In this article, we will discuss the 5 best DOW stocks to buy according to hedge funds. You can find similar stocks by going to 12 Best DOW Stocks To Buy According To Hedge Funds.
5. Salesforce.com, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 110
Salesforce.com, Inc. (NYSE:CRM) is a leading global provider of customer relationship management (CRM) technology. Insider Monkey found 110 hedge funds long Salesforce.com, Inc. (NYSE:CRM) at the end of the fourth quarter of 2021. The total stakes of these hedge funds came in at $11.45 billion. Hedge funds are making sizeable investments in the company, one of the reasons which make Salesforce.com, Inc. (NYSE:CRM) rank among the 5 best DOW stocks to buy according to hedge funds.
On May 1, Salesforce.com, Inc. (NYSE:CRM) posted market-beating earnings for the fiscal fourth quarter of 2022. The company reported earnings per share of $0.84 and outperformed EPS estimates by $0.09. The company’s quarterly revenues came in at $7.33 billion, up 25.94% year over year, exceeding estimates by $84.15 million.
This May, Salesforce.com, Inc. (NYSE:CRM) announced plans to add Troops.ai to its stronghold. Toops.ai provides revenue communications solutions that help businesses improve sales velocity, forecasting, visibility, and collaboration. Salesforce.com, Inc. (NYSE:CRM) plans on integrating Troops.ai into Slack. The acquisition is expected to close during the first half of the company’s fiscal year 2023.
On May 17, Morgan Stanley analyst Keith Weiss trimmed his price target on Salesforce.com, Inc. (NYSE:CRM) to $291 from $360 but maintained an Overweight rating on the shares. Weiss contended that lowering his price target reflects his revenue estimates for FY23 to decline by 3%, and his rating reflects the company’s strong FY23 pipeline along with sustained business momentum.
As of March 31, 2022, Fisher Asset Management is the most prominent stakeholder in Salesforce.com, Inc. (NYSE:CRM) having stakes worth $3.23 billion in the company.
Here is what Oakmark Funds had to say about Salesforce.com, Inc. (NYSE:CRM) in its “Oakmark Fund” first-quarter 2022 investor letter:
“Over the past 20 years, Salesforce (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software. CRM earns 80% gross margins, grows 20% organically and virtually all of its revenue is recurring. It’s a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 5x next year’s revenues represents a significant discount compared to publicly traded comparables and private market values in the software space. We view this discount as an opportunity to invest in a great business at a good value.
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 111
The Walt Disney Company (NYSE:DIS) is a prominent name in the movies and entertainment industry and is also a top stock pick among elite hedge funds, which places it fourth among the best DOW stocks to buy according to hedge funds. According to Insider Monkey’s database, 111 hedge funds held long positions in The Walt Disney Company (NYSE:DIS) at the end of the fourth quarter of 2021, up from 101 positions in the previous quarter. The total stake of these hedge funds came in at $6.94 billion.
On May 11, The Walt Disney Company (NYSE:DIS) reported earnings for the fiscal second quarter of 2022. According to the company’s earnings report, The Walt Disney Company (NYSE:DIS) registered a quarterly EPS of $1.08 and generated revenues of $19.25 billion, up 23.29% year over year from $15.61 billion.
This May, JP Morgan analyst Phil Cusick reiterated his $175 price target and Overweight rating on The Walt Disney Company (NYSE:DIS), following the company’s strong fiscal second-quarter performance. The analyst reasoned his bullish outlook by highlighting that the company reported over 7.8 million Disney+ subscriber additions for the quarter, 2.8 million more than the 5 million consensus estimate. Cusick believes fiscal 2022 Disney+ net additions of 43 million subscribers and also sees The Walt Disney Company (NYSE:DIS) generating pre-pandemic margins from its theme parks business in 2022 which will drive momentum for its shares.
Matrix Capital Management is the most bullish hedge fund on The Walt Disney Company (NYSE:DIS) as of March 31, 2022. The fund’s stakes were valued at $868.22 million.
ClearBridge Investments mentioned The Walt Disney Company (NYSE:DIS) in its “Sustainability Leaders Strategy” fourth-quarter 2021 investor letter:
“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. Disney announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. Disney has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Shares of Apple Inc. (NASDAQ:AAPL) have soared 18.31% over the past twelve months as of May 17. Investors are getting handsome returns and are continually making hefty investments in the company. At the end of the fourth quarter of 2021, 134 hedge funds were long Apple Inc. (NASDAQ:AAPL) with stakes worth $186 billion. This is compared to 120 positions in the third quarter of 2021 with stakes of $146 billion. The stock ranks third among the best DOW stocks to buy according to hedge funds.
Apple Inc. (NASDAQ:AAPL) has continuously outperformed the market and posted another strong quarter this April. On April 28, the company released earnings for the fiscal second quarter of 2022. Apple Inc. (NASDAQ:AAPL) reported earnings per share of $1.52, exceeding estimates by $0.09. Moreover, the company’s quarterly revenues came in at $97.28 billion, up 8.59% year over year, and beat the market by $3.29 billion.
