In this piece, we will take a look at the 15 best strong buy stocks to invest in. If you want to skip our overview of analyst ratings and the finance industry, then you can take a look at the 5 Best Strong Buy Stocks To Invest In.
The financial services industry is one of the biggest in the world, and just like oil, its smooth functioning is indispensable for global economic well being. A financial firm can be of several types and cater to the money needs and requirements of a wide variety of customers. The firms can range from small, regional, and mega banks, to credit services providers, savings and loan associations, multi billion dollar asset management funds, sharply managed hedge funds, and of course, investment management companies such as Warren Buffett’s Berkshire Hathaway.
Broadly speaking, while the finance industry is involved in the business of managing money, it’s investment banks and analysts who are responsible for shaping investor attention. They do this by preparing stock coverage reports and assigning ratings and price targets to publicly traded companies. The share price targets, ratings, earnings, revenue estimates, and notes are the primary ways through which analysts evaluate an equity. Their opinions are also some of the most reliable indicators of a share price’s movements as every earnings cycle investor reacts to a publicly traded stock’s revenue and EPS meeting or missing analyst estimates, Similarly, during any business day, a share price upgrade or downgrade by mega investment banks and behemoths such as JPMorgan Chase & Co. (NYSE:JPM), The Goldman Sachs Group, Inc. (NYSE:GS), and Morgan Stanley (NYSE:MS).
Additionally, just because these banks or others evaluate stocks doesn’t mean that they don’t get evaluated themselves. As long as they’re publicly traded and are of sufficient size to justify expending resources on, the banks that analysts work for are evaluated by their peers as well with the only limitation being that analysts from, say, JPMorgan cannot write investment notes about their own bank.
Since dozens of analysts cover big ticket names such as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT), the most common way in which share price ratings or price targets are covered in the press is by averaging them. For instance, as part of our look at ten stocks with rising share price targets, Insider Monkey analyzed data for firms such as Costco Wholesale Corporation (NASDAQ:COST), Uber Technologies, Inc. (NYSE:UBER), and AbbVie Inc. (NYSE:ABBV), Insider Monkey used share price target averages ranging from 31 analysts for Costco, to 44 analysts covering Uber’s shares. This is unsurprising as well, since analysts typically work for financial services firms that are classified as Sell Side.
A sell side analyst works for a bank that manages money for clients that end up buying stocks. So, if there’s a potential for a stock to attract significant investor funds, then a bank is incentivized to cover it and assign share ratings and share price targets. Therefore, the fact that more analysts cover Uber than Goldman is unsurprising. After all, Uber was one of the first movers in the ride hailing application space, and while its income statement struggled to come out of a ‘high growth look’ that focuses on revenue instead of profit, the firm is one of the leading players in industries with disruptive potential such as urban air mobility.
With these details in mind, let’s take a look at the best strong buy stocks to invest in so that we can see which stocks with strong buy ratings are also favorites among hedge funds. Some notable stocks in this list are Baidu, Inc. (NASDAQ:BIDU), Valaris Limited (NYSE:VAL), and Lantheus Holdings, Inc. (NASDAQ:LNTH).
A close-up of a hand, counting the money from the subscription fees of the Entertainment Communication Services company.
Our Methodology
To make our list of the best strong buy stocks to invest in, we first made a list of the 30 most valuable stocks with a market capitalization greater than $300 million and share price upside greater than 50% that had Strong Buy ratings on average. Then, they were ranked by the number of hedge funds that had bought the shares during Q3 2023, and the best strong buy stocks are as follows.
For these best strong buy stocks, we used hedge fund sentiment. 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.
15 Best Strong Buy Stocks To Invest In
15. Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT)
Number of Q3 2023 Hedge Fund Shareholders: 27
Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) is a small biotechnology company developing treatments for genetic diseases. The firm’s treatment for a treatment for a rare genetic disease that affects children is in the final stages of the FDA approval, providing a potential catalyst for the share price.
Insider Monkey took a look at 910 hedge fund portfolios for last year’s third quarter and found 27 Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) investors. Lee Ainslie’s Maverick Capital was the firm’s largest shareholder in our database due to its $115 million stake.
Just like Valaris Limited (NYSE:VAL), Baidu, Inc. (NASDAQ:BIDU), and Lantheus Holdings, Inc. (NASDAQ:LNTH), is a top Strong Buy stock that hedge funds are piling into.
14. Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)
Number of Q3 2023 Hedge Fund Shareholders: 27
Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) is another small biotechnology firm focusing on helping people with genetic ailments. It is starting 2024 on a strong note and has seen progress in accessing European markets, clinical trials, and drug efficiency.
For their Q3 2023 shareholdings, 27 out of the 910 hedge funds part of Insider Monkey’s database had bought and owned the firm’s shares. Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)’s biggest hedge fund investor is Panayotis Takis Sparaggis’s Alkeon Capital Management as it owns a $69.2 million stake.
13. Iridium Communications Inc. (NASDAQ:IRDM)
Number of Q3 2023 Hedge Fund Shareholders: 28
Iridium Communications Inc. (NASDAQ:IRDM) is an American telecommunications firm that provides satellite connectivity all over the world. One of the first firms of its kind, it is facing heavy competition from SpaceX as of late, especially as the latter’s partnership with T-Mobile seeks to disrupt mobile connectivity.
