12 Best Reddit Stocks To Invest In

Published on September 12, 2022 at 9:13 am by Aima Zaheer in Hedge Funds, News

In this article, we will take a look at the 12 best Reddit stocks to invest in. If you want to skip our discussion on the Reddit community, take a look at the 5 Best Reddit Stocks To Invest In.

Notable subreddits like r/stocks, r/WallStreetBets and r/Investing have taken center stage since the start of the COVID-19 pandemic in 2020. These subreddits have gained the ability to mold the opinion of investors on whether to buy or sell any stock. Novice and expert investors are now looking at these subreddits, sharing their views, and gaining valuable knowledge from them. In 2021, numerous buying and selling campaigns took place through Reddit, resulting in significant short squeezes in several stocks that even took hedge funds out of business. During the short squeeze of GameStop, Melvin Capital incurred significant losses, prompting Citadel and Point72 to invest approximately $3 billion into the struggling hedge fund.

Online trading platforms were caught by surprise by the trading volume generated as a result of the Reddit investor community. However, it does not mean that only meme stocks with struggling businesses and unstable share prices are discussed in these subreddits. There are numerous threads where productive discussion regarding investing in stocks with strong growth catalysts is taking place. Reddit community is also looking at numerous fundamentally strong companies like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOGL), and Microsoft Corporation (NASDAQ:MSFT) as investment targets for the long run.

Image by Sergei Tokmakov www.thecorporateattorneys.com from Pixabay

Our Methodology

For this article, we went through famous subreddits such as r/stocks and r/WallStreetBets at length and picked the 12 best stocks that the Reddit community suggests investing in. These stocks have robust business fundamentals and are well-positioned for growth in the current macroeconomic situation. We have discussed the reasons why Reddit users are bullish on these stocks and have backed the investment thesis with analyst ratings too.

Best Reddit Stocks To Invest In

12. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 46

Target Corporation (NYSE:TGT) is a Minneapolis-based big-box retailer that has the distinction of being the seventh biggest retailer in the US.

Although the Reddit community recognized the company’s weak results for Q2 2022, which were published on August 17, it also highlighted several key developments for the company. The community acknowledged the growth in the sales of beauty products as a positive and also appreciated the rise in sales from the online segment. One of the key highlights was the company’s 18% return on invested capital (ROIC).

Analysts also have a bullish outlook on Target Corporation (NYSE:TGT). Michael Baker at DA Davidson increased the target price from $185 to $203 on August 18 and maintained a Buy rating on the stock. The analyst highlighted that Target Corporation (NYSE:TGT) had made significant progress in overcoming the challenges related to overstocking that dented the margins for Q2 2022. The financials will appear to look clean by Q4 2022, and the margins will recover to historical levels. Hence, Target Corporation (NYSE:TGT) is amongst the 12 best Reddit stocks to invest in due to the company’s bright future prospects.

Target Corporation (NYSE:TGT) was mentioned in the Q2 2022 investor letter of Ensemble Capital. Here’s what the firm said:

“Speaking on their earnings call, Target’s CEO Brian Cornell said that spending on items such as kitchen appliances, TVs and outdoor furniture – products that consumers splurged on while stuck at home – has declined sharply. While they had expected there to be a shift from spending on goods to services as America exited pandemic lifestyles, they didn’t anticipate the speed and magnitude of the shift. On the other hand, they saw luggage sales grow by an astounding 50%, along with robust growth in “going out” categories such as sunscreen, beauty products, and even toys as families return to hosting large birthday parties for their children. So, despite Target seeing increasing foot traffic and higher spending overall, they got caught with the wrong inventory relative to what customers wanted to buy. What this means for investors is that it is incorrect to say that the consumer is weak, despite weakness in some consumer facing companies. Rather what people are spending money on is changing rapidly, which is good or bad for a given company based on what they sell. Importantly, with demand shifting from items that were in short supply, there is good reason to think that inflation in these categories will moderate. Indeed, Target stated that their plan was to put their excess inventory on sale, something that consumers haven’t seen a lot of over the past two years. But as demand for COVID era goods moderates, demand for activities such as travel has surged, driving up inflation in airline tickets and hotel rooms. This illustrates the way that the shock waves from the pandemic have scrambled the typical economic cycle such that even at a time when all signs point to the biggest summer travel season in history, investors are worried that we are headed into, or are already in, a recession.”

11. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 65

Intel Corporation (NASDAQ:INTC) is a Santa Clara, California-based diversified technology company that is making headways in emerging tech themes like cloud computing, data center, Internet of Things (IoT), and personal computer offerings.

The Reddit community began focusing on Intel Corporation (NASDAQ:INTC) when the stock fell to a five-year low on August 22 and took it as an opportunity to buy the dip and take a long position in the stock. Users think that Intel Corporation (NASDAQ:INTC) has a strong pipeline of products that will aid it in gaining industry leadership in the next couple of years. Intel Corporation (NASDAQ:INTC) is also a member of Bank of America’s quantamental Alpha Surprise Portfolio for September 2022. The list is constituted by bringing into use proprietary models designed by Bank of America based on the dividend discount model and the consensus forecast earnings surprise model. Intel Corporation (NASDAQ:INTC) offers a forward dividend yield of 4.72% as of September 8. All these factors have made the company one of the best Reddit stocks to invest in.

Here’s what Baron Funds said about Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter:

“Intel’s (NASDAQ:INTC) capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”

10. Cheniere Energy, Inc. (NYSE:LNG)

Number of Hedge Fund Holders: 65

Cheniere Energy, Inc. (NYSE:LNG) is another stock on our list of the 12 best Reddit stocks to invest in. Cheniere Energy, Inc. (NYSE:LNG) is a Houston, Texas-based liquefied natural gas (LNG) company.

Given the energy crisis across Europe, companies like Cheniere Energy, Inc. (NYSE:LNG) have come into the limelight, given their ability to export a significant quantity of LNG at an affordable rate. Mad Money host Jim Cramer reiterated a similar opinion as he highlighted Cheniere LNG as a pure-play on the LNG sector and a worthwhile pick for the long-term. Mr. Cramer suggested investors build up positions in companies with a strong theme behind them and Cheniere Energy, Inc. (NYSE:LNG) is one of those companies riding the LNG wave. These comments were welcomed by the Reddit community.

ClearBridge Investments shared its outlook on Cheniere Energy, Inc. (NYSE:LNG) in its Q3 2021 investor letter. Here’s what the firm said:

“Cheniere Energy is an energy infrastructure company that owns and operates U.S. liquefied natural gas (LNG) export facilities. Strong quarterly results and the disclosure of capital allocation policies were positively received by the markets. In addition, continued supply and demand tightness in the LNG market created a favorable commodity price environment.”

Of the 895 hedge funds in Insider Monkey’s database, Cheniere Energy, Inc. (NYSE:LNG) was held by 65 funds as of Q2 2022.

9. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 72

Tesla, Inc. (NASDAQ:TSLA) is a Texas-based electric vehicle company.

The Reddit community appreciated the company’s recent milestone of manufacturing three million vehicles worldwide. One-third of these vehicles have been manufactured in Gigafactory facility in China, according to the Tweet by CEO and founder Elon Musk. The facility reached this achievement in two-and-a-half years and intends to produce the next one million vehicles in the next ten months. Tesla, Inc. (NASDAQ:TSLA) ramped up its production significantly and jumped from two million to three million vehicles within a few weeks after adding new production facilities in the state of Texas, US, and Berlin, Germany. Mr. Musk terms these facilities as “money furnaces.”

On September 6, Rod Lache at Wolfe upgraded Tesla, Inc. (NASDAQ:TSLA) stock from a Peer Perform to an Outperform with a target price of $360. The analyst has based this price on the assumption that EV penetration in the US will rise from 10% to 20% by 2025 due to the impact of the Inflation Reduction Act (IRA) recently rolled out by the US government. Meanwhile, the analyst anticipates global penetration to increase from 17.5% to 22%.

Here’s what Baron Funds said about Tesla, Inc. (NASDAQ:TSLA) in its Q2 2022 investor letter:

“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:

First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;

second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.

Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful.

Regardless, I was right to have spoken with Roger. That was since he outlined numerous issues we needed to consider, study, and question before we determined whether we believed Tesla could be a successful business…before we ultimately chose whether to invest in that company.

When we completed our initial due diligence on Tesla, which diligence has been ongoing since 2014, we decided to invest $360 million in Tesla over the next two years. I then called Roger and outlined why I thought we could earn 20 times our capital over the next 10 years. Roger was so certain I was wrong that he offered to bet me $1 million that Tesla would fail. “Roger, I can’t bet you a million dollars. First, if you are right, I couldn’t afford to pay you. Second, if I’m right, you’re my friend, and I couldn’t take your money.”

8. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Number of Hedge Fund Holders: 77

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a Texas-based cybersecurity company founded in 2011 that operates through a cloud-native platform to secure cloud workloads, data, endpoints, and identities.

The Reddit community has recognized the strong and constant cash flows generated by the company in the last three years.

Based on a DCF model, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) stock has been given a target price of $200. Meanwhile, Alex Henderson at Needham is more bullish on the stock as he raised the target price for CrowdStrike Holdings, Inc. (NASDAQ:CRWD) from $210 to $225 and reiterated a Buy rating in a research note issued on August 31. The analyst saw the company’s Q2 2022 results as strong. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) saw its revenue jump by 58% YoY, surpassing the consensus revenue growth forecast of 52% to 53%. Meanwhile, the annual recurring revenue (ARR) rose by 45%.

Here’s what Baron Funds said about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q1 2022 investor letter:

“CrowdStrike, Inc. provides cloud-delivered, next generation security solutions via its Falcon platform consisting of end-point protection, advanced persistent threat, security information, event management, and cloud workload protection. Shares rose 11% in the first quarter, on the back of impressive quarterly results with net new annual recurring revenue (ARR) accelerating for the second straight quarter to 52% year-over-year and the company’s favorable unit economics driving 30% free cash flow margins. Moreover, key new disclosures highlight how non-end-point products are seeing momentum with cloud product-generated ARR surpassing $100 million, representing 8% of net new ARR in the quarter. With more workloads migrating to or starting in the cloud, we believe CrowdStrike is well positioned to compound at high growth rates for years given its unique product platform and attractive go-to-market business model.”

As of Q2 2022, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) was held by 77 hedge funds.

7. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 84

NVIDIA Corporation (NASDAQ:NVDA) is a California-based semiconductor company that invented the graphic processing unit (GPU) that is now widely used in personal computers, laptops, mobile devices, and notebooks.

The Reddit community gave significant attention to the development that Democratic Representative Kathy Manning from North Carolina bought $95,000 worth of NVIDIA Corporation (NASDAQ:NVDA) stock on July 27. The development took place just a day before voting for the $50 billion CHIPS Act. The legislation is aimed at promoting semiconductor production in the US by providing companies with healthy subsidies. On the other hand, the House of Representative Speaker Nancy Pelosi’s husband liquidated a portfolio of $4 million. The portfolio included various software and semiconductor companies, including NVIDIA Corporation (NASDAQ:NVDA).

On September 2, Rajvindra Gill at Needham gave NVIDIA Corporation (NASDAQ:NVDA) stock a target price of $170 with a Buy rating. The analyst sees the shares trading at an attractive level currently.

Here’s what ClearBridge Investments said about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2022 investor letter:

“Chipmaker Nvidia (NASDAQ:NVDA) has also been pressured by multiple compression of higher growth companies and weakness in its gaming business. While Nvidia has grown into a top 10 position with its strong performance through late 2021, we have been consistently trimming the position to derisk against short-term volatility in its gaming business. The company is clearly exposed to the semiconductor cycle but also participates in the secular growth of cloud and AI adoption through its data center business. With these secular drivers intact and new products ramping up in the second half of the year, we are maintaining an overweight to the company.”

6. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 87

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a California-based semiconductor company known for producing processors and other products and services for the development of consumer goods.

The Reddit community has highlighted the company’s ability to report strong revenues for the past eight consecutive quarters. Advanced Micro Devices, Inc. (NASDAQ:AMD) saw its revenue increase by 70% YoY to $6.6 billion during Q2 2022 due to the integration with Xilinx. The investor community on Reddit has also highlighted Advanced Micro Devices, Inc.’s (NASDAQ:AMD) intent to enter the automotive and telecommunications sector through its products and services.

Furthermore, AMD is one of the few semiconductor companies that reiterated its guidance for 2022 as opposed to the majority slashing their outlook for the rest of the year due to supply chain constraints, the possibility of an economic recession, and uncertainty related to COVID-19-related lockdowns in China. The company’s firm growth plans warrant its inclusion in our list of the 12 best Reddit stocks to invest in.

Advanced Micro Devices, Inc. (NASDAQ:AMD) was mentioned in the Q4 2021 investor letter of Carillon Tower Advisers. Here’s what the firm said:

“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”

Besides Advanced Micro Devices, Inc. (NASDAQ:AMD), companies like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOGL), and Microsoft Corporation (NASDAQ:MSFT) are also on our list of the 12 best Reddit stocks to invest in.

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