In this article, we will take a look at the 5 cash-rich stocks to buy according to hedge funds. If you want to see more stocks in this selection, go to the 10 Cash-Rich Stocks To Buy According To Hedge Funds.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 140
Latest Cash and Short-Term Investments: $48.3 billion
Apple Inc. (NASDAQ:AAPL) is a Cupertino, California-based technology company.
Apple Inc. (NASDAQ:AAPL) is also considered amongst the best cash-rich stocks to buy according to hedge funds. The company has allocated $550 billion in the last decade to repurchase its shares. This has enabled Apple Inc. (NASDAQ:AAPL) to report healthier earnings and shift the focus of investors away from weak demand and production-related challenges. In a note issued to investors on December 21, Jim Suva at Citi shared that the regulatory overhang related to the tech giants offering access to TikTok through their app stores has created an attractive entry position for investors. He added that Apple Inc.’s (NASDAQ:AAPL) current stock price does not reflect the impact of new launches. However, this will change following the launch of virtual reality (VR) headsets next year and foldable devices in 2024. The analyst has assigned Apple Inc. (NASDAQ:AAPL) stock a target price of $175 along with a Buy rating.
Here’s what TimesSquare Capital Management said about Apple Inc. (NASDAQ:AAPL) in its Q3 2022 investor letter:
“Apple Inc. (NASDAQ:AAPL) designs and manufactures smartphones, personal computers, tablets, and wearable devices. The company reported better than expected revenues, though that came from a lower-than-expected supply chain impact. Apple called out pockets of weakness in wearables as well as home & accessories. Management referenced macroeconomic uncertainty and sounded somewhat guarded when commenting on fourth quarter expectations. In September, Apple introduced four new iPhones with retail prices kept at last year’s levels. Its shares edged forward by 1% in consideration of these developments. We trimmed the position after evaluating the channel which highlighted some consumer demand choppiness.”
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4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 177
Latest Cash and Short-Term Investments: $41.78 billion
Meta Platforms, Inc. (NASDAQ:META) is a Menlo Park, California-based technology conglomerate that provides social media and instant messaging solutions through Facebook, Instagram, and WhatsApp. The company is preparing for the next revolution by investing heavily in augmented reality and the metaverse.
Meta Platforms, Inc. (NASDAQ:META) has significantly expanded its operations by acquiring Instagram for $1 billion in 2012, followed by WhatsApp in 2014 for $16 billion. The stock price of the tech giant has observed a decline of nearly 65% since the start of 2022; Doug Anmuth at JPMorgan thinks this is an attractive entry point for investors. The analyst believes that many pressures on Meta Platforms, Inc. (NASDAQ:META) would subside in 2023, and the company has also revealed positive signs of controlling its overheads. On December 16, Anmuth upgraded Meta Platforms, Inc. (NASDAQ:META) stock from a Neutral to an Overweight rating and assigned a target price of $150.
Here’s what ClearBridge Investments said about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2022 investor letter:
“We initiated a new position in Meta Platforms, Inc. (NASDAQ:META), in the communication services sector, which operates the Facebook and Instagram social media platforms and is a leading digital advertising provider. We have been carefully watching the company over the last few quarters and believe headwinds from lower monetizing in Facebook and Instagram Reels and pressures from consumer privacy measures are poised to lessen. We believe the company has begun to fully acclimate to this new environment, will achieve greater effectiveness in Reels monetization and find ways to adapt to new privacy standards which will rebound advertising efficiency. Combined with a greater focus on cost control, we believe these initiatives will help contribute to further margin expansion and leave the company well-positioned moving forward.”
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3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 196
Latest Cash and Short-Term Investments: $116.26 billion
Alphabet Inc. (NASDAQ:GOOGL) is a Mountain View, California-based technology conglomerate with platforms like Google, YouTube, Calico, and Waymo in its portfolio.
On December 22, the company entered into a partnership with the National Football League (NFL) that would allow YouTube TV to provide NFL Sunday Ticket Subscriptions. Following this development, Ronald Josey at Citi highlighted that this would accelerate the subscription growth of the video platform. He drew a comparison to Amazon’s deal with the NFL to broadcast the inaugural season of Thursday Night Football on the Amazon Prime platform. Mr. Josey concluded that this will aid the top-line growth of Alphabet Inc. (NASDAQ:GOOGL) and will contribute positively to the bottom-line margins in the long term. On December 23, the analyst assigned Alphabet Inc. (NASDAQ:GOOGL) stock a target price of $120 along with an Overweight rating.
