5 Best Robinhood Stocks to Buy According To Hedge Funds

In this article, we will discuss the 5 best Robinhood stocks to buy according to hedge funds. If you want to read our discussion on the macroeconomic environment, go directly to the 10 Best Robinhood Stocks to Buy According To Hedge Funds.

5. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 89

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a California-based company involved in the manufacturing of semiconductor products used across numerous industries.

Chris Caso at Credit Suisse resumed coverage on Advanced Micro Devices, Inc. (NASDAQ:AMD) stock with an Overweight rating and a target price of $90 on November 15. This reflects a potential upside of 22.3% from the closing price as of November 25. The analyst anticipates Advanced Micro Devices, Inc. (NASDAQ:AMD) to gain market share in the cloud computing and server markets. Caso added that the semiconductor industry is on a continuous long-term growth trajectory, with industries like artificial intelligence and automobile driving growth. Caso thinks that all the negative developments have been incorporated into the stock price, and Advanced Micro Devices, Inc. (NASDAQ:AMD) stock offers limited downside as the multiples are trading around their lowest multi-year levels.

Baron Funds shared its outlook on Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2022 investor letter. Here’s what the firm said:

“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global fabless semiconductor company focusing on high-performance computing technology, software, and products. AMD designs leading high-performance central and graphics processing units (known as CPUs and GPUs) and integrates them with hardware and software to build differentiated solutions for customers.

AMD has been gaining meaningful share in personal computing and server end markets over the past several years driven by the performance of its processors and technology and strong execution against its technology roadmap, and we believe share gains will continue over the coming years from a combination of AMD’s continued advancements and Intel’s stumbles in developing its leading-edge technology.

Additionally, the recently closed acquisitions of Xilinx and Pensando enhance AMD’s positioning within the data center, a key growth engine for the semiconductor industry, and Xilinx specifically opens up several new growth opportunities in new end markets like industrial, automotive, and communications. The company also generates significant cash flow, giving it capital allocation optionality for further M&A and returning capital to shareholders.”

Advanced Micro Devices, Inc. (NASDAQ:AMD) is considered one of the best Robinhood stocks to invest in by many hedge funds. Renaissance Technologies raised its stake in the company by 90% during Q3 2022.

4. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 112

The Walt Disney Company (NYSE:DIS) is a Burbank, California-based diversified entertainment and mass-media company. The company has a diverse network of theme parks across the world, along with various mediums of content distribution platforms.

On November 20, The Walt Disney Company (NYSE:DIS) announced the return of former CEO Bob Iger. Mr. Iger will occupy the position for two years to navigate the company through challenging times and is expected to negotiate with Nelson Peltz’s Trian Fund Management LP. The activist hedge fund has taken a position worth $800 million in The Walt Disney Company (NYSE:DIS) following the Q4 results to pressure the company into controlling costs and give a seat on its Board.

Given Walt Disney Company’s (NYSE:NYSE:DIS) strong intellectual property (IP) portfolio and the increasing demand for theme parks, the company is anticipated to experience substantial growth in profitability. The company’s top line is expected to increase by 10.4%, while the bottom line is projected to expand by 18.8% in FY 2023, making The Walt Disney Company (NYSE:DIS) one of the best Robinhood stocks to invest in.

Third Point discussed its positive outlook on The Walt Disney Company (NYSE:DIS) in its Q3 2022 investor letter. Here’s what the firm said:

“As disclosed in our Q2 letter, we reinitiated a significant position in The Walt Disney Company (NYSE:DIS) when the company retested its Covid lows earlier this year. At the current price, Disney is trading for little more than the stand-alone value of its Parks business and a mere 15x ’24 “street” consensus. The company remains early in its Direct to Consumer (“DTC”) transition with a leading market position, and yet the current stock price ascribes negligible value to the streaming business. We believe this is due to questions around the terminal economics of streaming, given large losses being generated today at Disney (>$1 billion dollars last quarter) and stagnating margins at peers such as Netflix. On the last earnings call, management highlighted three items that could lead to an inflection in DTC profitability over the next 12 months: a 38% price increase for Disney+ in the US; moderating growth in cash content expense; and an advertising tier for Disney+ launching in two months that can drive additional ARPU given high demand for the Disney brand amongst advertisers.

