believe these gains are expected to continue as the AI boom is just getting started. In the coming days there will be new product launches and AI announcements, while analysts are also expecting strong days ahead for e-commerce and tech stocks like Meta and Amazon amid the shopping season.

Scott Chronert, Citi U.S. equity strategist, while talking to CNBC, recently said that he upgraded tech stocks after he saw valuations reset to attractive levels. The analyst said that over the past couple of months tech stocks had a pullback which made the companies in the sector investable again. Chronert said that if investors are looking to offset the effects of rising rates, tech stocks is the way to go.

Our Methodology

For this article we scanned Insider Monkey’s database of 910 hedge funds and picked 12 mega-cap stocks with the highest number of hedge fund investors.

Image by Sergei Tokmakov Terms.Law from Pixabay

Best Big Company Stocks to Buy

12. Netflix, Inc. (NASDAQ:NFLX)

Number of Hedge Fund Holders: 114

Netflix, Inc. (NASDAQ:NFLX) ranks 12th in our list of the best big company stocks to buy according to hedge funds. Out of the 910 hedge funds tracked by Insider Monkey, 114 hedge funds reported having stakes in Netflix, Inc. (NASDAQ:NFLX). The biggest stakeholder of Netflix, Inc. (NASDAQ:NFLX) during this period was Boykin Curry’s Eagle Capital Management which owns a $1.5 billion stake in the company.

Recently, the Wall Street Journal reported that Netflix, Inc. (NASDAQ:NFLX) is mulling a price hike after the end of the Hollywood strike.

Polen Focus Growth Strategy made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its second quarter 2023 investor letter:

“In 2022, some of our holdings had difficulty achieving revenue growth in line with their long-term trends because of difficult comparisons and changing COVID dynamics. Now, most of these companies have experienced a rebound in revenue growth and have also shown a newfound willingness to control their operating expenditures, yielding substantial margin expansion and earnings growth. For example, Amazon and Netflix, Inc. (NASDAQ:NFLX) (two of our top three absolute contributors to our return in 2Q) are exercising more stringent spending discipline while revenue growth accelerates, a powerful combination for earnings growth in our view.

The top absolute contributors to the Portfolio’s performance in the second quarter were Amazon, Netflix, and Microsoft. As mentioned, Amazon and Netflix are seeing their revenue growth accelerate after a difficult 2022 while keeping expense growth in check. We expect robust earnings growth for both companies in 2023 and growth rates in the mid-teens or higher well into the future.”

11. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 121

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) ranks 11th in our list of the best big company stocks to buy according to hedge funds. As of the end of the second quarter of 2023, 121 hedge funds tracked by Insider Monkey reported owning stakes in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). The biggest stakeholder of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was Jean-Marie Eveillard’s First Eagle Investment Management which owns a $214 million stake in the company.

Taiwan Economic Daily recently reported that Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has increased its orders for advanced packaging to fulfill orders of processors that are especially made for artificial intelligence

Artisan Focus Fund made the following comment about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its first quarter 2023 investor letter:

“Accelerated card sales are expected to grow from $5.2B to ~$50B in 2026. Just last year this $50B was expected to be $15B-$17B, signifying the massive inflection at hand. We believe this step function in demand almost entirely accrues to Nvidia, one of our winners in Q1. Advanced Micro Devices (AMD) currently does not have an AI-specific accelerated card but should be in the market by the end of the year, making it also compelling. Regardless, Nvidia’s software is the only game in town, and we believe it will ultimately be layered on top of AMD or any other cards that come up. We are early in this process and believe we have sized this market more accurately than other research providers, giving us an advantage in executing and generating alpha in this area over the coming years. Downstream, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is also an important holding for us and one of only three companies that is currently able to manufacture these accelerated cards at scale. Among the three, Taiwan Semiconductor is the most advanced. As seen below, the mix shift in compute spending in the accelerated format represents a massive TAM shift.”

10. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders: 122

Salesforce, Inc. (NYSE:CRM) is one of the best big company stocks to buy according to hedge funds. Salesforce, Inc. (NYSE:CRM) is seen as a potential AI play as the company released several AI features for its CRM platform earlier this year.

Investment firm Baird recently said Salesforce, Inc. (NYSE:CRM)’s Dreamforce conference was a positive for the company as it had a huge focus on AI.

A total of 122 hedge funds in Insider Monkey’s database of 910 hedge funds reported owning stakes in Salesforce, Inc. (NYSE:CRM) as of the end of the second quarter of 2023. The most significant stakeholder of Salesforce, Inc. (NYSE:CRM) was Natixis Global Asset Management’s Harris Associates which owns a $1.1 billion stake in the company.

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: 135

Apple Inc. (NASDAQ:AAPL) is showing massive insider selling activity, including selling from CEO Tim Cook. However, the latest weakness in Apple Inc. (NASDAQ:AAPL) could be the perfect entry point for long-term investors. Bank of America recently highlighted that Apple Inc. (NASDAQ:AAPL)’s app store revenue in the third quarter jumped about 8.6% year over year. Evercore ISI recently said in a report that the demand for iPhone 15 Pro remains strong everywhere except China and Japan.

