In this article, we discuss the 5 best stocks to buy according to Chris James’ Engine No. 1. If you want to read our detailed analysis of James’ history, and hedge fund performance, go directly to the 10 Best Stocks to Buy According to Chris James’ Engine No. 1.
5. NextEra Energy, Inc. (NYSE: NEE)
James’ Stake Value: $14,260,000
Percentage of Chris James’ 13F Portfolio: 5.23%
Number of Hedge Fund Holders: 63
NextEra Energy, Inc. (NYSE: NEE) ranks 5th on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. The Florida-based utility company is the largest solar and wind energy generator in the US, with approximately 54,727 megawatts of net generating capacity as of December 2020. The company was founded in 1925 and was formerly known as FPL Group, Inc. In 2020, the company invested approximately $14.6 billion in energy infrastructure in the US. By 2022, NextEra Energy, Inc. plans to invest between $50 and $55 billion in new infrastructure. NextEra Energy, Inc. just received approval for the Chesapeake Solar Project, a 118-MW solar project in Virginia that will become operational by the end of 2022. The solar investment costs approximately $135 million. NextEra Energy, Inc. (NYSE: NEE) pays its shareholders an annual dividend of $1.54 per share, with a 2.10% dividend yield. NEE stock has returned more than 19% to investors in the past twelve months.
The company has a market cap of $143 billion. The company’s revenue in the first quarter of 2021 came in at $3.7 billion, down from $4.6 billion in the same period in 2020. On a GAAP basis, first-quarter net income attributable to NextEra Energy was $1.6 billion, or $0.84 per share, compared to $421 million, or $0.21 per share, in the first quarter of 2020. As of June 18, NextEra Energy, Inc. (NYSE: NEE) shares traded at $73.28 and have a P/E ratio of 34.73. The 52-week price range of NEE is $58.44 – $87.69. On May 18, Morgan Stanley maintained its Equal-Weight rating on NextEra Energy, Inc. and upgraded its price target to $75 per share.
Engine No. 1 owns 188,604 shares in the company worth $14.4 million, representing 5.23% of the fund’s investment. Out of the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in NextEra Energy, Inc. (NYSE: NEE) with 13.6 million shares worth more than $1.03 billion.
4. Exxon Mobil Corporation (NYSE: XOM)
James’ Stake Value: $51,218,000
Percentage of Chris James’ 13F Portfolio: 18.8%
Number of Hedge Fund Holders: 65
Exxon Mobil Corporation (NYSE: XOM) ranks 4th on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. Exxon Mobil Corporation is one of the biggest oil and gas companies in the US. The company sells and transport, oil, gas, and petrochemical products. The Texas-based oil company pays an annual dividend of $3.48 per share with a 5.61% dividend yield. XOM stock has returned more than 30% to investors in the past twelve months.
The company has a market of $256 billion. Exxon Mobil Corporation (NYSE: XOM) reported first-quarter revenue of $2.6 billion, up 376% from $536 million in the first quarter of 2020. As of June 18, Exxon Mobil Corporation (NYSE: XOM) shares trade at $60.40. The 52-week price range of XOM is $31.11 – $64.80. On June 15, Credit Suisse maintained a Neutral rating on Exxon Mobil Corporation, with a price target of $72 per share.
As of the end of the first quarter, Engine No. 1 LLC has a significant holding in Exxon Mobil Corporation (NYSE: XOM). The hedge fund run by Chris James owns 917,400 shares in the company worth over $51.3 million, representing 18.8% of their investment portfolio. At the end of the first quarter of 2021, 65 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in Exxon Mobil Corporation (NYSE: XOM), up from 63 the preceding quarter worth $2.2 billion.
First Eagle Investment Management, in their Q1 2021 investor letter, mentioned Exxon Mobil Corporation (NYSE: XOM) and shared their insights on the company. Here is what the fund said:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. Recovering oil prices on improvements in demand for crude and other distillates helped fuel strong performance across the energy complex, including shares of Exxon Mobil. The company’s financial results have improved markedly from the Covid-related demand shocks in 2020, helping ease concerns about the sustainability of Exxon’s dividend, which is among the largest in the S&P 500 Index. In addition, Exxon has reiterated its commitment to reducing capital expenditures, which we believe should further bolster the resilience of its cash flows against future demand slowdowns.”
3. General Motors Company (NYSE: GM)
James’ Stake Value: $21,117,000
Percentage of Chris James’ 13F Portfolio: 7.75%
Number of Hedge Fund Holders: 86
General Motors Company (NYSE: GM) ranks 3rd on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. Since 1908, the Detroit-based automaker has been producing cars, trucks, SUVs, and automobile parts all around the world. Among the brands General Motors Company owns are GMC, Chevrolet, Baojun, Buick, and Cadillac. The old car manufacturer said on June 16 that it has increased its investment in electrified and autonomous vehicles to $35 billion through 2025, up from $27 billion anticipated in November 2020. GM stock has returned more than 123% to investors in the past twelve months.
The company has a market cap of $85 billion. The company’s first-quarter revenue came in at $32.5 billion, down from $32.7 billion in the first quarter of 2020. As of June 18, General Motors Company (NYSE: GM) shares trade at $58.76. The 52-week price range of GM is $23.33 – 64.30. On June 6, Barclays maintained an Overweight rating on General Motors Company, with a price target of $70 per share.
