In this article, we will take a look at the 5 best stocks to buy on the dip for long term. To see more such companies, go directly to 10 Best Stocks to Buy on the Dip for Long Term.
5. Paycom Software, Inc. (NYSE:PAYC)
Number of Hedge Fund Holders: 40
Paycom Software, Inc. (NYSE:PAYC) ranks 5th in our list of the best buy the dip stocks to buy according to Citi. Paycom Software, Inc. (NYSE:PAYC) has lost about 43% year to date through November 12. Investment firm UBS recently started covering the stock with a Buy rating and a $235 price target.
As of the end of the second quarter of 2023, 40 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in Paycom Software, Inc. (NYSE:PAYC). The biggest stakeholder of Paycom Software, Inc. (NYSE:PAYC) was Greg Poole’s Echo Street Capital Management which owns a $347 million stake in the company.
Polen U.S. SMID Company Growth Strategy made the following comment about Paycom Software, Inc. (NYSE:PAYC) in its Q3 2023 investor letter:
“The most significant detractors from the Portfolio’s relative performance in the quarter included Farfetch, Doximity, and Paycom Software, Inc. (NYSE:PAYC).
Paycom, a leading provider of cloud-based human capital management software for small and mid-sized businesses, was another detractor in the period. Despite reporting positive results, the investors seemed concerned about the company’s performance in the year’s second half. As a result, the stock fell by almost 20% on the day of the report. However, the company is committed to investing in its BETI platform to onboard more customers, which may have a short-term negative impact on revenues. But, in the long run, it can benefit the company’s margins. Our positive long-term outlook remains unchanged. We still believe the company has an attractive growth potential in a large addressable market.”
4. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 52
Lockheed Martin Corporation (NYSE:LMT) shares have lost about 6% year to date through November 12. But Citi believes Lockheed Martin Corporation (NYSE:LMT) should be bought on the dip for long-term gains.
Insider Monkey’s database shows that 52 hedge funds had stakes in Lockheed Martin Corporation (NYSE:LMT) as of the end of the second quarter of 2023. The biggest hedge fund stakeholder of Lockheed Martin Corporation (NYSE:LMT) was John Overdeck and David Siegel’s Two Sigma Advisors which owns a $364 million stake in the company.
RiverPark Advisors made the following comment about Lockheed Martin Corporation (NYSE:LMT) in its Q3 2023 investor letter:
“Lockheed Martin Corporation (NYSE:LMT): LMT is the world’s largest aerospace and defense contractor. With about 70% of its $66 billion in revenue from the U.S. government, the company is well positioned to benefit from U.S. defense budget growth, historically 5%-6% per year, as well as increased global military spending. With a $158 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year (up from 141 in 2022) in the coming years, we believe the company could grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions, debt repayment, a 2.9% dividend yield, and continued share buybacks from more than $6 billion per year of free cash flow should lead to even greater shareholder returns. We re-initiated a small position in August.”
3. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders: 52
Las Vegas Sands Corp. (NYSE:LVS) shares have lost about 3% year to date through November 12. Las Vegas Sands Corp. (NYSE:LVS) in October posted Q3 results. Adjusted EPS in the quarter came in at $0.55, meeting estimates. Revenue in the quarter jumped 177.2% year over year to $2.8 billion, beating estimates by $80 million.
As of the end of the second quarter of 2023, 52 hedge funds tracked by Insider Monkey reported owning stakes in Las Vegas Sands Corp. (NYSE:LVS). The most significant stakeholder of Las Vegas Sands Corp. (NYSE:LVS) during this period was Steve Cohen’s Point72 Asset Management which owns a $141 million stake in the company.
Baron Real Estate Fund made the following comment about Las Vegas Sands Corp. (NYSE:LVS) in its first quarter 2023 investor letter:
“In the first quarter of 2023, we re-acquired shares in Macau-centric casino gaming companies Wynn Resorts, Limited and Las Vegas Sands Corp. (NYSE:LVS) with the following considerations in mind:
Since the early days of the COVID-19 pandemic in 2020 through mid-2022, the shares of Wynn and Las Vegas Sands significantly underperformed the share price performance of other U.S.-centric casino gaming and lodging companies due in large part to extremely limited travel mobility to Macau during China’s Zero-COVID policy. Just as business activity and the shares of U.S.-centric casino gaming companies rebounded sharply once people felt comfortable to travel to Las Vegas and other U.S. regional gaming markets, we have felt that Macau business activity and the shares of Macau-centric casino gaming companies would follow in the footsteps of Las Vegas-centric and other U.S. gaming and lodging companies and inflect positively once people were permitted to travel to Macau more freely.