As of the end of the second quarter of 2023, 135 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported having stakes in Apple Inc. (NASDAQ:AAPL). The most significant stakeholder of Apple Inc. (NASDAQ:AAPL) was Warren Buffett’s Berkshire Hathaway which owns a $178 billion stake in the company.

Choice Equities Capital Management made the following comment about Apple Inc. (NASDAQ:AAPL) in its second quarter 2023 investor letter:

“Dramatic valuation differences across market cap sizes continue. This has been the case for some time now. Perhaps I have spent too much time discussing these dichotomies, as generally, I feel like if we pick the right stocks and manage market exposures thoughtfully, our equities- oriented portfolio will prosper across various market cycles. However, when markets become as lopsided as they have lately, I feel additional discussion on the market environment is worthwhile, if only to help highlight the opportunities that are available and the likely path forward. I expect future discussions to soon be focused again on our moderately concentrated portfolio. But for now, let’s take one last in-depth look at how far reaching these valuation dichotomies have again become.(Please note: charts that accompany the following can be found in the Appendix.)

Take Apple Inc. (NASDAQ:AAPL) for example. It is the largest stock by market cap, and fairly considered one of the best companies in the world. The company has been extraordinarily successful and improved standards of living everywhere in the process with their ubiquitous products. Along the way, shareholders have been richly rewarded, with shares increasing nearly fourteen-fold over the last ten years while generating an annualized total shareholder return of 31%, including dividends.

On the back of another big quarter for large cap tech, it is now the first stock to surpass the $3T market cap threshold. This makes its weighting in the ~$37T market cap of the S&P 500, ~8%. It also means this one stock’s market cap is larger than that of the entire ~$2.98T market cap of the Russell 2000 index, the first time in history a single stock has outweighed the Russell 2000 – aside from two brief days in September 2020 when Apple’s market cap then accomplished the same…” (Click here to read the full text)

8. Mastercard Incorporated (NYSE:MA)

Number of Hedge Fund Holders: 139

Mastercard Incorporated (NYSE:MA) ranks 8th in our list of the best big company stocks to buy now according to hedge funds. Mastercard Incorporated (NYSE:MA) recently said the report from the Wall Street Journal saying the company is mulling to hike credit card fees is wrong.

As of the end of the second quarter of 2023, 139 hedge funds out of the 910 funds tracked by Insider Monkey reported having stakes in Mastercard Incorporated (NYSE:MA). The most significant stakeholder of MA during this period was Charles Akre’s Akre Capital Management which owns a $2.31 billion stake in Mastercard Incorporated (NYSE:MA).

Mastercard Incorporated (NYSE:MA) is enjoying massive consumer spending on travel. Mastercard Incorporated (NYSE:MA) in its latest earnings call talked about travel spending patterns and its guidance:

“Domestic spending patterns have broadly normalized postpandemic. Cross-border travel continues to grow at a healthy pace, now above 150% of 2019 levels. While the travel recovery has progressed well in most regions, there remain pockets of opportunity, notably into and out of China. We remain well positioned to capitalize on this continued growth with our travel-oriented portfolios and related service offerings. Cross-border card-not-present ex travel continues to hold up well. While we are monitoring a number of macro and geopolitical factors, our base case scenario for the year continues to assume consumer spending remains resilient, buoyed by strong labor market and reflects current spending dynamics and the ongoing recovery of cross-border travel.

For the year, our outlook is broadly unchanged. We expect net revenue growth for the full year 2023 to remain in the low teens range on a currency-neutral basis excluding acquisitions and special items. As a reminder, this growth rate would have been approximately 1.5 ppt higher if you exclude Russia-related revenues from 2022. Foreign exchange is expected to be a tailwind of 1 ppt for the year, and we expect a minimal impact from acquisitions. Our expectations for operating expense for the year are also unchanged with growth expected to be at the high end of a high single-digit rate on a currency-neutral basis excluding acquisitions and special items.”

Read the full earnings call transcript here.

Baron FinTech Fund made the following comment about Mastercard Incorporated (NYSE:MA) in its second quarter 2023 investor letter:

“We modestly trimmed Visa Inc., Mastercard Incorporated (NYSE:MA), and Accenture plc to manage the position sizes and raise capital to fund purchases elsewhere. These stocks remain full-sized positions and high-conviction ideas in the Fund.

Another fintech industry trend we’re seeing is a pickup in M&A activity, most notably in the payments sector. The year started with Nuvei’s $1.3 billion acquisition of Paya announced in January. In April, Network International received an initial takeover offer from a group of private equity firms, which was then topped by Brookfield Asset Management whose $2.8 billion offer was accepted by the Board in June. Following reports earlier this year of a bidding war between Visa Inc. and Mastercard Incorporated to acquire cloud-based issuer processor and core banking software provider Pismo.”

