In this article, we discuss the 5 best stocks to invest your $1000 according to Reddit. If you want to see more stock picks of Redditors that are geared towards building a $1,000 portfolio, check out the 10 Best Stocks to Invest Your $1000 According to Reddit.
5. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 44
Snap Inc. (NYSE:SNAP) is a California-based social media company. As of August 26, the stock has lost more than 77% in value year-to-date. Redditors were keen on buying Snap Inc. (NYSE:SNAP) shares on the dip. On August 22, Loop Capital analyst Alan Gould reiterated a ‘Buy’ rating on Snap Inc. (NYSE:SNAP) but lowered the price target on the stock to $19 from $26 as part of a broader research note on digital advertising platforms. The analyst observed that advertising activity has been “somewhat mixed” during the summer, and multiple online businesses that gained during the pandemic are now “comping negative”. The analyst further contended that the monetization at TikTok is having some cannibalization effect on other social media platforms, including Snapchat.
Among the hedge funds tracked by Insider Monkey, 44 funds were bullish on Snap Inc. (NYSE:SNAP) at the end of Q2 2022, compared to 54 funds in the prior quarter. Two Sigma Advisors is a significant position holder in the company, with 14 million shares worth $185 million.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Snap Inc. (NYSE:SNAP) was one of them. Here is what the fund said:
“Snap Inc. (NYSE:SNAP) is the leading social network among teens and young adults in North America and a growing number of overseas markets, including Western Europe and India. Shares fell this quarter on a greater-than anticipated impact from Apple’s new privacy changes for iOS mobile devices. These changes made it more difficult for Snapchat to measure the effectiveness of ads shown on its platform. We believe this is a near-term, industry-wide issue for which Snap Inc. (NYSE:SNAP) is already developing a solution. Longer term, we continue to view Snap Inc. (NYSE:SNAP) favorably as the company sustains its rapid pace of product innovation and expands its premium partnerships with advertisers.”
4. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 48
Altria Group, Inc. (NYSE:MO) makes and sells smokable and oral tobacco products in the United States. On July 28, the company released its earnings report for the second quarter of 2022. Earnings per share came in at $1.26, beating analysts’ estimates by $0.01. Revenue was $5.37 billion, which fell short of the market consensus by $48.2 million. On August 25, the company declared a quarterly dividend of $0.94 per share, a 4.4% increase from its prior dividend of $0.90. The dividend is payable on October 11, to shareholders of record on September 15. The forward yield was 8.18%.
Jefferies analyst Owen Bennett reaffirmed a ‘Buy’ rating on Altria Group, Inc. (NYSE:MO) on July 25 but lowered the price target on the shares to $54 from $58. While acknowledging that Altria Group, Inc. (NYSE:MO)’s outlook is “increasingly challenged” as U.S. cigarette volumes are deteriorating, the analyst called the selloff in the stock “overdone” given his view that the market is pricing in the worst case scenario. The “only way” he sees risk of further de-rating from this point is if Altria Group, Inc. (NYSE:MO) renounces long-term growth to cater to dividends. Even in that case, a double-digit dividend yield can still be expected into 2028, the analyst added.
Among the hedge funds tracked by Insider Monkey, 48 funds were long Altria Group, Inc. (NYSE:MO) at the end of Q2 2022, compared to 47 funds in the previous quarter. Arrowstreet Capital is the leading stakeholder of the company, with 8.8 million shares worth $370 million.
Here is what Broyhill Asset Management had to say about Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
3. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 95
Most Redditors believe that buying Netflix, Inc. (NASDAQ:NFLX) on the dip is one of the best ways to invest your $1,000. The stock has lost approximately 63% in value year-to-date as of August 26. However, Redditors think the company’s underlying fundamentals remain attractive, and the new ad-supported tiers will be a positive catalyst.
CFRA analyst Kenneth Leon downgraded Netflix, Inc. (NASDAQ:NFLX) to ‘Sell’ from ‘Hold’ on August 22 with a price target of $238, down from $245. The analyst said the shares may underperform the S&P 500 Index for the rest of 2022 after rising 40% from their mid-July lows. Netflix, Inc. (NASDAQ:NFLX)’s new advertising-supported tier is a primary catalyst, but the service “may not be visible until 2023”, as per the analyst.
Among the hedge funds tracked by Insider Monkey, 95 funds were long Netflix, Inc. (NASDAQ:NFLX) at the end of Q2 2022, compared to 109 funds in the first quarter. Ken Fisher’s Fisher Asset Management featured as the largest stakeholder of the company, with 6.5 million shares worth $1.15 billion.
Here is what Oakmark Fund had to say about Netflix, Inc. (NASDAQ:NFLX) in its Q2 2022 investor letter:
“Netflix‘s stock price was down considerably after providing a weaker than expected outlook for both subscriber growth and profit margins. After meeting with management and scrutinizing our investment thesis, we lowered our estimate of business value to account for the company’s softer near-term guidance. However, we believe the decline in the company’s share price more than adjusts for this. Indeed, Netflix now trades for a discount to the S&P 500 Index on next year’s GAAP earnings despite our view that the company remains a much better than average business run by a highly accomplished management team. We believe the company’s lead in streaming remains intact and we expect terminal operating margins to be substantially higher than they are today. Furthermore, we are encouraged by Netflix’s potential to enhance revenue growth through advertising, the monetization of password sharing and further penetrating international markets.”
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Redditors believe that in addition to diversifying a portfolio with penny stocks, small-caps, and under-the-radar equities, it is prudent to invest in safe stocks like Apple Inc. (NASDAQ:AAPL), which offers growth opportunities and robust underlying business and financial fundamentals. On August 24, research firm Counterpoint Research said that Apple Inc. (NASDAQ:AAPL) experienced a 147% year-over-year growth in the $1,000 and above category of the smartphone market, accounting for 46% of the total Chinese market.
On August 19, KeyBanc analyst Brandon Nispel raised the price target on Apple Inc. (NASDAQ:AAPL) to $185 from $177 and reaffirmed an ‘Overweight’ rating on the shares. The analyst recommends buying Apple Inc. (NASDAQ:AAPL) and lifted the price target “based on strong trends”. July is seasonally the most resilient month for sequential growth, which appears to be off to a solid start, contended the analyst.
According to Insider Monkey’s Q2 data, Apple Inc. (NASDAQ:AAPL) was part of 128 hedge funds’ portfolios, compared to 131 funds in the previous quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of Apple Inc. (NASDAQ:AAPL), with approximately 895 million shares worth $122.3 billion.
Here is what Wedgewood Partners had to say about Apple Inc. (NASDAQ:AAPL) in its Q2 2022 investor letter:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”
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.”
You can also take a look at 10 Undervalued Canadian Stocks to Buy Now and Best Defensive Stocks Under $50.