While the company has guided to Disney+ achieving breakeven sometime within the fiscal year ending September 2024, the valuation suggests the market remains skeptical. Disney only trades at ~14x the $7 in earnings generated prior to the Fox acquisition, which implies investors don’t expect earnings to meaningfully exceed this figure in the coming years. Hence, the first value driver we highlighted in our last letter is the opportunity for management to optimize Disney’s cost base to drive earnings growth. We believe Disney has ample means to rationalize costs across its operating platform and deliver targeted content for home viewing that does not entail the same cost structure of exclusive theatrical releases…” (Click here to view the full text)

3. Apple, Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 140

Apple, Inc. (NASDAQ:AAPL) is a Cupertino, California-based diversified tech giant. The company is at the third position on our list of the ten best Robinhood stocks to buy, according to hedge funds.

In a note issued on November 18, Amit Daryanani at  Evercore ISI noted that the restrictions in Zhengzhou, China, have increased the lead time of iPhone 14’s Pro models. The analyst observed that the lead time has grown to a range of 31 to 45 days across the world. However, it should not worry investors as the supply-chain disruptions are expected to be short-lived. The demand-supply shortfall provides investors with an attractive entry point in Apple, Inc. (NASDAQ:AAPL). The analyst believes that there is stickiness in the products and services offered by the company, which is expected to keep its margins stable in the long run. Mr. Daryanani assigned Apple, Inc. (NASDAQ:AAPL) stock an Outperform rating with a target price of $190.

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.”

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based technology conglomerate with exposure to consumer electronics, software, cloud computing services, social networking services, and the video games segment.

The company is in the middle of acquiring Activision Blizzard, Inc. (NASDAQ:ATVI) for $68.7 billion in cash. The deal is awaiting approval from regulatory authorities in 16 countries. The deal is bigger than Elon Musk’s acquisition of Twitter, Inc. for $44 billion. Microsoft Corporation (NASDAQ:MSFT) is making this move to boost the sales of its gaming division, recorded at $15 billion at the end of FY21. The company is aggressively working on expanding the reach of its gaming subscription service Game Pass. The deal could unlock great value as it would bring together the game library of Activision with the cloud computing expertise of Microsoft Corporation (NASDAQ:MSFT) and help the company gain an advantage in the gaming streaming services industry.

Here’s what Carillon Tower Advisers said about one of the best Robinhood stocks to buy in its Q3 2022 investor letter:

“Despite reporting very good quarterly results, Microsoft Corporation (NASDAQ:MSFT) underperformed the overall market in August. Technology stocks in general underperformed in August due to fears over slowing global economic growth, potentially leading to cuts in corporate information technology budgets.”

Microsoft Corporation (NASDAQ:MSFT) was held by 269 hedge funds at the end of the third quarter of the year.

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

Number of Hedge Fund Holders: 269

Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based e-commerce giant with interests in cloud computing, consumer electronics, and digital streaming.

Companies are increasingly adopting the cloud as they are looking to reduce the cost of owning technology infrastructure. Amazon.com, Inc.’s (NASDAQ:AMZN) e-commerce sales in the US reached $78.8 billion in the third quarter of 2022, reflecting a YoY growth of 20%. Furthermore, Amazon Web Services recorded $20.5 billion in net sales in Q3, an increase of 27% from the previous quarter. With a margin of 30% and a 12-month trailing operating income of $22.9 billion, the segment is extremely profitable. Meanwhile, Amazon.com, Inc.’s (NASDAQ:AMZN) advertising business is also expanding as the company is leveraging Marketplace Ads on its platform. The company’s strong positioning in the market has made it one of the best Robinhood stocks to buy, according to hedge funds.

Here’s what Baron Funds said 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-overyear. 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.”

You can also take a peek at the 12 Best Robotics Stocks To Buy According to Hedge Funds and the 12 Best High Yield Dividend Stocks To Buy.

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