Shortly after the company’s earnings release, Evercore ISI analyst Amit Daryanani reiterated his $210 price target and Outperform rating on shares of Apple Inc. (NASDAQ:AAPL). The analyst contended that the company reported a significant upside in its fiscal second-quarter 2022 report.
Berkshire Hathaway is the top shareholder in Apple Inc. (NASDAQ:AAPL) as of the end of this March. The fund owns over 890.9 million shares of stock which amount to a stake value of $155.56 billion.
Here is what ClearBridge Investments had to say about Apple Inc. (NASDAQ:AAPL) in its “Global Growth Strategy” fourth-quarter 2021 investor letter:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
2. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 142
On April 26, Visa Inc. (NYSE:V) reported solid earnings for the fiscal second quarter of 2022. According to the company’s report, Visa Inc. (NYSE:V) saw revenue growth of 25.48% year over year and generated quarterly revenues of $7.19 billion, exceeding revenue estimates by 366.88 million. Moreover, the company reported earnings per share of $1.79, beating estimates by $0.14.
Shortly after Visa Inc. (NYSE:V) released earnings, Morgan Stanley analyst James Faucette raised his price target on the stock to $284 from $279 and maintained an Overweight rating on the shares. Faucette views upside for Visa Inc. (NYSE:V), noting that the payments giant exhibited continued signs of travel recovery as its cross-border travel volumes recorded impressive growth. The analyst also raised his EPS estimates on Visa Inc. (NYSE:V) by 2% for the fiscal years 2022 and 2023.
Insider Monkey spotted Visa Inc. (NYSE:V) on 142 hedge fund portfolios at the close of Q4 2021. The total stakes of these hedge funds in the company amounted to $29.29 billion, up from $26.16 billion in the preceding quarter with 143 positions. Hedge funds are stacking up Visa Inc. (NYSE:V) and analysts are becoming bullish on the stock, which makes Visa Inc. (NYSE:V) the second-best DOW stock to buy according to hedge funds.
As of the end of this March, TCI Fund Management is the most bullish hedge fund on Visa Inc. (NYSE:V) having stakes worth $4.41 billion in the payments giant. The investment covers 11.99% of its 13F portfolio.
Wedgewood Partners, an investment management firm, mentioned Visa Inc. (NYSE:V) in its recently published first-quarter 2022 investor letter. Here is what experts at Wedgewood had to say:
“Visa continued to benefit from strong consumer spending as well as a recovery in crossborder payment volumes, more recently driven by the return of travelers. While the emergence of the “Omicron” variant of COVID early in the quarter posed a risk to this travel recovery, it proved short-lived, with most of Europe, North America, and Latin American reengaging in cross-border travel. Visa continues to extend its network to all comers. By processing over $10 trillion in volume per year, Visa has unparallel scale and, as a result, can sell this scale to its customers at very attractive economics. For example, “FinTech” businesses will often charge customers upwards of 3-5% to transact, while Visa takes mere basis points on most transactions, despite enabling service levels historically reserved for only the largest financial institutions. After adding to Visa late last year, we are most pleased that Visa is back to one of our top 5 holdings.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 262
Microsoft Corporation (NASDAQ:MSFT) is gaining momentum and in turn, returning value to investors. As of May 17, the stock’s trailing-twelve-month returns are up 9.77%. On April 26, 2022, Microsoft Corporation (NASDAQ:MSFT) reported having another consecutive strong quarter when it released its earnings for the fiscal third quarter of 2022. The company recorded year-over-year revenue growth of 18.35% and reported quarterly revenues of $49.36 billion, beating expert estimates by $311.18 million. Moreover, the company registered an EPS of $2.22 and outperformed market consensus by $0.02.
This May, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating and a $411 price target on shares of Microsoft Corporation (NASDAQ:MSFT), and also named this point in time as a “major buying opportunity.” Feinseth further added that growth in cloud computing will be key to driving business growth for Microsoft Corporation (NASDAQ:MSFT) and said the company will continue to lead the gaming industry as it prepares to expand its operations into the metaverse and with its recently announced acquisition of Activision Blizzard (NASDAQ:ATVI).
Microsoft Corporation (NASDAQ:MSFT) is one of the most heavily-bought stocks by elite hedge funds. According to Insider Monkey’s database, 262 hedge funds held positions in the company at the end of the fourth quarter of 2021. The stake of these hedge funds totaled a whopping $75.66 billion, up from $65.87 billion in the third quarter with 250 positions. The hedge fund sentiment for Microsoft Corporation (NASDAQ:MSFT) is positive, and it is the best DOW stock to buy according to hedge funds.
As of March 31, 2022, Ken Fisher’s Fisher Asset Management is the leading stakeholder in Microsoft Corporation (NASDAQ:MSFT) with stakes worth a hefty $8.59 billion which represents 5.06% of its 13F portfolio.
Motiwala Capital, an investment management firm, published its fourth-quarter 2021 investor letter in which it mentioned Microsoft Corporation (NASDAQ:MSFT). Here is what the firm said:
“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”
You can also take a look at 10 Best Dow Stocks To Buy Now and 10 Best Index Funds to Invest In 2022.
