In this article, we will take a look at the 5 best Reddit stocks to invest in. If you want to read our discussion on the Reddit community, take a look at the 12 Best Reddit Stocks To Invest In.
5. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based investment bank and provider of diversified financial services corporation.
JPMorgan Chase & Co. (NYSE:JPM) offers a forward dividend yield of 3.52% as of September 8. The Reddit community was quick to highlight the intense research conducted by JPMorgan Chase & Co. (NYSE:JPM) related to blockchain technology, an attractive theme that has caught the eyes of various investors. JPMorgan Chase & Co. (NYSE:JPM) has been employing blockchain technology to process repo transactions. The company is working on the technology to create products that can generate healthy fees for the investment bank division.
JPMorgan Chase & Co. (NYSE:JPM) also has strong support from the hedge fund community as nine of the company’s top ten hedge fund holders increased their stake in JPMorgan Chase & Co. (NYSE:JPM) on a sequential basis.
Carillon Tower Advisers shared its stance on JPMorgan Chase & Co. (NYSE:JPM) in its Q1 2022 investor letter. Here’s what the firm said:
“More cyclical sectors, including technology and consumer discretionary, were among the weakest, likely due to rising interest rates and inflation. It was encouraging to see the quarter finish on a strong note with the S&P 500 only about 5% away from its all-time highs. Shares of JPMorgan Chase (NYSE:JPM) detracted from performance due to the company’s increased expense guidance, announced in January.”
JPMorgan Chase & Co. (NYSE:JPM) was held by 104 hedge funds as of Q2 2022.
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 109
The California-based mass media and entertainment conglomerate is also on our list of the 12 best Reddit stocks to invest in.
The Reddit community is impressed by the company’s ownership of the biggest catalog in entertainment through its movie, TV, and streaming projects. The launch of Disney+ and other streaming platforms has caused The Walt Disney Company (NYSE:DIS) to pull back its content from other non-related streaming services to increase its own subscriber base.
Furthermore, The Walt Disney Company (NYSE:DIS) has made impressive progress in capturing subscribers in international markets. As of June 2022, various streaming platforms offered by Disney had a subscriber count of 221.1 million as opposed to 220.7 million paid subscribers for Netflix Inc. (NASDAQ:NFLX).
Oakmark Funds discussed its outlook on The Walt Disney Company (NYSE:DIS) in its Q2 2022 investor letter. Here’s what the firm said:
“Disney (NYSE:DIS) is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney, Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”
Arrowstreet Capital raised its stake in The Walt Disney Company (NYSE:DIS) by 73% during Q2 2022.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is a California-based diversified technology company involved in making consumer electronics goods and services.
The Reddit community considers the company’s strong cash position as the strength of Apple Inc.’s (NASDAQ:AAPL) stock. The stellar cash position allows the company to maintain healthy share buyback from the open market, which keeps a strong price floor on the shares. Apple Inc. (NASDAQ:AAPL) finished Q3 2022 with a cash balance of over $275 billion.
Investors also have a bullish outlook on the range of products that are expected to be launched later this month and in October. Apple Inc. (NASDAQ:AAPL) also has the distinction of having Warren Buffett’s Berkshire Hathaway as the biggest hedge fund holder of the stock, with a stake of over $122 billion at the current market price.
Here’s what Wedgewood Partners said about Apple Inc. (NASDAQ:AAPL) in its Q2 2022 investor letter:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and 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.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 191
Alphabet Inc. (NASDAQ:GOOGL) is a Mountain View, California-based diversified technology conglomerate that has notable brands like Google and YouTube under its umbrella.
According to StatCounter, 91% of global searches are done through Google. Meanwhile, on the cloud front, the company is notable in the industry right after Amazon.com, Inc. (NASDAQ:AMZN) through Amazon Web Services (AWS) and Microsoft Corporation (NASDAQ:MSFT) through Azure.
Furthermore, despite having a strong growth outlook, Alphabet Inc. (NASDAQ:GOOGL) stock is trading at a P/E multiple of around 20x as opposed to the S&P 500 Index’s P/E of 22x. The company is also a behemoth in generating free cash flows and has negligent debts on its books. Alphabet Inc.’s (NASDAQ:GOOGL) strong fundamentals support its inclusion in our list of 12 best Reddit stocks to invest in.
Farrer Wealth Advisors shared its stance on Alphabet Inc. (NASDAQ:GOOGL) in its Q1 2022 investor letter. Here’s what the firm said:
“Alphabet: We won’t waste much time trying to explain to our clients why Alphabet is such a phenomenal business, we believe that is quite self-evident. The better explanation is why we never bought Alphabet before. The reason was a personal bias we held based on three beliefs (which we now believe to be incorrect)
Growth in YouTube would stall as the increased ad-load would turn-off viewers (the double ad-load at the beginning of videos for example). Consumers will focus on discovery rather than search to purchase new items. For example – using Instagram/TikTok to decide what new clothes to buy instead of ‘googling’ for clothes. Other Bets: In general, we felt that capital spent on “Other Bets” has been a bit wasteful with the segment earning just around $3.1bn in revenue versus nearly $21bn in operating losses over the last five years…” (Click here to see the full text)
Overall, 191 hedge funds held a stake in Alphabet Inc. (NASDAQ:GOOGL) as of Q2 2022.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based diversified technology company.
The investor community at Reddit understands that Microsoft Corporation (NASDAQ:MSFT) is pivoting away from one-time payment for its consumer electronics goods and looking for recurring revenue from its cloud computing segment. There is a consensus amongst market observers that Microsoft Corporation (NASDAQ:MSFT) has a better outlook than Apple due to its bet on the cloud computing segment. Market observers believe that the company will experience low-to-mid-teens annual YoY growth in revenue for the next five years. Meanwhile, the operating margins are expected to expand by 2% as cloud computing is a higher-margin business.
In its Q1 2022 investor letter, Baron Funds shared its outlook on Microsoft Corporation (NASDAQ:MSFT). Here’s what the firm said:
“Shares of mega-cap software company Microsoft Corporation (NASDAQ:MSFT) pulled back with the broader software sector. The company posted another solid quarter, highlighted by total revenues increasing 20% and Microsoft Cloud revenues, now 45% of total revenues, growing 32%. These results were driven, in large part, by strong demand for large Azure contracts. We believe Microsoft can compound revenue in the low double digits for the next three years, underpinned by its expansion in its total addressable market and market share gains.”
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