In this article, we will take a detailed look at the 14 Best Hot Stocks To Buy Now. For a quick overview of 5 such stocks, read our article 5 Best Hot Stocks To Buy Now.
The first few weeks and months of 2024 would be really interesting in the US stock market as all eyes would be on the Fed as it charts a new path towards its goal of bringing inflation down to 2% while making sure it does not tip the economy into recession by going with the “higher for longer” scenario where interest rates would remain elevated. Wisdom Tree in its 2024 market outlook report said that the Fed clearly made a mistake by not beginning to raise rates earlier but it does not want to make another blunder by “declaring inflation dead and cutting rates prematurely.” The report said:
The longer the Fed stays too high, the more risk there is in the whole system, for the economy and for equities. Bonds lost their typical hedge characteristics in the last 24 months when rising bond yields triggered a sell-off in equities. Bonds weren’t the insurance asset they used to be, when stocks would go down and bonds would go up. While bond volatility has experienced record highs, the trend for equities has been lower volatility. A solution for heightened volatility in the bond market could be floating rate Treasuries—and that is the best hedge for equities. Thinking ahead to rate cuts, expectations have changed dramatically, and they will no doubt continue to evolve throughout 2024. While the Fed’s revised Dot Plot now sees three rate cuts worth 75 basis points (bps) for next year, as we went to press, the market was pricing in six cuts totaling 150 bps. The key question for 2024 is: will the Fed match the market’s newfound expectations or will the markets be disappointed? That being said, the bottom line message is that rate cuts are coming, it’s just a question of timing and magnitude.
Photo by Ruben Sukatendel on Unsplash
Methodology
For this article we first used Yahoo Finance’s most active stocks screener to list down all stocks with the highest average daily trading volumes recorded over the past three months. From these stocks we selected 14 stocks with the highest number of hedge fund investors. 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).
14. Marathon Digital Holdings Inc (NASDAQ:MARA)
Number of Hedge Fund Investors: 13
Marathon Digital Holdings Inc (NASDAQ:MARA) had an average daily volume of about 44 million as of December 22. The stock has already gained about 650% year to date through December 22. The stock is getting attention amid hopes that Bitcoin and other major cryptocurrencies would enjoy a strong bull run in 2024.
Marathon Digital Holdings Inc (NASDAQ:MARA) recently said it entered into definitive purchase agreement to acquire two currently operational Bitcoin mining sites, totaling 390 megawatts of capacity, for $178.6 million.
13. Citigroup Inc (NYSE:C)
Number of Hedge Fund Investors: 79
Citigroup Inc (NYSE:C) ranks 13th in our list of the hot stocks these days. Citigroup Inc (NYSE:C) shares are up by about 5% over the past five days as of December 20.
As of the end of the third quarter of 2023, 79 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Citigroup Inc (NYSE:C). The most significant stakeholder of Citigroup Inc (NYSE:C) was Warren Buffett’s Berkshire Hathaway which owns a $2.3 billion stake in Citigroup Inc (NYSE:C).
Here is what Lansing Street Advisors has to say about Citigroup Inc. (NYSE:C) in its Q3 2023 investor letter:
“Renowned advisor Peter Mallouk draws on research from DFA to remind us that historical probabilities tend to challenge the notion of FAANG+ stocks enduring indefinitely. While it’s true that these are exceptional companies with strong financial foundations and consistent profitability, maintaining a historical perspective is valuable, as it helps us remain mindful of the ever-changing landscape of the financial markets. Investors should remember that Citigroup‘s stock, once above $500, now trades at $39. Many wellknown companies share a similar trajectory.”
12. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 81
Tesla Inc (NASDAQ:TSLA) remains on investors’ radar despite concerns around growth challenges and increasing competition. According to Yahoo Finance data, average daily volume of Tesla Inc (NASDAQ:TSLA) shares for the past three months is 121.441 million as of December 20.
A total of 81 hedge funds out of the 910 hedge funds tracked by Insider Monkey were long Tesla Inc (NASDAQ:TSLA). The most significant stakeholder of Tesla Inc (NASDAQ:TSLA) was Catherine D. Wood’s ARK Investment Management which owns a $1 billion stake in Tesla Inc (NASDAQ:TSLA). Cathie Wood thinks Tesla Inc (NASDAQ:TSLA) stock could hit $2,000 by 2027.
