Below we present the list of the 5 Best 52-Week Low Stocks To Buy Now. For our methodology and a more comprehensive list please see the 10 Best 52-Week Low Stocks To Buy Now.
5. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Shareholders: 81
1-Year Share Price Decline: 57.3%
Before we get into some of the biggest names in the tech industry, we’ll start with Datadog, Inc. (NASDAQ:DDOG), whose shares fell to a 2-year low on November 9. You’d never guess it based on DDOG shares losing 57% of their value over the last year, but the application performance and analytics company continues to execute at a high level, drive stellar growth, and get its customers spending more money. Datadog’s Q3 revenue ballooned by 61% to $437 million and unlike most other tech growth stocks, the company is already profitable, pulling in $304 million in operating cash flow during the first nine months of 2022. Thanks to its continued product innovation, Datadog is extremely effective at extracting more and more cash out of its customers, growing its net retention rate by more than 130% during the quarter, a feat it’s maintained for more than five years running.
Hedge funds haven’t been scared off by Datadog, Inc. (NASDAQ:DDOG)’s falling share price in 2022, as their collective ownership of the stock has continued to tick upwards this year, reaching an all-time high at the end of Q2. Philippe Laffont’s tech-focused fund Coatue Management added a large position in DDOG to its 13F portfolio during Q2, while fellow Tiger Cub Chase Coleman’s Tiger Global Management owned 1.81 million shares on June 30.
The Baron Global Advantage Fund is extremely bullish on Datadog, Inc. (NASDAQ:DDOG)’s operational excellence, as discussed in its Q1 2022 investor letter:
“Another example is Datadog, the leading infrastructure monitoring, application performance monitoring and log management software platform. Datadog’s stock declined 15% during the quarter, despite reporting sparkling operational results, with revenues accelerating to a growth rate of 84% year-over-year with 33% free cash flow margins, while guiding for 2022 significantly above expectations. Datadog added 4,600 new customers in the quarter, while existing customers continued to increase their spending on Datadog products at a rapid pace with the number of customers using four or more products increasing to 33% from 22% last year. While Datadog’s stock was down, its intrinsic value has undoubtedly increased. This is enabled by rapid innovation (Datadog released 13 new products in 2021) into a market that is benefiting from the secular growth in cloud, digital transformation, and the explosion in complexity as the number of vendors, diversity of technologies and related infrastructure continued to expand.”
4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Shareholders: 184
1-Year Share Price Decline: 67%
Meta Platforms, Inc. (NASDAQ:META) shares have crashed to a 7-year low as the social media giant’s disastrous, money-losing foray into the metaverse continues to erode investors’ confidence in the company in general, and CEO Mark Zuckerberg in particular, who can’t be ousted from his role thanks to his outsized voting power.
Meta’s Reality Labs (metaverse) division had its worst quarter yet in Q3, losing more money ($3.67 billion) while simultaneously pulling in less revenue ($285 million) than it has in any other quarter over the past two years. Meta’s capital expenditures have nearly doubled from a year-ago to $22.8 billion with Q4 still to come, and Zuckerberg expects Reality Labs to suffer even bigger losses in 2023 as he doubles down on the metaverse. Meta’s advertising and overall revenue also fell year-over-year during Q3. On the bright side, Meta’s short-form video platform Reels has grown plays by 50% over the last six months to 140 billion.
Though Meta Platforms, Inc. (NASDAQ:META) is still the fourth-most popular stock among hedge funds, there’s been a massive smart money exodus from the company over the last year. All told, there’s been a 32% decline in the number of funds long META since mid-2021. Michael Platt and William Reeves’ BlueCrest Capital Mgmt. and Louis Bacon’s Moore Global Investments are just some of the funds that have sold off META during the past four quarters.
Weitz Investment likes the more cautious approach Meta Platforms, Inc. (NASDAQ:META) is taking with its expense management and investments, as revealed in the fund’s Q3 2022 investor letter:
“Facebook parent Meta Platforms, Inc. (NASDAQ:META) was the portfolio’s top year-to-date detractor. Fears of a recession and a resultant pullback in ad spending have added insult to injury as Meta attempts to gain traction with its short-form video product called Reels. Meta’s progress in monetizing Reels and the heavyweight bout with video-sharing app TikTok for consumers’ attention are clearly the main event, but we are also encouraged that, behind the scenes, management is taking a more disciplined approach to investing and expense management. Investors looking for greater detail on Meta are encouraged to read equity analyst Jon Baker’s Analyst Corner feature from earlier this year.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Shareholders: 191 (GOOGL), 153 (GOOG)
1-Year Share Price Decline: 35.3%
Alphabet Inc. (NASDAQ:GOOG) shares hit a 52-week low on November 3 after tumbling by 20.4% between October 25 and the aforementioned date. Alphabet’s Q3 results released in late October were relatively weak across the board, with advertising, search, and YouTube all showing softer-than-expected results. The one positive during the quarter was cloud, which continued to grow at a strong pace (37%) and beat top-line expectations.
Given its unassailable leadership position in search and its long-term growth opportunity with cloud computing and YouTube, getting Alphabet shares at a discount like this is a rare opportunity that shouldn’t be passed up.