During 2023’s September 28 out of the 910 hedge funds profiled by Insider Monkey had held a stake in Iridium Communications Inc. (NASDAQ:IRDM). Kevin Kuebler And Ming Lam’s Silver Heights Capital Management owned the largest stake which was worth $111 million.
12. H World Group Limited (NASDAQ:HTHT)
Number of Q3 2023 Hedge Fund Shareholders: 28
H World Group Limited (NASDAQ:HTHT) is a Chinese hotel operator with more than a dozen properties in its portfolio. Its stock is down by more than 37% over the past 12 months as the Chinese economy continues to suffer from a prolonged slowdown that has shifted the narrative around the Asian giant’s strengths and weaknesses.
After scouring through 910 hedge fund portfolios for last year’s third quarter, Insider Monkey discovered that 28 had bought a stake in H World Group Limited (NASDAQ:HTHT).
11. Li Auto Inc. (NASDAQ:LI)
Number of Q3 2023 Hedge Fund Shareholders: 28
Li Auto Inc. (NASDAQ:LI) is a Chinese electric vehicle manufacturer headquartered in Beijing, China. While a Chinese stock might worry some, particularly after the recent bloodbath in equities, Li Auto Inc. (NASDAQ:LI) competes in the world’s biggest electric vehicle market, allowing it to gain expertise and also compete globally.
As of Q3 2023 end, 28 out of the 910 hedge funds covered by Insider Monkey had invested in the firm. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is Li Auto Inc. (NASDAQ:LI)’s largest hedge fund investor courtesy of its $71.8 million investment.
10. Copa Holdings, S.A. (NYSE:CPA)
Number of Q3 2023 Hedge Fund Shareholders: 31
Copa Holdings, S.A. (NYSE:CPA) is a Brazilian airline with close to a hundred aircraft in its fleet. The firm has been performing well as of late since it has beaten analyst EPS estimates in all four of its latest quarters.
During 2023’s September quarter, 31 out of the 910 hedge funds profiled by Insider Monkey had held a stake in the firm. Copa Holdings, S.A. (NYSE:CPA)’s biggest hedge fund investor in our database is Ken Griffin’s Citadel Investment Group as it owns $61 million worth of shares.
9. Shoals Technologies Group, Inc. (NASDAQ:SHLS)
Number of Q3 2023 Hedge Fund Shareholders: 33
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is a backend energy company that makes and sells products used in clean and green energy products such as electric vehicles. It has nearly three decades of operational experience, after being founded in 1996. Apart from an average share price rating of Strong Buy, the firm’s average share price target of $16.50 prices in a comfortable 50% upside.
Insider Monkey dug through b910 hedge fund portfolios for their third quarter of 2023 shareholdings and found that 33 had bought a stake in Shoals Technologies Group, Inc. (NASDAQ:SHLS). Out of these, the firm’s largest hedge fund shareholder is Todd J. Kantor’s Encompass Capital Advisors courtesy of its $80.3 million investment.
8. Liberty Live Group (NASDAQ:LLYVA)
Number of Q3 2023 Hedge Fund Shareholders: 34
Liberty Live Group (NASDAQ:LLYVA) is one of three companies in the Liberty Media Group, also known as Liberty Media Corporation. It’s been relatively quiet for the firm on the news front lately, but the shares have proven to be a reliable investment in today’s turbulent environment as they are up a comfortable 1% over the past year.
By the end of 2023’s third quarter, 34 out of the 910 hedge funds covered by Insider Monkey’s research were Liberty Live Group (NASDAQ:LLYVA)’s shareholders.
7. Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL)
Number of Q3 2023 Hedge Fund Shareholders: 35
Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) is a specialized biotechnology company that develops treatments for liver damage due to alcohol consumption. The firm has struggled on the financial front as of last since it has missed analyst EPS estimates in three out of its four latest quarters.
As of September 2023 end, 35 out of the 910 hedge funds profiled by Insider Monkey had invested in the firm.
6. KE Holdings Inc. (NYSE:BEKE)
Number of Q3 2023 Hedge Fund Shareholders: 37
KE Holdings Inc. (NYSE:BEKE) is a Chinese technology company that caters to the needs of the real estate industry and market. Despite China’s historic economic downturn that has left even the biggest of its cheerleaders scratching their heads, KE Holdings Inc. (NYSE:BEKE) has held up on the financial front due to beating analyst EPS estimates in all of its four latest quarters.
Insider Monkey sifted through 910 hedge fund portfolios to find 37 KE Holdings Inc. (NYSE:BEKE) shareholders as of Q3 2023 end. The firm’s biggest investor among these is Lei Zhang’s Hillhouse Capital Management as it owns 30.6 million shares that are worth $475 million.
Baidu, Inc. (NASDAQ:BIDU), KE Holdings Inc. (NYSE:BEKE), Valaris Limited (NYSE:VAL), and Lantheus Holdings, Inc. (NASDAQ:LNTH) are some top strong buy stocks with great hedge fund interest.
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Disclosure: None. 15 Best Strong Buy Stocks To Invest In is originally published on Insider Monkey.