In this article, we discuss the 5 best Roth IRA stocks to buy according to Reddit. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Roth IRA Stocks to Buy According to Reddit.
5. Alibaba Group Holding Limited (NYSE: BABA)
Number of Hedge Fund Holders: 135
Alibaba Group Holding Limited (NYSE: BABA) is a technology company based in China that operates an ecommerce platform. It is ranked fifth on our list of 10 best Roth IRA stocks to buy according to Reddit. On June 21, the firm announced that it had extended an agreement with shipping firm Zim that allowed merchants at the ecommerce giant to use the services of Zim. The agreement was first made official last year.
On May 24, Alibaba Group Holding Limited (NYSE: BABA) announced that 250,000 brands had joined the ecommerce platform of the company for an annual shopping festival. The increase has been attributed to lower standards for entry as the firm deals with a government crackdown.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE: BABA) with 13.9 million shares worth more than $3.1 billion.
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE: BABA) was one of them. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
4. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 251
Microsoft Corporation (NASDAQ: MSFT) stock has offered investors returns exceeding 34% over the course of the past twelve months. It is a Washington-based firm that makes and sells computer software and related services. It is placed fourth on our list of 10 best Roth IRA stocks to buy according to Reddit. On June 30, telecom firm AT&T announced that it would be selling its network cloud service to Microsoft and moving its 5G network data to cloud servers operated by the software giant.
On June 23, Microsoft Corporation (NASDAQ: MSFT) became the second company after Apple to cross $2 trillion in market capitalization, marking a key milestone for the firm as it ramps up spending on cloud and enterprise software.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ: MSFT) with 23.9 million shares worth more than $5.6 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
3. Shopify Inc. (NYSE: SHOP)
Number of Hedge Fund Holders: 91
Shopify Inc. (NYSE: SHOP) is a Canadian ecommerce firm. It is ranked third on our list of 10 best Roth IRA stocks to buy according to Reddit. The stock has returned 41% to investors in the past twelve months. On June 21, the firm announced that it had partnered with online publication BuzzFeed to provide content creators a platform to earn. Talks to expand the agreement to more publishers, for example Vox, were also underway.
On June 30, investment advisory Loop Capital Markets maintained a Buy rating on Shopify Inc. (NYSE: SHOP) stock and issued a revised price target of $1,600 from $1,400 on the back of positive growth potential for the firm because of changes to the revenue model.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Shopify Inc. (NYSE: SHOP) with 1.7 million shares worth more than $1.8 billion.
In its Q4 2020 investor letter, RGA Investment Advisors, an asset management firm, highlighted a few stocks and Shopify Inc. (NYSE: SHOP) was one of them. Here is what the fund said:
“While we are pleased with the results of these specific purchases, we made a huge mistake of omission at that time. This mistake will likely be one of the biggest we ever make in our careers. Specifically, we did deep work on Shopify and loved everything about the business qualitatively. Unfortunately, we ultimately found ourselves unable to get comfortable with the numbers.
We built our model up from the key performance indicators (KPIs) that drive revenues. Our last save of the model dated 8/3/2016 looked as follows: (Page 2). These numbers seemed right from everything we understood about the company. While we tend not to rely on sell-side consensus estimates before finishing our own workup of the business, we do give them a look once we feel comfortable with how we have approached our analysis as it is often helpful to get a sense of what the average participant in the market expects the business to do. With Shopify, the sell-side consensus was so far from where our numbers were shaking out, it seemed almost impossible that we were basing our analysis on the same underlying information. Our natural next step was thus to take the sell-side consensus data and work backwards to figure out the implied expectations on each of the key revenue drivers. Here is what the sell-side consensus looked like as at the time: (Page 2).
Shopify’s actual revenues for 2016-2018 ended up being $389m, $673m and $1,073m. In other words, not only were we justifiably far more optimistic than the consensus estimate, but we also were far too conservative in terms of how the company actually performed.
The nature of our job as securities analysts is to take calculated risks, in an uncertain world where the “true” answer is inherently unknowable before the fact. We operate in what many call an “efficient market” and subscribe to the belief that for the most part, markets are generally pretty efficient and it requires differentiated analysis to find a return above what the market can offer. So why did we pass on Shopify despite 1) deeply believing in the qualitative elements of the business; and, 2) seeing a meaningful gap between what we expected and the consensus expected? The answer is unfortunate but simple: we lacked confidence in ourselves. It was the first time we truly experienced such a stark divergence between our expectation and the consensus and the result was the inclination was to pound ourselves over the head with how dumb we must be, rather than the other way around. We also learned that the truly great companies use their strong business advantages, smart management and execution to raise the bar every step along the way. Obviously this is a cycle which cannot continue ad infinitum, but especially in instances where our qualitative work identifies the inherent strengths in the business and the numbers shake out to be quite fair, the consistent “raising of the bar” can be a potent driver for the stock.
Please do not judge us too harshly for our mistake on Shopify, for we have from the very beginning made one commitment above all else to both our clients and ourselves: that we will be better today than we were yesterday, and better tomorrow than we are today. While this mistake was quite costly, it ended up being a key confidence and process builder.”
2. Apple Inc. (NASDAQ: AAPL)
Number of Hedge Fund Holders: 127
Apple Inc. (NASDAQ: AAPL) is placed second on our list of 10 best Roth IRA stocks to buy according to Reddit. The company’s shares have returned 53% to investors in the past year. It is a technology company that has interests in the making and selling of electronic devices. On July 2, news publication Nikkei Asia reported that Apple was one of the first big technology firms that were testing the new 3-nanometer chip design and could deploy the tech in their devices as soon as next year.
On July 1, Apple Inc. (NASDAQ: AAPL) allowed marijunana delivery services access to the App Store of the firm, marking a policy shift in this regard for areas where marijunana has been legalised, according to a report in Marijuana Moment.
At the end of the first quarter of 2021, 127 hedge funds in the database of Insider Monkey held stakes worth $130 billion in Apple Inc. (NASDAQ: AAPL), down from 146 in the preceding quarter worth $142 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ: AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
1. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 62
Tesla, Inc. (NASDAQ: TSLA) is an electric vehicle company with a large stake in the clean energy business as well. It is ranked first on our list of 10 best Roth IRA stocks to buy according to Reddit. The stock has returned 182% to investors in the past year. The company is one of the most mentioned stocks on Reddit forums. Although the stock has pulled back in recent weeks after registering record highs earlier this year, it still has a lot of room to run as the adoption of electric vehicles continues to increase across the globe.
On July 2, Tesla, Inc. (NASDAQ: TSLA) announced that it had delivered 201,250 vehicles in the second quarter of 2021, down from around 207,000 deliveries in the previous quarter, but satisfying market predictions which had been between 180,000 to 230,000 vehicles, with the 200,000 mark identified as a key threshold.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Tesla, Inc. (NASDAQ: TSLA) with 24.4 million shares worth more than $16.3 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ: TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
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