Here is what White Brook Capital has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q3 2023 investor letter:
“The magnificent seven, that underpin the S&P 500 performance, which includes Tesla, Inc. (NASDAQ:TSLA), now comprise almost 30% of the market capitalization of the S&P500. At least three of the seven stocks have heightened downside risk and suffer from already high penetration, weakening end markets, competitive risk, and lofty valuation. They have been remarkably resilient to increased interest rates and the potential for slowing growth. Small and midcap stocks, on the other hand, have been systemically penalized by fears of recession and continue to price that eventuality even as significantly better outcomes have become more probable. Today, it’s relatively easy to find attractive investments in this segment.”
11. Kenvue Inc (NYSE:KVUE)
Number of Hedge Fund Investors: 84
Consumer health company Kenvue Inc (NYSE:KVUE) ranks 11th in our list of the hot stocks based on daily volume as of December 20.
A total of 84 hedge funds tracked by Insider Monkey had stakes in Kenvue Inc (NYSE:KVUE) that started publicly trading after spinning off from Johnson & Johnson.
Kenvue Inc (NYSE:KVUE) shares are rising after a judge ruled in Kenvue Inc’s (NYSE:KVUE) favor in a class action lawsuit alleging prenatal exposure to Tylenol may contribute to autism or attention-deficit hyperactivity disorder.
Mayar Capital made the following comment about Kenvue Inc. (NYSE:KVUE) in its third 2023 investor letter:
“We also initiated a new investment in the shares of Kenvue Inc. (NYSE:KVUE). In August, Johnson & Johnson completed the split-off from Kenvue in which J&J shareholders could tender their shares in exchange for Kenvue shares at a 7% discount. Kenvue is formerly the J&J Consumer Health business. The transaction makes sense – the Consumer division was always small for J&J and this separation gives investors two distinct options, one pure-play FMCG company, and one pure-play healthcare company. We like Kenvue’s strong brand portfolio across its OTC medication business as well as its beauty and other healthcare brands (such as Listerine and Johnson’s), and the company has some very strong positions in its niches. While this isn’t a fast-grower, the manufacturing scale, IP and distribution network of this business provide a deep enough moat to give reasonable assurances about the company’s quality. And the current valuation looks attractive.”
10. Bank of America Corp (NYSE:BAC)
Number of Hedge Fund Investors: 88
Average daily volume for Bank of America Corp (NYSE:BAC) shares over the past three months is over 48 million. As of the end of the third quarter of 2023, 88 hedge funds tracked by Insider Monkey had stakes in Bank of America Corp (NYSE:BAC).
The most significant stakeholder of Bank of America Corp (NYSE:BAC) during this period was Warren Buffett’s Berkshire Hathaway which owns a $28.2 billion stake in Bank of America Corp (NYSE:BAC).
Smead Value Fund made the following comment about Bank of America Corporation (NYSE:BAC) in its Q3 2023 investor letter:
“Through the first nine months of the year, we had a gain of 2.10%. The S&P 500 had a gain of 13.07% and the Russell 1000 Value had a gain of 1.79%. The stock market realized markedly higher riskless US Treasury interest rates had their effect on the stock market as it began to reassert what Warren Buffett calls the “gravitational pull” on price-to-earnings ratios (P/E).
On the downside, Target (TGT), Bank of America Corporation (NYSE:BAC) and Pfizer (PFE) detracted the most in the first nine months of the year. Inverted yield curves are historically lousy for the banks, so the weak performance for BAC is no surprise.”
9. Alibaba Group Holding Ltd – ADR (NYSE:BABA)
Number of Hedge Fund Investors: 110
Despite disappointing performance and future concerns, Chinese ecommerce giant Alibaba Group Holding Ltd – ADR (NYSE:BABA) has seen a lot of trading volume over the past three months. Analysts are divided over Alibaba Group Holding Ltd – ADR’s (NYSE:BABA) future as new entrants in the market and an uncertain economic environment in the country is taking a toll on Alibaba Group Holding Ltd – ADR (NYSE:BABA) which was once Wall Street darling.
A total of 110 hedge funds tracked by Insider Monkey had stakes in Alibaba Group Holding Ltd – ADR (NYSE:BABA).