China recently abandoned it’s Zero-COVID policy and removed travel restrictions in January 2023. We now believe both Wynn and Las Vegas Sands are well positioned to capitalize on China’s reopening.
For Las Vegas Sands, we believe additional drivers for future value creation beyond a re-emergence in Macau business activity include: (i) our expectation for a continued positive inflection in visitation and cash flow at Marina Bay Sands, Singapore; (ii) Las Vegas Sands’ plans to invest $4.5 billion in Macau and Singapore in the next 10 years; (iii) the company’s plans to pursue a New York casino and its prioritization of Texas as a new market; and (iv) the possibility that Las Vegas Sands reinstates its dividend in the next few years…” (Click here to read the full text)
2. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 78
Datadog, Inc. (NASDAQ:DDOG) shares pulled back in September when Citi called it one of the best buy the dip stock for the long term. But Datadog, Inc. (NASDAQ:DDOG) has since recovered. Datadog, Inc. (NASDAQ:DDOG) shares have gained about 43% year to date through November 12.
Earlier this month Datadog, Inc. (NASDAQ:DDOG) posted Q3 results. Adjusted EPS in the quarter came in at $0.45, beating estimates by $0.11. Revenue in the quarter increased by 25.4% year over year to $547.54 million, beating estimates by $23.3 million.
RiverPark Large Growth Fund made the following comment about Datadog, Inc. (NASDAQ:DDOG) in its Q1 2023 investor letter:
“Datadog, Inc. (NASDAQ:DDOG): DDOG was a top detractor in the quarter. The company reported strong 4Q results including 44% revenue growth and 30% earnings growth but gave cautious revenue guidance for 2023. Macroeconomic headwinds have caused clients to slow the transition of workloads to the cloud and instead to optimize current capacity. Despite this temporary slowdown, DDOG still expects revenue to grow nearly 25% in 2023.
As businesses have transitioned to cloud software infrastructure, much of which is in isolated data silos, it has become increasingly difficult for data engineers to monitor and analyze system performance. Datadog provides a SaaS software platform to monitor and analyze the system performance of software applications and IT infrastructure by giving users a single page view to observe their company’s technology stack. The company has quickly grown its revenue from $100 million in 2017 to $1.7 billion in 2022 and, we believe, should continue to grow revenue at more than 20% annually as it penetrates its $40 billion and fast-growing market. Less than 10% of software applications are currently monitored. The company’s dollar-based net retention rate has been 130%+ as existing customers continue to use an increasing number of products and the company continues to add new features. As of 4Q22, 81% of customers used 2+ products, while only 18% of customers used 6+ products (up from less than 1% two years ago). As an extremely capex light software business, DDOG already has significant free-cash-flow ($350m in 2022) and free-cash-flow margins (21% in 2022).”
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) shares were declining in September and that’s when Citi said the stock should be bought on the dip for long-term gains. Since then Apple Inc. (NASDAQ:AAPL) has recovered. Over the past one year Apple Inc. (NASDAQ:AAPL) shares have gained about 25% in value.
Apple Inc. (NASDAQ:AAPL) is up to something big in the AI space and could reveal its AI project in 2024, believes Morgan Stanley’s analyst Erik Woodring, who recently said the following in a note:
“We believe Apple will emerge as one of the key winners – or ‘Edge AI Enablers’ – in this race given the unique data from Apple’s 2 billion+ devices and 1.2 billion+ users, Apple’s focus on data privacy, and Apple’s leading hardware, software, silicon and services vertical integration.”
As of the end of the second quarter of 2023, 135 hedge funds tracked by Insider Monkey reported owning stakes in Apple Inc. (NASDAQ:AAPL). The biggest stakeholder of Apple Inc. (NASDAQ:AAPL) was Warren Buffett’s Berkshire Hathaway which had a $178 billion stake in the company.
RiverPark Advisors made the following comment about Apple Inc. (NASDAQ:AAPL) in its Q3 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL): Apple shares were a top detractor in the quarter following reports of the Chinese government banning iPhone use by government employees. Additionally, while the iPhone 15 rollout went generally as expected, the market was underwhelmed by the upgrades in the new phone. Despite these overhangs, early reports from the supply chain seem to indicate demand for the new phone is in line with or better than investor expectations. In August, the company reported a broadly in-line fiscal 3Q23 with $82 billion of revenue and $24 billion of free cash flow. High margin Services Revenue continues to grow faster than the overall business leading to gross and operating margin expansion.
With an installed base of 2 billion active devices and significant growth of the company’s recurring revenue Services segment (now 18% of revenue), we believe that Apple remains one of the most innovative, best positioned and most profitable companies in the mobile technology industry.”
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