5 Best Rebound Stocks To Buy Now

In this article, we will take a look at the 5 best rebound stocks to buy now. If you want to see some more of the stocks, go to 10 Best Rebound Stocks To Buy Now.

5. Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders: 92 

YTD Price Change: -44.0%

Adobe Inc. (NASDAQ:ADBE) is a Mountain View, California-based diversified software company that aids users in creating, delivering, and optimizing content through its offerings.

Adobe Inc. (NASDAQ:ADBE) is expected to emerge as one of the best rebound stocks after its acquisition of Figma for nearly $20 billion by 2023. Figma is a close competitor of Adobe, and the acquisition will allow the company to increase its total addressable market (TAM). Figma is projected to reach a TAM of $16.5 billion by 2025. On October 19, Matthew Swanson at RBC Capital gave Adobe Inc. (NASDAQ:ADBE) stock a target price of $395 and reiterated an Outperform rating. The analyst highlighted that during the Adobe Max event, the company unveiled the accessibility and usability of its creative suite along with its artificial intelligence (AI) and machine learning abilities. These developments are expected to boost the stock price of Adobe Inc. (NASDAQ:ADBE) in the long run.

Here’s what Andvari Associates said about Adobe Inc. (NASDAQ:ADBE) in its Q3 2022 investor letter:

“The only company-specific news worth mentioning is Adobe Inc. (NASDAQ:ADBE)’s announcement in September that it will acquire collaborative design platform Figma for $20 billion. Adobe’s share price dropped 16.8% on the day of the announcement. Shareholders signaled that paying an extraordinary 50x Figma’s annualized run-rate revenues is likely to destroy value.

Although Andvari is skeptical of this deal, there are a few reasons why it could turn out to be a decent use of capital. First is Figma’s astounding growth. Since its first dollar of revenue in late 2017, Figma has grown to $400 million in annualized revenues in just five years. Furthermore, they achieved this growth through the viral adoption of their product, not by employing an army of salespeople. Second, Adobe is experienced at acquiring products and then accelerating growth with its distribution network and access to large enterprise customers. Adobe built its suite of products over the decades by making over fifty acquisitions. Adobe even acquired its best-known product, Photoshop. Andvari thinks Figma can continue its rapid growth when it has access to Adobe’s ability to spend $5 billion annually on sales and marketing.”

4. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 128

YTD Price Change: -17.2%

Apple Inc. (NASDAQ:AAPL) is a California-based technology giant.

Apple Inc. (NASDAQ:AAPL) has come under pressure recently following news that the demand for the new iPhone 14 has been weaker than anticipated. However, the company is diversifying its offerings to hedge its bets and recover strongly. A week earlier, Apple Inc. (NASDAQ:AAPL) announced its plans to increase the price of the Apple One bundle. According to an estimate provided by Amit Daryanani at Evercore ISI, this move will generate an incremental annual revenue of $1.8 billion on the assumption of maintaining 100 million Apple Music subscribers and 25 million Apple TV subscribers. The analyst further believes that Apple Inc. (NASDAQ:AAPL) is building the best-in-class premium streaming service organically, which would allow it to become one of the best rebound stocks in the future. Daryanani maintained an Outperform rating on Apple Inc. (NASDAQ:AAPL) with a target price of $190 on October 28.

Here’s what Wedgewood Partners said about Apple Inc. (NASDAQ:AAPL) in its Q3 2022 investor letter:

“Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”

Apple Inc. (NASDAQ:AAPL) was held by 128 hedge funds as of Q2 2022.

3. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 191

YTD Price Change: -37.6%

Alphabet Inc. (NASDAQ:GOOGL) is a Mountain View, California-based diversified technology company. The company is also considered one of the best rebound stocks to invest in.

Alphabet Inc. (NASDAQ:GOOGL) stock has come under pressure after YouTube advertising revenue fell by 2% YoY to $7.07 billion and missed the Street’s forecast of $7.42 billion during Q3 2022. This was the first instance when YouTube’s advertising revenue fell on a year-over-year (YoY) basis. However, Brad Erickson at RBC Capital believes that the long-term position of Alphabet Inc. (NASDAQ:GOOGL) remains strong in online advertisement, and the company could return to see strong earnings growth in 2023. Before the rebound, investors could face a few quarters of uncertainty due to the macroeconomic environment and tough comparables. The analyst gave Alphabet Inc. (NASDAQ:GOOGL) stock an Outperform rating with a target price of $130 in an update issued to investors on October 26.