7. Uber Technologies, Inc. (NYSE:UBER)

Number of Hedge Fund Holders: 144

Uber Technologies, Inc. (NYSE:UBER) is one of the top big company stocks to buy according to hedge funds. Uber Technologies, Inc. (NYSE:UBER) has been ruthlessly cutting costs in a bid to focus on profits and controlled growth. Those efforts are showing results. For the first time in history, Uber Technologies, Inc. (NYSE:UBER) posted an operating profit earlier this year when it posted results for the second quarter of 2023. Uber Technologies, Inc. (NYSE:UBER)’s net income in the period came in at $394 million, up $1.0 billion on a year-over-year basis.

As of the end of the second quarter of 2023, 144 hedge funds tracked by Insider Monkey reported owning stakes in Uber Technologies, Inc. (NYSE:UBER).

Uber Technologies, Inc. (NYSE:UBER)’s CEO talked about Uber’s future plans, using of AI and machine learning and cost discipline in Q2 earnings call:

“Travel is a very important ecosystem for us, both in terms of pickups and drop-offs, and we have a very significant audience of international travelers and U.K. travelers. And we said, “Hey, why can’t we go after this tour operator market?” And essentially, we are building up services that we think rival traditional tour operators with what I will call the Uber Delight. We already know who you are. We know your identity. We know your payments. Tony West, the General Counsel, was saying last week, he was in the U.K., and he booked the Eurostar ticket beautifully effortlessly on the app. And frankly, early on in our experimentation with travel and the tour operator market, we’re a little worried that with these additional products on the app distract the user from the mainline use case from I’m going to get from point A to B, I want to go to [indiscernible], et cetera, just get me there.

And what we’re seeing more recently is that with the power of machine learning, we can offer the right product to the consumer at the right time. So, when we know it’s your morning commute on a Tuesday morning, we don’t offer you the Eurostar, but when we think that you might be open to new and different ways of using the Uber, and we want to be your kind of the operating system for everyday life, not just for you to go to work, but to be that travel companion as well, we will extend those services, offer those services. We’ve now expanded into flights as well. And we’re actually seeing engagement with users being higher than we thought, and we’re not seeing cannibalization of the base business. So, we’re quite hopeful of that business. And again, that tour operator market in the U.K. is a very, very large market that we can go after.”

Read the full earnings call transcript here.

RiverPark Large Growth Fund made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q2 2023 investor letter:

“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor for the quarter following better than expected 1Q23 earnings and 2Q23 guidance. Gross bookings of $31.4 billion were up 22% year over year. Mobility gross bookings of $15 billion grew 44% over the last year driven by a combination of product innovation and driver availability. Delivery gross bookings, also $15 billion, were up 12% from last year and accelerated through the quarter. 1Q Adjusted EBITDA of $761 million, up $593 million year over year, significantly beat management’s $660-$700 million guidance and the company generated $549 million of free cash flow versus a loss last year. Management guided to continuing growth in 2Q Gross Bookings (13%-17% growth) and Adjusted EBITDA (of $800- $850 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, truck brokerage (the company had $1.4 billion in Freight revenue for 1Q23), and worker staffing for shift work. Given its $4.2 billion of unrestricted cash and $5 billion of investments, the company today has an enterprise value of $84 billion, indicating that UBER trades at 20x next year’s estimated free cash flow.”

6. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 171

Visa Inc. (NYSE:V) is one of those companies that continue to remain strong even during volatile times due to the “essential” nature of the services they provide. A total of 171 hedge funds tracked by Insider Monkey reported having stakes in Visa Inc. (NYSE:V) as of the end of the second quarter.

Investment firm BMO recently published a list of dividend stocks for volatility and high interest rates. Visa Inc. (NYSE:V) made it to the list.

Visa Inc. (NYSE:V) has also boarded the AI bandwagon. Visa Inc. (NYSE:V) recently said it’s launching a $100 million generative AI ventures initiative via Visa Ventures.

Baron FinTech Fund made the following comment about Visa Inc. (NYSE:V) in its second quarter 2023 investor letter:

“We modestly trimmed Visa Inc. (NYSE:V), Mastercard Incorporated, and Accenture plc to manage the position sizes and raise capital to fund purchases elsewhere. These stocks remain full-sized positions and high-conviction ideas in the Fund.

Another fintech industry trend we’re seeing is a pickup in M&A activity, most notably in the payments sector. The year started with Nuvei’s $1.3 billion acquisition of Paya announced in January. In April, Network International received an initial takeover offer from a group of private equity firms, which was then topped by Brookfield Asset Management whose $2.8 billion offer was accepted by the Board in June. Following reports earlier this year of a bidding war between Visa Inc. and Mastercard Incorporated to acquire cloud-based issuer processor and core banking software provider Pismo, Visa announced its intention to acquire the Brazilian company for $1 billion in late June.”

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