5 Best COVID Stocks To Buy According To Hedge Funds

In this article, we discuss 5 best COVID stocks to buy according to hedge funds. If you want to see more stocks in this selection, check out 11 Best COVID Stocks To Buy According To Hedge Funds. 

5. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 85

Johnson & Johnson (NYSE:JNJ)’s COVID-19 vaccine was one of the four universal vaccine candidates approved by the World Health Organization. Johnson & Johnson (NYSE:JNJ) is one of the best COVID stocks to invest in. On November 18, Johnson & Johnson (NYSE:JNJ) declared a $1.13 per share quarterly dividend, in line with previous. The dividend is payable on December 6, to shareholders of record on November 22. The company has increased its dividend in each of the last 60 years, making it a reliable dividend king. 

On November 17, Credit Suisse analyst Trung Huynh assumed coverage of Johnson & Johnson (NYSE:JNJ) with a Neutral rating and a $170 price target. The analyst sees value in the company’s consumer separation. This should result in an improved valuation for the rest of the businesses, but it could also pressure Johnson & Johnson (NYSE:JNJ)’s new dividend. He believes the $60 billion in pharma revenue guidance by 2025 is “likely not derisked enough.”

According to Insider Monkey’s data, Johnson & Johnson (NYSE:JNJ) was part of 85 hedge fund portfolios at the end of Q3 2022, compared to 83 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with nearly 6 million shares worth $967.2 million. 

Distillate Capital Partners LLC shared its outlook on Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter. Here’s what the firm said:

“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”

4. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 89

The Home Depot, Inc. (NYSE:HD) is an American home improvement retailer that provides building materials, lawn and garden equipment, and decor products. The COVID-19 pandemic has had a material impact on the home improvement sector. The Home Depot, Inc. (NYSE:HD) posted a record $40 billion in sales in the last 2 years, citing higher home improvement spending by individuals in lockdowns during the pandemic. 

On November 17, The Home Depot, Inc. (NYSE:HD) declared a $1.90 per share quarterly dividend, in line with previous. The dividend is payable on December 15, to shareholders of record on December 1. The dividend yield on November 25 came in at 2.36%. 

JPMorgan analyst Christopher Horvers on November 16 raised the price target on The Home Depot, Inc. (NYSE:HD) to $328 from $300 and maintained an Overweight rating on the shares. The company posted an in-line Q3 and guidance, the analyst told investors in a research note.

According to Insider Monkey’s data, 89 hedge funds were bullish on The Home Depot, Inc. (NYSE:HD) at the end of Q3 2022, compared to 80 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a significant stakeholder of the company, with 2.3 million shares worth $644 million. 

Diamond Hill made the following comment about The Home Depot, Inc. (NYSE:HD) in its Q3 2022 investor letter:

“The Home Depot, Inc. (NYSE:HD) shares were more resilient in Q3 as the company continues to perform well and reiterated guidance despite increasing market concerns regarding general inflationary pressures and the impact rising mortgage rates may have on the housing market. We view the longterm prospects and multi-year fundamental outlook as unchanged. Home improvement through repair and remodel is likely to be one of more resilient housing-related industries given the relative attractiveness for consumers to renovate existing homes rather than reset their current low fixed mortgage rate to higher rates that we’re seeing today.”

3. Netflix, Inc. (NASDAQ:NFLX)

Number of Hedge Fund Holders: 115

Netflix, Inc. (NASDAQ:NFLX) saw 16 million new accounts in the first three months of 2020 as people suffered through lockdowns, and this was almost double the new sign-ups the company experienced in the last three months of 2019. Netflix, Inc. (NASDAQ:NFLX) is one of the premier COVID stocks to invest in. 

BofA analyst Jessica Reif Ehrlich on November 15 reinstated coverage of Netflix, Inc. (NASDAQ:NFLX) with a Buy rating and a $370 price target, reflecting 24% upside potential. Netflix, Inc. (NASDAQ:NFLX) is still the streaming leader, the analyst told investors. Her valuation factors in the company’s strong position within the “still burgeoning” shift towards non-linear video viewing, a “strong runway” for subscriber growth outside the U.S., and upside from advertising video on demand. The analyst views Netflix, Inc. (NASDAQ:NFLX)’s risk/reward positively.

