In this article, we discuss the 5 best up and coming stocks to invest in. If you want to read our comprehensive analysis of these stocks and the current market situation, go directly to 10 Best Up and Coming Stocks To Invest In.
5. Northrop Grumman Corporation (NYSE:NOC)
Number Of Hedge Fund Holders: 39
Northrop Grumman Corporation (NYSE:NOC) is an American multinational aerospace and defense technology company that specializes in commercial aerospace, electronics, and information-technology products and services. In early April, the defense firm was awarded a $254.42 million firm-fixed-price modification to a previously awarded contract to exercise an option for production of its Surface Electronic Warfare Improvement Program Block 3 Hemisphere systems, which is expected to be completed by September 2025.
Northrop Grumman Corporation (NYSE:NOC) declared a quarterly dividend of $1.73 per share on May 17, which would be payable on June 15, 2022, to shareholders of record as of the close of business on May 31, 2022.
On May 12, Argus analyst John Eade raised the price target on Northrop Grumman Corporation (NYSE:NOC) to $495 from $420 and maintained a Buy rating on the shares. According to the analyst, the defense firm has consistently delivered positive surprises to investors on Wall Street in recent years, regardless of whether defense spending was rising or falling.
Based on Insider Monkey’s Q1 data, Northrop Grumman Corporation (NYSE:NOC) was found in the public stock portfolios of 39 hedge funds, up from 33 funds in Q4 2022. Donald Yacktman’s Yacktman Asset Management owned a sizable position in Northrop Grumman Corporation (NYSE:NOC) in the first quarter of 2022, with 435,159 shares worth $194.6 million.
In its Q1 2022 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Northrop Grumman Corporation (NYSE:NOC) was one of them. Here is what the fund said:
“Based in Virginia, Northrop Grumman Corporation (NYSE:NOC) is one of the world’s largest defense contractors with annual revenue of more than $30 billion. The company operates in a cozy oligopoly, that after decades of consolidation has resulted in the US defense market being controlled by five large companies: The Boeing Company (BA), General Dynamics Corporation (GD), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), and Raytheon Technologies Corporation (RTX).
Industry barriers to entry are immense, government procurement cycles are extremely long, and the consolidated industry structure reflects this. This has allowed Northrop Grumman Corporation (NYSE:NOC) to earn stable mid-teens returns on invested capital (ROIC) and grow earnings per share at a rate of over 13% per year in the past decade, despite a topline that has grown only in-line with inflation. Even after the recent run-up in the stock price, it trades at approximate 15x next year’s earnings estimates, far below the S&P 500 index, despite being an above average company. While nominally, there are five major defense contractors, the true industry concentration is even higher because not all companies compete in all possible business segments. General Dynamics’ submarine division, Electric Boat, is the sole supplier of nuclear power submarines in the United States. Lockheed Martin is the sole supplier of the F-18, the F-35 and the F-22. Northrop was the sole bidder on the contract to develop the next generation of intercontinental ballistic missiles; Raytheon dominates missile systems; and so on.
Northrop’s revenue growth over the past decade has been mediocre but even that has led to impressive shareholder returns that have far outpaced the S&P500. What’s more, we believe that revenue growth may accelerate in the next few years. A lot of ink is spilled every year about the “massive” U.S. defense budget that critics claim is “out of control”. Given this, you might be surprised to hear that U.S. defense spending as a share of GDP is at the lowest level in recorded history, at a mere 3.8%. In other words, U.S. military spending could double and not be out of line with historical norms. While we are not calling for a new Cold War, given the global instability we are witnessing, it is not unreasonable to expect U.S. defense spending to grow faster than GDP over the next decade.”
4. Coinbase Global, Inc. (NASDAQ:COIN)
Number Of Hedge Fund Holders: 46
Coinbase Global, Inc. (NASDAQ:COIN), is a Delaware-based company that operates a cryptocurrency exchange platform. Providing financial infrastructure and technology for the global crypto market, Coinbase Global, Inc. (NASDAQ:COIN) ended 2021 with an average of 11.4 million monthly transacting users, more than 300% above 2020’s level.
Cowen analyst Stephen Glagola on May 26 initiated coverage of Coinbase Global, Inc. (NASDAQ:COIN) with an Outperform rating and an $85 price target. According to the analyst, Coinbase Global, Inc. (NASDAQ:COIN) has a dominant spot volume exchange position in the U.S. and he expects it to be primarily an exchange/retail brokerage-driven story over the next several years. Additionally, he believes that the company can grow at a double-digit percentage compound annual growth rate for “the foreseeable future” and argues that its security infrastructure and regulatory adherence are a structural advantage over global competitors.
Among the hedge funds tracked by Insider Monkey, 46 funds were bullish on Coinbase Global, Inc. (NASDAQ:COIN) at the end of Q1 2022, down from 57 funds in the prior quarter. Cathie Wood’s ARK Investment Management is the biggest shareholder of the company, with close to 7 million shares worth $1.3 billion.
Here is what Longleaf Partners Fund has to say about Coinbase Global, Inc. (NASDAQ:COIN) in its Q4 2021 investor letter:
“We also have seen plenty of IPO/SPAC craziness showing both that private players need public markets more than they admit and that there is more volatility embedded in these newer companies than a private quarterly mark might admit. As for how efficient both the private and public markets are, we would encourage you to really delve into some of those multi-hundred-page S1s for many of the newest public companies to see the huge gap between the last valuation at which the company was funded and/or granted shares to its executives and the often much higher price at which the company went public – Coinbase is a prime example.”