Here’s what Bronte Capital said about Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2022 investor letter:

Consensus longs—those stocks widely held and admired by fund managers—have recently underperformed the market. Consensus shorts have been bad shorts. We have over 500 shorts, of which a few are consensus, and we have noticed this effect. But we also own what we think is (alas) the most consensus long in this market: Alphabet Inc. (NASDAQ:GOOG). We find it hard to find any strong reason not to own it. Internet advertising is going from strength to strength and Google’s place in the market is mostly improving. Some of the other bets such as cloud services are beginning to pay off, and finally the CEO is expressing discipline on costs. (Per the consensus, the biggest problem with Google has been a lack of discipline on costs. Every time we look there are another 20 thousand employees.) Being a consensus long, it is down hard. We did say consensus longs are not going well…” (Click here to read the full text)

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

Number of Hedge Fund Holders: 252

YTD Price Change: -43.2%

Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based diversified technology company that is a leader in the e-commerce and cloud computing segments. The company is at the second position on our list of the 10 best rebound stocks to buy now.

Like conventional retail, the e-commerce industry has also come under pressure due to high inflation and an uncertain economic environment. Amazon.com, Inc. (NASDAQ:AMZN) is facing higher transportation costs that are straining the bottom line. Meanwhile, the weakness in consumer spending is hurting the company’s top line. However, Amazon.com, Inc. (NASDAQ:AMZN) is preparing itself for a rebound by growing its Amazon Prime membership beyond 200 million subscribers. By 2025–2026, the subscription business could have a $100 billion revenue base, greatly enhancing Amazon.com, Inc.’s (NASDAQ:AMZN) prospects for long-term capital gains. Furthermore, the Amazon Web Services (AWS) segment is also expected to continue reporting a double-digit increase in revenue in the coming quarters. Analysts think the softening in capital expenditure could enhance the company’s generation of healthy cash flows.

Here’s what Polen Capital said about Amazon.com, Inc. (NASDAQ:AMZN) 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 Holders: 258

YTD Price Change: -31.8%

Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based technology conglomerate operating in the consumer electronics, computer hardware, and software business.

Microsoft Corporation’s (NASDAQ:MSFT) stock price has been weighed down due to growth concerns, but J. Derrick Wood at Cowen thinks that the company can become one of the best rebound stocks as it offers durable growth through its commercial segment. Furthermore, Microsoft Corporation (NASDAQ:MSFT) has a significant TAM to address and monetize in the cloud, data, and security industries. The results of the commercial segment during the most recent quarter and the guidance provided by the company were also positive. Experts also believe that the cloud computing story is still intact for Microsoft Corporation (NASDAQ:MSFT), and the weakness in the PC market and adverse foreign exchange impact are short-term headwinds.

Here’s what Lakehouse Capital said about Microsoft Corporation (NASDAQ:MSFT) in its September letter:

“During the month, the Fund initiated a new position in Microsoft Corporation (NASDAQ:MSFT), a name that is no doubt familiar to our investors. The company was founded by Bill Gates and Paul Allen in a friend’s garage in 1975 and began dominating the operating system market with MS-DOS by the mid-1980s. The company has come a long way since then and is now widely considered the most critical and indispensable IT mega-vendor for businesses globally. In addition to its well-known Windows operating systems and Office productivity suite, the company has a broad portfolio of strategic products, including a rapidly growing public cloud business in Azure and a sizeable gaming presence.

Microsoft’s foundational products, Office365 and Windows365, are ubiquitous and highly penetrated with circa 90% and 80% market share, respectively. These solutions are deeply ingrained in commercial and personal use globally and across all industry sectors. They serve as stable, high-margin cash flow generators for Microsoft whilst they expand and invest in other growth areas of the business. One particular growth area, which is the most exciting part of Microsoft’s business in our view, is their public cloud service, Azure.

Azure has grown at a rapid clip over the past decade to cement itself as the second-largest cloud service provider globally, behind Amazon Web Services. The business benefits from strong secular tailwinds as cloud adoption continues unabated and there is considerable runway ahead – it’s currently estimated that less than 20% of global IT spend is currently in the cloud. Research indicates that 80% of enterprises use Azure and its market share has grown to 21%, up from 13% five years ago. The mission-critical nature of the product, which is similar to many of Microsoft’s other solutions, is incredibly attractive as it leads to sticky, recurring revenue streams. Something we love to see…” (Click here to read the full text)

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