Chris James’ Engine No. 1 recently added General Motors Company (NYSE: GM) in its portfolio where it owns 367,500 shares in the company worth $21 million, representing 7.75% of the fund’s investment portfolio. At the end of the first quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $8.05 billion in General Motors Company (NYSE: GM), up from 70 the preceding quarter worth $6.33 billion.
Like Exxon Mobil Corporation (NYSE: XOM), Deere & Company (NYSE: DE), and Microsoft Corporation (NASDAQ: MSFT), General Motors Company (NYSE: GM) is one of the best stocks to buy according to Chris James’ Engine No. 1.
2. Square, Inc. (NYSE: SQ)
James’ Stake Value: $34,082,000
Percentage of Chris James’ 13F Portfolio: 12.51%
Number of Hedge Fund Holders: 92
Square, Inc. (NYSE: SQ) ranks 2nd on the list of 10 best stocks to buy according to Chris James’ Engine No. 1. The San Francisco-based fintech firm creates a commerce ecosystem that assists businesses with digital inventories, receipts, and sales records. In 2013, Square, Inc. launched the Cash App mobile payment platform to compete with other digital payment services like PayPal Holdings, Inc.’s (NASDAQ: PYPL) Venmo. The fintech firm recently teamed up with Blockstream Mining, a blockchain technology provider, to develop a $5 million open-source, solar-powered bitcoin mining facility. Square, Inc. (NYSE: SQ) acquired about 4,709 bitcoins for $50 million in October 2020 and added another $170 million in February. SQ stock has returned more than 127% to investors in the past twelve months.
The company has a market cap of $103 billion. The company’s first-quarter gross profit grew 79% to $936 million, up from $539 million in the first quarter of 2020. As of June 18, Square, Inc. (NYSE: SQ) shares trade at $237.05 and have a P/E ratio of 331.54. The 52-week price range of SQ is $98.93 – $283.19. On May 10, BMO Capital maintained a Market Perform rating on Square, Inc., with a price target of $269 per share.
Chris James’ Engine No. 1 owns 150,109 shares in the company worth $34 million, representing 12.51% of the fund’s investment portfolio. At the end of the first quarter of 2021, 92 hedge funds in the database of Insider Monkey held stakes worth $9.20 billion in Square, Inc. (NYSE: SQ), up from 89 the preceding quarter worth $8.82 billion.
Like Exxon Mobil Corporation (NYSE: XOM), Deere & Company (NYSE: DE), and Microsoft Corporation (NASDAQ: MSFT), Square, Inc. (NYSE: SQ) is one of the best stocks to buy according to Chris James’ Engine No. 1.
RiverPark Funds, in their Q1 2021 investor letter, mentioned Square, Inc. (NYSE: SQ) and shared their insights on the company. Here is what the fund said:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to passing through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.
We estimate that the company can grow its gross profit more than 30% and EBITDA by more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
1. Microsoft Corporation (NASDAQ: MSFT)
James’ Stake Value: $16,781,000
Percentage of Chris James’ 13F Portfolio: 6.16%
Number of Hedge Fund Holders: 251
Topping the list of the 10 best stocks to buy according to Chris James’ Engine No. 1 is American tech giant Microsoft Corporation (NASDAQ: MSFT). On top of developing the Windows operating system and providing Microsoft Office products, the Washington-based tech giant offers cloud computing services through Microsoft Azure. In 2016, the company’s cloud infrastructure accounted for only 7% of the market, but in 2020, it has grown by 20%. On the other hand, Microsoft Corporation (NASDAQ: MSFT) currently boasts 200 million active business Microsoft 365 users on a monthly basis. The company currently pays an annual dividend of $2.24 per share with a 0.86% dividend yield. MSFT stock has offered more than 33% returns to investors in the past twelve months.
The company has a market cap of $1.95 trillion. Revenue for the third quarter of 2021 was $41.7 billion, up 19% from $35.02 billion the previous year. As of June 18, Microsoft Corporation (NASDAQ: MSFT) shares traded at $259.43 and have a P/E ratio of 35.35. The 52-week price range of MSFT is $193.55 – $263.19. KGI Securities initiated coverage on Microsoft Corporation on June 2 with an Outperform rating and a $300 per share price target.
Chris James’ Engine No. 1 LLC owns 71,177 shares of Microsoft Corporation (NASDAQ: MSFT) worth $16.8 million, representing 6.16% of its investment portfolio. The hedge fund trimmed its stake in MSFT by 26% in the first quarter of 2021. At the end of the first quarter of 2021, 251 hedge funds in the database of Insider Monkey held stakes worth $60 billion in Microsoft Corporation (NASDAQ: MSFT). Out of the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ: MSFT) with 23.9 million shares worth more than $5.66 billion.
Our calculations show that Microsoft Corporation (NASDAQ: MSFT) ranks 2nd in our list of the 30 Most Popular Stocks Among Hedge Funds.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned Microsoft Corporation (NASDAQ: MSFT) and shared their insights on the company. Here is what the fund said:
“We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks. The FAANGs and Microsoft delivered mixed results during the quarter and we continue to be mindful of our weighting to these mega-cap growth stocks to ensure they are not limiting our ability to add diversity through new ideas. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
You can also take a peek at 10 Best Spring Stocks to Buy Now and 10 Best Dividend Stocks to Buy According to Billionaire Ray Dalio.
