This article presents an overview of the 5 Best Stocks To Buy Before Recessions. For a detailed overview of such stocks, read our article, 13 Best Stocks To Buy Before Recessions.
5. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 134
Apple Inc (NASDAQ:AAPL) is one of the best stocks to own during or before recessions as well as during market bull runs since Apple Inc’s (NASDAQ:AAPL) products have a strong demand which is expected to remain robust for decades to come. Apple Inc (NASDAQ:AAPL) is also a dividend payer with years of consistent payments and a strong growth track record.
Apple Vision Pro is the latest Apple Inc (NASDAQ:AAPL) product to create waves around the world. Wedbush’s Dan Ives recently said he’s surprised to see a strong demand for the headset.
“While price points are clearly high at $3,500 with a limited audience outside of developers out of the gates, we are surprised at the early mass market appeal Vision Pro is sparking with a jaw dropper 600 apps (and counting) built for Vision Pro well above expectations,” Ives said in a note. He has a $250 price target on the stock.
Bireme Capital stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2023 investor letter:
“We also shorted Apple Inc. (NASDAQ:AAPL) in Q3. At our average price of around $190 per share, Apple traded at 30x peak earnings and a $2.8 trillion market cap. While Apple is indeed a magnificent company, this valuation is simply too rich for a business with a substantial cyclical component. The company is projected to grow revenue at a mere 4% rate between 2022 and 2026. We think the total return on Apple stock will be lower than the market, and especially our long positions, over the next few years.”
4. Visa Inc (NYSE:V)
Number of Hedge Fund Investors: 167
Visa Inc (NYSE:V) continues to thrive even during recession because Visa Inc (NYSE:V) is the backbone of a major chunk of financial transactions taking place in the world. Visa Inc (NYSE:V) is also a dividend payer, with 15 years of consistent dividend increases.
In its October 2023 investor letter, Lakehouse Capital stated the following regarding Visa Inc. (NYSE:V):
“Visa Inc. (NYSE:V) reported a strong result with net revenue increasing 11% year-on-year to $8.6 billion and non-GAAP earnings per share increasing by 21% to $2.33. As has been the case for many years now, the scalable nature of the business allows for revenue growth to outpace its costs, which places the company in a good position to navigate through this inflationary period. The network continues to grow, with credentials and merchant locations up 7% and 17%, respectively. Cross-border travel-related spend also maintained its robust growth, increasing 26% year-on-year while Visa Direct reported 7.5 billion transactions, up 19% yearon-year, progressing on penetrating categories such as cross-border remittances. Altogether, we’re pleased with how the business is tracking and remain positive on Visa’s outlook.”
3. Alphabet Inc Class A (NASDAQ:GOOGL)
Number of Hedge Fund Investors: 221
Search. YouTube. Health Sciences. Cloud. AI. Machine Learning. The list of growth catalysts for Alphabet Inc Class A (NASDAQ:GOOGL) keeps increasing. Many believe it is one of the undervalued stocks to buy for the long term as the market is still not appreciating Alphabet Inc Class A’s (NASDAQ:GOOGL) business expansion while the stock’s valuation also remains depressed amid fears that AI tools like Perplexity and ChatGPT might dent Alphabet Inc Class A’s (NASDAQ:GOOGL) search business. But experts say such fears are overblown.
The FPA Crescent Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its fourth quarter 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) continued going from strength to strength during 2023 despite concerns that competition may infringe on the company’s dominant position in Search. Thus far, Alphabet has continued to hold its own, and we look forward to seeing how the company incorporates further AI developments across the Alphabet ecosystem. Lastly, we are hopeful that the impending arrival of a new CFO will bring a renewed focus on efficiency – an area where we believe Alphabet has ample room for improvement.”
2. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 286
Amazon.com Inc (NASDAQ:AMZN) keeps thriving even during recessions since Amazon.com Inc’s (NASDAQ:AMZN) platform is used by millions to buy essentials. Amazon.com Inc’s (NASDAQ:AMZN) Cloud business AWS also provides a backbone to millions of websites and small businesses that operate online around the world.
It is the fourth biggest holding of the Goldman Sachs Defensive Equity ETF.
A total of 286 hedge funds had stakes in Amazon.com Inc (NASDAQ:AMZN) as of the end of the third quarter of 2023.
Polen Focus Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2023 investor letter:
“For the full year, the top relative and absolute contributors were Amazon.com, Inc. (NASDAQ:AMZN), Salesforce, and ServiceNow. Amazon shares appreciated 88% in 2023, driven primarily by rapidly expanding operating profit margins and free cash flow growth. After the pandemic, Amazon experienced a period of inefficiency and overinvestment in its distribution and logistics infrastructure. Amazon is now leveraging these investments as growth returned to its e-commerce business in 2023 after a highly unusual 2022. At the same time, Amazon’s rapidly growing and high-margin advertising business is contributing strongly to the entire company’s operating profit growth. The AWS (Amazon Web Services) cloud infrastructure and services business continued to slow in 2023 as customers anticipating a more difficult economic environment looked to save money on their cloud spend, but these cloud spending optimizations began to stabilize in the second half of 2023. We now expect customer interest in generative AI will begin to contribute to growth.”
1. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Fund Investors: 306
Microsoft Corp (NASDAQ:MSFT) is among the most popular stock among the elite hedge funds tracked by Insider Monkey. It is also the biggest holding of the Goldman Sachs’ Defensive Equity ETF. What makes Microsoft Corp (NASDAQ:MSFT) a strong stock to buy before recessions is its huge penetration in the enterprise sector which makes its products indispensable for small businesses, offices and individuals. Microsoft Corp’s (NASDAQ:MSFT) huge investments in AI and its plans to revive search business are also expected to bear fruit in the coming years.
Madison Sustainable Equity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:
“Microsoft Corporation’s (NASDAQ:MSFT) sustainable scorecard was updated with an unchanged rating of Above Average. The company’s board has an official Environmental, Social, and Public Policy Committee in addition to the traditional Audit, Compensation, and Governance committees. For ten years, Microsoft has publicly released data measuring the diversity of its workforce. With the prominence of Artificial Intelligence (AI), the company has launched a 5-point blueprint for governing AI to address public policy and regulation. Environmentally, Microsoft has multiple programs to be carbon negative by 2030. The company has signed Purchase Power Agreements for carbon-free energy totaling 13.5 Gigawatts.”
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