3. Bill.com Holdings, Inc. (NYSE:BILL)
Number Of Hedge Fund Holders: 58
Bill.com Holdings, Inc. (NYSE:BILL) is a financial technology company that offers an AI-powered cloud software to simplify, digitize, and automate back-office financial operations for small and medium-sized businesses to optimize their payment systems.
JPMorgan analyst Tien-tsin Huang initiated coverage of Bill.com Holdings, Inc. (NYSE:BILL) with an Overweight rating and a $140 price target on May 20. According to Huang, the stock is off 67% from the November 2021 high, creating an opportunity to own what he calls a “bona fide growth stock with early-mover advantages and nascent cross-selling opportunities.”
Bill.com Holdings, Inc. (NYSE:BILL) reported its first quarter earnings on May 5, recording an EPS of -$0.08 which beat estimates by $0.08. Revenue stood at $166.9 million for the quarter, above estimates by $9 million and up 179% on a year-over-year basis.
According to Insider Monkey’s Q1 data, Bill.com Holdings, Inc. (NYSE:BILL) was part of 58 public hedge fund portfolios, down from 65 funds in the preceding quarter. Stephen Mandel’s Lone Pine Capital held a prominent stake in the company, consisting of 1.3 million shares worth $309.6 million.
Here is what Alger Mid Cap Focus Fund has to say about Bill.com Holdings, Inc. (NYSE:BILL) in its Q4 2021 investor letter:
“Bill.com Holdings, Inc., was among the top detractors from performance. Bill.com provides cloud-based software solutions that simplify, digitize, and automate complex back-office financial operations for small and medium size businesses. Its software helps customers to generate and process invoices, streamline approvals, send and receive payments, synchronize data with their accounting system and manage their cash.”
2. Cheniere Energy, Inc. (NYSE:LNG)
Number Of Hedge Fund Holders: 62
Cheniere Energy, Inc. (NYSE:LNG) operates as an energy infrastructure company in the United States. Engaged in liquified natural gas (LNG) related businesses, the company owns and operates LNG terminals, and develops, constructs, and operates liquefaction projects near Corpus Christi, Texas.
This May, Cheniere Energy, Inc. (NYSE:LNG) reported earnings for the fiscal first quarter of 2022. The company reported revenues of $7.48 billion, an increase of 142.20% on a year-over-year basis, and surpassed market forecasts by $1.92 billion.
On May 23, RBC Capital analyst Elvira Scotto raised the price target on Cheniere Energy, Inc. (NYSE:LNG) to $178 from $151 and maintained an Outperform rating on the shares after its Q1 results. While it remains well-positioned to benefit from growing demand for liquefied natural gas globally, he adds that in the near- term, given its open capacity, the company should benefit from strong margins as well.
According to Insider Monkey’s database, 62 hedge funds held stakes in Cheniere Energy, Inc. (NYSE:LNG) at the end of the first quarter of 2022. The total value of these stakes was approximately $3.2 billion. This is compared to 52 hedge funds in the fourth quarter of 2021 with stakes of $3.38 billion. Carl Icahn’s Icahn Capital LP is the most prominent shareholder in Cheniere Energy, Inc. (NYSE:LNG), owning more than 9.72 million shares of stock which amount to a stake of $1.34 billion.
ClearBridge Investments published its “Global Infrastructure Value Strategy” third-quarter 2021 investor letter, in which the firm mentioned Cheniere Energy, Inc. (NYSE:LNG). Here is what they said:
“Cheniere Energy is an energy infrastructure company that owns and operates U.S. liquefied natural gas (LNG) export facilities. Strong quarterly results and the disclosure of capital allocation policies were positively received by the markets. In addition, continued supply and demand tightness in the LNG market created a favorable commodity price environment.”
1. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number Of Hedge Fund Holders: 80
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is an American cybersecurity technology company based in Austin, Texas, that provides cloud workload and endpoint security, threat intelligence, and cyberattack response services. The company increased its annual recurring revenue (ARR) by 65% in its 2022 fiscal year to $1.7 billion, and forecasts a rise to $5 billion by its 2026 fiscal year.
On May 23, Stephens analyst Brian Colley initiated coverage of CrowdStrike Holdings, Inc. (NASDAQ:CRWD) with an Overweight rating and a $232 price target. The analyst cites four key reasons behind this initiation, one of which is a “sizable underpenetrated opportunity in the cloud security market.”
80 out of the 912 hedge funds tracked by Insider Monkey held stakes in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in the first quarter of 2022, worth $5.55 billion, compared to 74 in the preceding quarter, holding stakes in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) valued at $5.23 billion. Among these, New York-based investment firm Tiger Global Management LLC is a leading shareholder in CrowdStrike Holdings, Inc. (NASDAQ:CRWD), with 8.8 million shares worth more than $2 billion.
Baron Funds, in its Q1 2022 investor letter, mentioned CrowdStrike Holdings, Inc. (NASDAQ:CRWD). Here is what the fund said:
“CrowdStrike, Inc. provides cloud-delivered, next generation security solutions via its Falcon platform consisting of end-point protection, advanced persistent threat, security information, event management, and cloud workload protection. Shares rose 11% in the first quarter, on the back of impressive quarterly results with net new annual recurring revenue (ARR) accelerating for the second straight quarter to 52% year-over-year and the company’s favorable unit economics driving 30% free cash flow margins. Moreover, key new disclosures highlight how non-end-point products are seeing momentum with cloud product-generated ARR surpassing $100 million, representing 8% of net new ARR in the quarter. With more workloads migrating to or starting in the cloud, we believe CrowdStrike is well positioned to compound at high growth rates for years given its unique product platform and attractive go-to-market business model.”
You can also take a look at 10 European Defense Stocks to Buy Now and 10 Growth ETFs to Buy Now.
