1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 184
Meta Platforms, Inc. (NASDAQ:META) was one of the top stock picks of Redditors for building a $1,000 portfolio. The Reddit community believes that Meta Platforms, Inc. (NASDAQ:META) has an attractive P/E ratio and it has entered value territory, making it an attractive investment opportunity.
On August 19, Morgan Stanley analyst Brian Nowak reiterated an ‘Overweight’ rating on Meta Platforms, Inc. (NASDAQ:META) and lowered the price target to $225 from $280. Declining total engagement and lower monetization of reels are creating greater revenue headwinds, the analyst told investors. While Meta Platforms, Inc. (NASDAQ:META) faces execution uncertainty, the analyst believes it is more than factored into the price at current levels.
Among the hedge funds tracked by Insider Monkey, Boykin Curry’s Eagle Capital Management is a significant shareholder of Meta Platforms, Inc. (NASDAQ:META), with 7.3 million shares worth $1.18 billion. Overall, 184 hedge funds were bullish on Meta Platforms, Inc. (NASDAQ:META) at the end of Q2 2022, compared to 200 funds in the quarter prior to that.
Here is what RGA Investment Advisors specifically said about Meta Platforms, Inc. (NASDAQ:META) in its Q2 2022 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) f/k/a Facebook– we followed Facebook for years and were often asked “why own Twitter when you can buy Facebook?” Sure enough, Twitter’s return was far better over our holding period and we now deployed a decent portion of our Twitter proceeds into META. META today strikes us as one of the cheapest stocks in the entire market and one of the more interesting setups we have seen. META was hit with a triple whammy of tough COVID comps, changes in Apple’s privacy policies and emerging competition from TikTok. Despite all this, the company continues to grow, albeit at slower rates. At its lows this year, META was trading for a low teens forward P/E (15x 2022 numbers today) and this is despite investments in the Reality Labs division at around a $10b annualized rate. If we exclude the Reality Labs investments, the core META properties of Facebook, Instagram and WhatsApp would earn somewhere around 23% more in bottom line EPS. This would chop about 2.5 turns off the company’s P/E. Speaking realistically, there is no sign Mark Zuckerberg would entirely stop these investments; however, we do think Zuckerberg is realistic about his stock price and very well might defer a large portion of the investment until core earnings reaccelerate. Further, we think it is appropriate to value the company on a sum of the parts basis and rather than fully expense the Reality Labs investments against the core properties, we should think about what the actual value of that investment might yield. Either way, even fully expensing Reality Labs, this company is far too cheap to ignore.”
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