In this article, we discuss the 5 best stocks to buy according to Motley Fool. If you want to see more stocks in this selection, click 10 Best Stocks to Buy According to Motley Fool.
5. Watsco, Inc. (NYSE:WSO)
Motley Fool’s Stake Value: $56,680,000
Percentage of Motley Fool’s 13F Portfolio: 3.62%
Number of Hedge Fund Holders: 31
Watsco, Inc. (NYSE:WSO) is a Florida-based company that provides air conditioning, heating, refrigeration, and plumbing equipment. Securities filings for Q4 2021 disclosed that Motley Fool owned 181,156 Watsco, Inc. (NYSE:WSO) shares, worth $56.6 million, representing 3.62% of the total 13F securities.
Watsco, Inc. (NYSE:WSO) posted its Q1 2022 financial results on April 21, reporting earnings per share of $2.90, outperforming market estimates by $1.10. Revenue for the quarter grew 34.10% year-over-year to $1.52 billion, topping analysts’ predictions by $135.17 million.
On April 22, Baird analyst David Manthey raised the firm’s price target on Watsco, Inc. (NYSE:WSO) to $350 from $300 and maintained a Neutral rating on the shares. The analyst said sustainability of gross margin remains a primary question, and although he expects some normalization as compared to highly elevated Q1 levels, he sees a fraction of the improvement as sustainable. The analyst views Watsco, Inc. (NYSE:WSO)’s strengthened OEM partnerships, technology advancements, improved sales, and the company’s internal parts initiative continuing in the foreseeable future.
In Q4 2021, 31 hedge funds in the database of Insider Monkey reported owning stakes worth $445.5 million in Watsco, Inc. (NYSE:WSO), compared to 30 funds in the earlier quarter, holding stakes in the company valued at $414.8 million. Tom Gayner’s Markel Gayner Asset Management is the largest shareholder of Watsco, Inc. (NYSE:WSO), with 418,750 shares worth $131 million.
4. Microsoft Corporation (NASDAQ:MSFT)
Motley Fool’s Stake Value: $65,220,000
Percentage of Motley Fool’s 13F Portfolio: 4.17%
Number of Hedge Fund Holders: 262
Microsoft Corporation (NASDAQ:MSFT) is one of the Big Five United States technology giants. The company is involved in software development, computer hardware, consumer electronics, cloud computing, video games, and corporate venture capital.
13F filings for the fourth quarter of 2021 reveal that Motley Fool owns 193,922 shares of Microsoft Corporation (NASDAQ:MSFT), worth $65.2 million, representing 4.17% of the total securities.
Microsoft Corporation (NASDAQ:MSFT) posted Q1 2022 earnings on April 26. The company’s earnings per share of $2.22 topped consensus estimates by $0.02. The revenue of $49.36 billion grew 20.09% year-over-year, ahead of analysts’ predictions by $311.18 million.
On April 26, BMO Capital analyst Keith Bachman reiterated an Outperform rating on Microsoft Corporation (NASDAQ:MSFT) but lowered the firm’s price target on the stock to $340 from $355 to account for general compression of software valuations. Even with the possible impact of a weak PC market on Windows, Office, and Surface growth, he believes that his FY23 MPC estimates are reasonable, the analyst told investors in a research note.
According to Insider Monkey’s data, 262 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT) at the end of December 2021, compared to 250 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the leading shareholder of the company, with 26.8 million shares worth over $9 billion.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter, following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue growing 20% in constant currency, beating Street estimates by 3%; an acceleration in Commercial Cloud revenue to 34% constant-currency growth; operating margins expanding to just under 45%; earnings growth of 23%; and free cash flow growth of 30%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by total addressable market expansion and continued market share gains across its disruptive cloud product portfolio.”
3. Apple Inc. (NASDAQ:AAPL)
Motley Fool’s Stake Value: $75,164,000
Percentage of Motley Fool’s 13F Portfolio: 4.80%
Number of Hedge Fund Holders: 134
Apple Inc. (NASDAQ:AAPL) is an American multinational technology corporation that specializes in consumer electronics, software, and online services. Motley Fool held 423,290 Apple Inc. (NASDAQ:AAPL) shares in the fourth quarter of 2021, worth $75.1 million, representing 4.80% of the total 13F portfolio. The hedge fund increased its stake in Apple Inc. (NASDAQ:AAPL) by 3% in Q4 2021.
Baird analyst William Power forecasts a strong Q2 earnings report for Apple Inc. (NASDAQ:AAPL). The analyst continues to like the long-term growth opportunity and robust cash flow, but with the stock at a historically high valuation compared to the S&P 500 and possible risks in Europe and China, he would be more aggressive on any weakness in the shares. He maintained an Outperform rating and a $190 price target on Apple Inc. (NASDAQ:AAPL) on April 25.
According to Insider Monkey’s Q4 data, Apple Inc. (NASDAQ:AAPL) was found in the public stock portfolios of 134 hedge funds, compared to 120 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway held the largest stake in Apple Inc. (NASDAQ:AAPL), with a position worth $157.5 billion.
