In this article, we present the list of the 5 best tech stocks to buy now according to Nishkama Capital. For our methodology and a more comprehensive list please see 10 Best Tech Stocks to Buy Now According to Nishkama Capital.
5. Analog Devices, Inc. (NASDAQ:ADI)
Analog Devices, Inc. (NASDAQ:ADI) is first up on the second half of our list of Nishkama Capital’s favorite tech stocks. The fund owned 69,797 ADI shares on September 30, a 78% jump from the end of June and with the holding valued at $11.69 million at the end of Q3. There’s been a three-fold increase in hedge fund ownership of Analog Devices over the past three years.
Madison Funds, an investment management firm, published its “Madison Investors Fund” third-quarter 2021 investor letter and highlighted Analog Devices, Inc. (NASDAQ:ADI). Here‘s what the fund said:
“At its 2017 investor day, Analog Device’s VP of Automotive, Mark Gill, described how the company’s content on well-equipped electric vehicles was $600 per car compared to $250 per car for the traditional 2017 internal combustion engine car. Since then, Analog has highlighted the success of its EV battery management systems (BMS) product nearly every quarter. The BMS product is hardware and software that manages the power into and out of the battery systems. It’s the brains of the operation. Analog says it’s on its fifth generation BMS product, that it has the no. 1 market share in high voltage products, and that it is on 5 of the top 10 selling EVs. While we think that the BMS product is just 1 to 1.5% of Analog’s product mix, we think that it could add nearly a point of revenue growth per year to the company’s top-line given the expected ramp in EV production. This is a material amount of growth atop an already nicely growing company revenue line.”
4. Celestica Inc. (NYSE:CLS)
Nishkama Capital raised its stake in Celestica Inc. (NYSE:CLS) by 18% during Q3, giving the fund over 1.64 million shares valued at $14.6 million on September 30. Celestica hasn’t been overly popular among hedge funds but the stock did see a 50% jump in ownership to 21 funds during Q3, hitting an eight-year high.
The Q3 surge in hedge fund ownership of Celestica Inc. (NYSE:CLS) may have been due to the company’s late September acquisition of PCI Limited for $306 million in cash. That acquisition closed at the beginning of November, accelerating Celestica’s high-margin, high-growth strategy and giving the Canadian multinational corporation a stronger foothold in the lucrative Asian market.
3. Ceridian HCM Holding Inc. (NYSE:CDAY)
Nishkama sold off 41% of its Ceridian HCM Holding Inc. (NYSE:CDAY) position during Q3 but that still left the fund with a holding of 188,634 shares valued at $21.24 million on September 30. It is the fund’s fourth-largest long position as of the end of Q3 after ranking as its second-largest at the end of June.
Artisan Partners discussed Ceridian HCM Holding Inc. (NYSE:CDAY) in its Q3 investor letter, noting that it began investing in the payroll software company back in 2019 as it began its transition to a subscription model. The fund expected that transition to greatly improve margins and has been equally impressed with the company’s sales growth, which grew by 30% year-over-year in Q2. Furthermore, the fund believes that Ceridian’s cloud platform Dayforce still has a substantial growth runway ahead of it.
2. Microsoft Corporation (NASDAQ:MSFT)
Nishkama made a rare purchase in a hugely popular stock during Q3, opening a stake in Microsoft Corporation (NASDAQ:MSFT) of 121,422 shares valued at $34.23 million at the end of September. Microsoft has consistently ranked as one of the most popular stocks among hedge funds, with 253 of them long MSFT on September 30.
Microsoft Corporation (NASDAQ:MSFT) has rewarded those shareholders greatly in recent years, gaining over 420% in the last five years. Nishkama clearly believes that further gains are in store given its large investment as the tech giant continues to grow adoption and engagement among its various services, including its Office suite of software tools and its Azure cloud platform.
ClearBridge Investments, an investment management firm, published its “Sustainability Leaders Strategy” third quarter 2021 investor letter, and highlighted Microsoft Corporation (NASDAQ:MSFT). Here‘s what the fund said:
“The Strategy modestly outperformed the benchmark; consistent with our fundamental approach that seeks balanced exposure to industries and the growth and value spectrum, performance was driven by companies from diverse sectors. Microsoft, which develops software including the Windows family of products, the Microsoft Office system and the Azure cloud platform, and is a leader in data protection and customer privacy as well as human rights and diversity, contributed strongly as earnings maintained positive sentiment. Microsoft is seeing a number of businesses reach a new, higher level of engagement, adoption and momentum.”
1. Flex Ltd. (NASDAQ:FLEX)
Topping the list of Nishkama Capital’s top tech stock picks is Flex Ltd. (NASDAQ:FLEX), which surged to the front of the fund’s 13F portfolio after it added 331% more shares to its previous holding in the third quarter. That gave the fund 2.41 million shares valued at $42.57 million at the end of Q3. It also gives Nishkama the greatest 13F exposure to the stock among all the hedge funds in Insider Monkey’s database, at 12.39%.
Like Celestica, Flex Ltd. (NASDAQ:FLEX) is also involved in the global supply chain and manufacturing segments, being a solutions provider for those industries. Flex has been able to greatly improve its results in recent years by selling off some of its low-margin businesses and focusing on high-growth segments like solar, electric vehicles, and 5G.
You can also take a peek at the Top 10 High Growth Stocks To Buy in 2021 and 15 Biggest Companies That Use Shopify.