Alphabet Inc. (NASDAQ:GOOG)’s two classes of shares rank as the third (GOOGL) and sixth (GOOG)-most popular among hedge funds as of June 30, but there was a slight drop in ownership of both during Q2. Alphabet has been one of the most consistent stocks in terms of hedge fund ownership over the years, with between 308 and 375 funds long both classes of shares every quarter since late 2017. Several funds made massive investments in Alphabet during Q3, including Boykin Curry’s Eagle Capital Management, and Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC.
Baron Funds remains bullish on Alphabet Inc. (NASDAQ:GOOG) thanks to its leading market positions search and video, as the fund laid out in its Q3 2022 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google, the world’s largest search and online advertising company. After benefiting from the pandemic shift to e-commerce as well as data privacy changes negatively impacting major competitors, Google’s core search and YouTube businesses are facing broad macroeconomic headwinds impacting digital advertising demand, as well as difficult comparisons against the reopening backdrop of last year. During the second quarter, Google reported 16% overall revenue growth, with search growing 15% and YouTube 10%. Despite the short-term headwinds, we remain investors as Alphabet is still the strongest player in its market and continues to benefit from long-term secular growth in mobile and online video advertising, accruing to its core assets of Search, YouTube, and the Google ad network. We are further encouraged by Alphabet’s investments in cloud (which grew 40% last quarter), AI, and other initiatives, which can help the company capture share in large, growing markets and take advantage of Google’s technical competencies.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Shareholders: 252
1-Year Share Price Decline: 43.2%
Amazon.com, Inc. (NASDAQ:AMZN) shares hit their 52-week low on November 9 before jumping by 17% over the following two trading sessions, thanks in part to the release of consumer price index data that showed inflation is cooling more than expected, falling to 7.7% in October. That has investors more excited about growth stocks like Amazon, which has been pressured in the current inflationary environment. Amazon had a solid Q3, growing sales by 15%, but AWS growth continued to slow and costs have been ballooning in recent quarters.
Amazon.com, Inc. (NASDAQ:AMZN) was the second-most popular stock among hedge funds at the end of June 2022, being owned by 28.2% of the hedge funds that are tracked by Insider Monkey’s proprietary database. Hedge funds ownership of AMZN jumped by 48% between Q3 2019 and Q1 2020, and remained relatively stable since. Ken Fisher’s Fisher Asset Management owned 48.6 million Amazon shares on June 30, valued at $5.17 billion.
Polen Capital revealed some of the reasons why Amazon.com, Inc. (NASDAQ:AMZN) ended up being a top Q3 contributor for the fund in its Q3 2022 investor letter:
“At an individual company level, the top three absolute contributors were Amazon.com, Inc. (NASDAQ:AMZN), ADP, and Autodesk. Amazon reported better-than-expected earnings during the quarter driven by robust earnings and margins in AWS, its cloud division. The company also posted positive numbers for advertising in the face of a tough environment for the sector.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Shareholders: 258
1-Year Share Price Decline: 26.5%
Topping the list of the best stocks near 52-week lows is Microsoft Corporation (NASDAQ:MSFT), which hit a 1-year low on November 3. As with Amazon, Microsoft’s cloud growth continued to slow during its Q1 of FY23, with Intelligent Cloud revenue growing by 20% year-over-year. That was more than double the growth of any of Microsoft’s other segments, which highlights how important cloud growth is when it comes to adding some sizzle to the company’s top-line growth.
Microsoft’s proposed takeover of gaming giant Activision Blizzard, Inc. (NASDAQ:ATVI), which is expected to help drive growth in its gaming business, is now being probed by the EU, which is concerned that the latter’s popular games like Call of Duty could be blocked from appearing on competing consoles and PCs.
Microsoft Corporation (NASDAQ:MSFT) was the most popular stock among hedge funds at the end of Q2, not to mention having $20 billion more in smart money investment than any other stock. Hedge fund ownership of the stock has more than tripled since 2013, making big gains in Q4 2015, Q1 2018, and Q1 2020. And once funds go long MSFT, they tend to stay in it for the long-term. There hasn’t been a single quarter with a greater than 10% selloff of hedge funds’ positions in over nine years. Chris Hohn’s TCI Fund Management had 16% 13F exposure to Microsoft on June 30, owning a 19.6 million share position worth over $5.04 billion.
Despite the challenges it’s facing in the PC business, Baron Funds remains bullish on Microsoft Corporation (NASDAQ:MSFT)’s ability to drive stable growth and expand its margins, as detailed in the fund’s Q3 2022 investor letter:
“Shares of Microsoft Corporation (NASDAQ:MSFT) pulled back with the overall software industry on the back of macroeconomic issues, including inflation concerns and rising interest rates. The company reported another strong quarter, highlighted by total revenues growing 16% on a constant currency basis and Microsoft Cloud revenues, now 48% of total sales, growing 33%, with Azure (Microsoft’s infrastructure cloud) growing 46%. These results were driven by strong demand for large commercial cloud contracts, as more businesses are standardizing on Microsoft’s platform and the company is signing larger and longer deals. Initial fiscal year 2023 guidance calls for healthy double-digit revenue and operating income growth. Both foreign exchange and personal computer headwinds were contemplated in the guidance and have continued to worsen, but we have conviction in the company’s strong competitive positioning, durable growth drivers, and margin expansion opportunity over the mid- to long term.”
For more of the latest stock picks worth considering for your portfolio, check out 15 Biggest Ecommerce companies in the US and 22 Biggest Economies in the World in 2022.
Disclosure: None.