L1 Long Short Fund made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2023 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) (Long -18%) shares weakened in recent months as Chinese reopening strength faded and macro-economic datapoints began sequentially declining. Nevertheless, we believe the Chinese government will use consumption as a key lever to reinvigorate the economy post-COVID lockdowns. Alibaba remains a high-quality business with leading positions in both eCommerce and Public Cloud, and management is taking proactive steps to unlock shareholder value. It has announced plans to split into six major business groups – Cloud Intelligence, Taobao Tmall, Local Services, Global Digital, Cainiao Smart Logistics and Digital Media, and Entertainment Group. Each group will be managed independently, with a separate CEO and board, have the flexibility to raise external capital and potentially pursue separate IPOs. We believe this restructure will be a strong positive catalyst to unlock the sum-of-the-parts valuation upside in the company.”
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 110
Analysts are excited about Advanced Micro Devices, Inc. (NASDAQ:AMD) since Advanced Micro Devices, Inc. (NASDAQ:AMD) has time and again proved that it has the ability to catch up with its competition quickly. Advanced Micro Devices, Inc. (NASDAQ:AMD) recently revealed its new chips designed to train and power AI systems.
Bank of America Corp (NYSE:BAC) earlier this month upgraded Advanced Micro Devices, Inc. (NASDAQ:AMD), along with a couple of other semiconductor stocks, to Buy from Neutral. BofA believes the semiconductor industry is coming out of the crisis it saw in the first quarter of 2023.
Artisan Global Opportunities Fund made the following comment about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2023 investor letter:
“Among our top contributors were Advanced Micro Devices, Inc. (NASDAQ:AMD), NU Holdings and Netflix. AMD’s data center CPUs are used in the cloud service provider (CSP) servers. In addition to the broader secular tailwind from cloud adoption, the company has a performance and pricing advantage over Intel, which we believe will enable it to continue capturing market share. However, the recent stock price rally was due to growing excitement around the company’s AI exposure. It will launch its new MI300 graphics processing unit (GPU) chip later this year to compete against the dominant market leader NVIDIA. Similar to its approach that won market share from Intel within the CPU market, AMD’s product will aim to provide similar performance at a more attractive price. AMD is already working with Microsoft and Meta, while Amazon publicly stated that it is evaluating AMD’s inferencing chips. Using assumptions around the total GPU market size, potential market share gains and price points, our research indicates this could be a $20 billion opportunity for AMD. That would nearly double its revenue. While the company has not historically missed many deadlines, there is execution risk as it works to manufacture and distribute these complex chips at scale, which, combined with an elevated valuation after the stock’s strong performance run, led us to trim the position.”
7. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 134
Dan Ives of Webush recently said he believes Apple Inc (NASDAQ:AAPL) could hit the $4 trillion market cap in 2024 as the analyst is bullish on prospects that Apple Inc (NASDAQ:AAPL) could up its AI game by launching an AI app store next year along with boosting its services revenue.
A total of 134 hedge funds tracked by Insider Monkey had stakes in Apple Inc (NASDAQ:AAPL). Apple Inc (NASDAQ:AAPL) shares have gained about 57% year to date through December 20.
Hayden Capital made the following comment about Apple Inc. (NASDAQ:AAPL) in its third 2023 investor letter:
“Even Berkshire Hathaway’s most famous investment of the last decade – Apple Inc. (NASDAQ:AAPL) – was based on a similar set up. When Berkshire invested in 2016, Apple’s subscription revenues were just starting to cross ~10% of total revenues. Today, that figure is ~25%.
While operating income has grown +90% from 2016 to 2023, the valuation multiple itself has expanded by ~300%, from ~6x EV/EBIT to ~24x EV/EBIT today.
Investors have evolved their perception of Apple’s products – from that of a “fad” hardware company at risk of competition, to that of a “consumer staple”, a necessary part of a household’s budget…” (Click here to read the full text)
6. Uber Technologies Inc (NYSE:UBER)
Number of Hedge Fund Investors: 146
Uber Technologies Inc (NYSE:UBER) ranks 6th in our list of the best hot stocks to buy now. Citi recently picked Uber Technologies Inc (NYSE:UBER) as one of its top picks for 2024.
“Underlying these themes are companies that, in our view, are stronger than they were a year ago. Most have gone through cost reductions and optimizations themselves resulting in sustainable margin expansion and stronger overall balance sheets,” Citi analysts said in a note.
RiverPark Advisors made the following comment 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.”
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Disclosure. None. 14 Best Hot Stocks To Buy Now was initially published on Insider Monkey.