Renaissance Investment Management shared its outlook on Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2022 investor letter. Here’s what the firm said:
“Lastly, Alphabet Inc. (NASDAQ:GOOGL) declined after reporting third quarter results that were better than feared, driven by upside in the company’s search segment and despite tough comparisons. The stock’s weakness was concentrated in the last month of the quarter after the Fed “non-pivot” caused a sell-off in high-multiple growth stocks.”
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2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 269
Latest Cash and Short-Term Investments: $58.66 billion
Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based diversified technology led by its e-commerce and cloud computing services business.
Following a 20-1 stock split in March 2022, Amazon.com, Inc. (NASDAQ:AMZN) also initiated a $10 billion share buyback plan to boost shareholder returns. Over the years, the company has efficiently used its cash reserves to expand its operations. In 2017, Amazon.com, Inc. (NASDAQ:AMZN) used $13 billion to increase its footprint in the grocery business through the acquisition of Whole Foods. In March 2022, the company also completed the $8.5 billion takeover of MGM Studios.
On December 16, Doug Anmuth at JPMorgan gave Amazon.com, Inc. (NASDAQ:AMZN) stock a target price of $130 along with an Overweight rating. The analyst believes that a “significant secular shift” toward e-commerce and cloud businesses is expected to take place. Furthermore, Amazon.com, Inc. (NASDAQ:AMZN) should benefit from easier retail comparables in 2023.
Here’s what Farnam Street Investments said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:
“Change doesn’t just impact investors. Business people also bet for or against change. Jeff Bezos was once asked this exact question:
“You can build a business strategy around the things that are stable in time. It’s impossible to imagine a future ten years from now where a customer comes up and says, ‘Jeff, I love Amazon, I just wish the prices were a little higher.’ Or, ‘I love Amazon, I just wish you’d deliver a little slower.’ Impossible. So we know the energy we put into these things today will still be paying off dividends ten years from now. When you have something you know is true, you can afford to put a lot of energy into it.”
A lot of energy… and more than $172 billion in capital expenditure in the last fifteen years.
Deeper, slower moving layers turn exponential growth into “S-curves.” A rapidly dividing bacteria crashes into the resource-wall of its Petri dish. Nineteenth-century commercial robber barons were smacked by the governance layer of the Sherman Antitrust act. Amazon (NASDAQ:AMZN) Prime free shipping leaned on the creaking infrastructure of the U.S. Postal Service until it was forced to invest in its own infrastructure (all those delivery vans you see driving around).
Hopefully, next time you’re thinking about change, you can recall pace layers as a helpful construct to understand how successful systems change.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 269
Latest Cash and Short-Term Investments: $107.24 billion
Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based technology conglomerate that manufactures personal computers, gaming consoles, and software.
Microsoft Corporation (NASDAQ:MSFT) is currently in the process of acquiring the Santa Monica, California-based video game developer Activision Blizzard, Inc. (NASDAQ:ATVI) for $68.7 billion. The deal is currently in the middle of a regulatory review. Furthermore, Microsoft Corporation (NASDAQ:MSFT) is also executing a $60 billion share buyback plan that was announced in September 2021. The company pays out more than $20 billion annually as dividends.
Microsoft Corporation (NASDAQ:MSFT) is the exclusive technology and sales partner of Netflix’s advertisement-based streaming model. There is a widespread belief that the company will be able to grow at a faster-than-expected growth rate under these uncertain economic circumstances through the enterprise side of the business.
TimesSquare Capital Management shared its outlook on Microsoft Corporation (NASDAQ:MSFT) in its Q3 2022 investor letter. Here’s what the firm said:
“Microsoft Corporation (NASDAQ:MSFT) develops, licenses, and supports software solutions worldwide. Fiscal fourth quarter results were generally in line with consensus estimates, though profits missed slightly. While its Azure cloud business continues to perform well, the personal computer market has declined with inflation having an impact. Its shares experienced a -9% selloff.”
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