According to Insider Monkey’s third quarter data, 115 hedge funds were bullish on Netflix, Inc. (NASDAQ:NFLX), compared to 95 funds in the earlier quarter. Boykin Curry’s Eagle Capital Management is one of the largest stakeholders of the company, with 5.5 million shares worth $1.30 billion. 

Artisan Partners made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q3 2022 investor letter:

“Netflix, Inc. (NASDAQ:NFLX) and Vertex Pharmaceuticals were two of our top contributors. Shares of Netflix got some relief after being under pressure in the first half of 2022. Media and entertainment stocks in general have been out of favor as investors grapple with the long-term economics of streaming services and slowing subscriber growth—what should be viewed as a normal feature of a maturing market. Our view is streaming is a scale and intellectual property business that will result in a few large winners, and we believe Netflix will be among this group. We initiated our position in Netflix in Q1 after shares fell by more than half due to concerns about subscriber growth and increasing competition from streaming upstarts. The stock then suffered a second down leg in April after the company reported subscriber losses for the first time in its history. Then in July, the company reported its second consecutive quarter of subscriber losses, but the nearly 1 million subscribers lost were much lower than the 2 million that management had forecast, and shares rallied on the news. For patient investors, there is reason for optimism that subscriber growth will turn around. The company has plans to crack down on password sharing and is launching a lower cost advertising supported tier. Our investment case is focused on an undemanding valuation, massive scale, a continued shift in time and attention from linear TV to streaming, and a financial condition which gives management the flexibility to operate unconstrained during a transition period for the business. We also believe Netflix can leverage its massive global scale of 200+ million subscribers into positive free cash flow through steady pricing increases and content spending controls.”

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 269

Amazon.com, Inc. (NASDAQ:AMZN) reported $108.5 billion in sales in the first three months of 2021, up 44% from the prior-year quarter. It also reported $8.1 billion in profit, an increase of 220% from the same period last year. Amazon’s revenue from merchants selling their products on the website increased 64% during that period and revenue from the advertising business rose 77%. Amazon.com, Inc. (NASDAQ:AMZN) is one of the best COVID stocks to buy according to hedge funds. 

On November 22, Piper Sandler analyst Thomas Champion maintained an Overweight rating on Amazon.com, Inc. (NASDAQ:AMZN) but trimmed the price target on the stock to $119 from $125. The analyst studied Amazon.com, Inc. (NASDAQ:AMZN)’s Q3 results with a focus on Web Services. While AWS does seem to be slowing, this seems to be an industry-wide scenario rather than specific to the company, the analyst wrote in a research note. The analyst said AWS retains industry leading infrastructure-as-a-service market share of 50% among the “Big-4” providers. He slashed estimates to account for industry headwinds but remains bullish on Amazon.com, Inc. (NASDAQ:AMZN).

According to Insider Monkey’s data, 269 hedge funds were long Amazon.com, Inc. (NASDAQ:AMZN) at the end of Q3 2022, compared to 252 funds in the prior quarter. Jaime Sterne’s Skye Global Management is a significant stakeholder of the company, with 15.5 million shares worth $1.75 billion. 

Baron Funds made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-over-year. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation (NASDAQ:MSFT) was one of the biggest beneficiaries of the COVID-19 pandemic. Microsoft Teams was used all over the world as work and education became remote. Global lockdowns served as a positive catalyst for Microsoft Corporation (NASDAQ:MSFT), as total revenues increased 15% over the three-month period ending March 2020, operating income jumped 25% to $13 billion, and net income climbed 22% to $10.8 billion.

On November 2, Macquarie analyst Sarah Hindlian-Bowler initiated coverage of Microsoft Corporation (NASDAQ:MSFT) with a Neutral rating and a $234 price target.

According to Insider Monkey’s data, 269 hedge funds were long Microsoft Corporation (NASDAQ:MSFT) at the end of Q3 2022, compared to 258 funds in the prior quarter. Microsoft Corporation (NASDAQ:MSFT) is one of the top COVID stocks backed by elite investors. 

Diamond Hill made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2022 investor letter:

“Also among our bottom contributors were media and technology giant Alphabet, software and IT services provider Microsoft Corporation (NASDAQ:MSFT) and insurance company American International Group (AIG). Microsoft shares declined in Q3, along with other tech companies, as rising interest rates impacted the near-term outlook. We expect the business to continue to generate strong revenue growth and benefit from operating leverage. Microsoft’s cloud computing services business, Azure, is generating robust growth, confirming its competitive positioning.”

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