Here is what ClearBridge Investments Global Growth Strategy has to say about Apple Inc. (NASDAQ:AAPL) in its Q4 2021 investor letter:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
2. Alphabet Inc. (NASDAQ:GOOG)
Motley Fool’s Stake Value: $75,586,000
Percentage of Motley Fool’s 13F Portfolio: 4.83%
Number of Hedge Fund Holders: 158
Alphabet Inc. (NASDAQ:GOOG) is a California-based multinational tech firm that operates as the parent company for Google and its subsidiaries. Motley Fool, as of Q4 2021, owned 26,122 shares of Alphabet Inc. (NASDAQ:GOOG), worth $75.5 million, representing 4.83% of the total 13F holdings.
On April 26, Alphabet Inc. (NASDAQ:GOOG) reported its Q1 2022 financial results, posting earnings per share of $24.62, falling short of analysts’ predictions by $0.92. The first quarter revenue grew close to 23% year-over-year to $68.01 billion, ahead of market consensus by 142.21 million. The company also authorized a share repurchase program of $70 billion of its Class A and Class C shares.
Credit Suisse analyst Stephen Ju on April 21 reiterated an Outperform rating on Alphabet Inc. (NASDAQ:GOOG) but lowered the firm’s price target on the stock to $3,450 from $3,500. The analyst continues to collect advertiser feedback suggesting increased spend allocation across Google properties amid lingering IDFA headwinds, and his FXN growth estimates remain unchanged.
Among the hedge funds tracked by Insider Monkey, 158 funds were bullish on Alphabet Inc. (NASDAQ:GOOG) at the end of the fourth quarter of 2021, collectively holding stakes worth $36.6 billion. Chris Hohn’s TCI Fund Management is the leading position holder in the company, with 2.95 million shares valued at $8.5 billion.
Here is what Ensemble Capital has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q1 2022 investor letter:
“Google (6.6% weight in the Fund): Google is one of the most extraordinary businesses of the digital age. Its mission is “to organize the world’s information and make it universally accessible and useful.” This is such a broad organizing principle for a company whose value is built on doing just that. When you think about the mass adoption of the Internet, smartphones, social and digital media, and e-commerce among billions of users every day, and the exponential growth of data that has brought, we all know how valuable Google’s role in collecting, organizing, and filtering all that information has become in our daily lives.
NVidia’s CEO Jensen Huang put the challenge really well in an interview with Tech Analyst Ben Thompson recently:
“We know that there are a trillion things on the Internet and the number of things on the Internet is large and expanding incredibly fast, and yet we have this little, tiny personal computer called a phone… How do we possibly figure out of the trillion things on the internet that we want to see on our little tiny phone?
Well, there needs to be a filter in between… basically an AI, a recommender system. A recommender that figures out based on the nature of the content, the characteristics of the content, the features of the content, based on your implicit and your explicit [preferences], find a way through all of that to predict what you would like to see.
I mean, that’s a miracle! That’s really quite a miracle to be able to do that at scale for everything from movies and books and music and news and videos and you name it.”
While Huang was talking about the role of artificial intelligence more generally amidst the data explosion, it’s hard not to think of Google as most fitting the role of the Internet’s leading “recommender system,” with its de facto role as the gateway to the Internet. In fact, it’s no coincidence that Google is a leader in AI technology, which it applies across most of its services…” (Click here to see the full text)
1. Amazon.com, Inc. (NASDAQ:AMZN)
Motley Fool’s Stake Value: $81,611,000
Percentage of Motley Fool’s 13F Portfolio: 5.21%
Number of Hedge Fund Holders: 279
Amazon.com, Inc. (NASDAQ:AMZN) is a leading force in the e-commerce, cloud computing, artificial intelligence, and digital streaming spaces. It is one of the Big Five US tech companies. As of Q4 2021, Motley Fool held 24,476 shares of Amazon.com, Inc. (NASDAQ:AMZN), worth $81.6 million, representing 5.21% of the total 13F holdings. The hedge fund elevated its stake in the company by 2% in Q4.
On April 22, Credit Suisse analyst Stephen Ju maintained an Outperform rating and a $4,100 price target on Amazon.com, Inc. (NASDAQ:AMZN) ahead of the company’s Q1 earnings. The analyst said Amazon.com, Inc. (NASDAQ:AMZN) remains a top pick as it is “the only company that has the potential to deliver accelerating revenue AND free cash flow growth”. His bullish thesis is based on operating margin expansion in the e-commerce segment, optionality for quicker than expected free cash flow growth through its advertising segment, and the higher AWS revenue forecasts.
Among the hedge funds tracked by Insider Monkey, 279 funds were bullish on Amazon.com, Inc. (NASDAQ:AMZN) at the end of December 2021, up from 242 funds in the preceding quarter. Boykin Curry’s Eagle Capital Management is a significant shareholder of the company, with 677,828 shares worth $2.26 billion.
Here is what Oakmark Fund has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter:
“Amazon is the leading e-commerce and cloud-computing provider in the world. In e-commerce, two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (AWS) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale, and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at an attractive multiple of normalized earnings and a discount to its peer-weighted enterprise value-to-sales multiple.”
You can also take a look at 10 Best Stocks to Buy Now According to Billionaire David Harding and 10 Best Stocks to Buy Now According to Billionaire Nicholas Pritzker’s Tao Capital.
