In this article, we discuss 5 high free cash flow stocks to buy in 2022. If you want to read about some more high free cash flow stocks to buy in 2022, go directly to 10 High Free Cash Flow Stocks to Buy in 2022.
5. Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Holders: 31
Free Cash Flow TTM: $60 Billion
Novo Nordisk A/S (NYSE:NVO) is a Denmark-based healthcare firm. On July 11, the company announced that it had achieved positive results in two studies related to drug candidates for the treatment of haemophilia. One was a Phase 3 study on concizumab and the other a trial for Factor Villa. The company said it was planning to launch regulatory filings for the former in the US and Japan as early as the second half of 2022. In Europe, the required paperwork would be submitted by 2023.
On July 15, Morgan Stanley analyst Mark Purcell upgraded Novo Nordisk A/S (NYSE:NVO) stock to Overweight from Equal Weight and raised the price target to DKK 915 from DKK 805, forecasting that the firm had a $11 billion sales opportunity with a weight management drug.
At the end of the first quarter of 2022, 31 hedge funds in the database of Insider Monkey held stakes worth $4.49 billion in Novo Nordisk A/S (NYSE:NVO), up from 28 in the previous quarter worth $4.43 billion.
In its Q1 2022 investor letter, Baron Funds highlighted a few stocks and Novo Nordisk A/S (NYSE:NVO) was one of them. Here is what the fund said:
“We initiated a position in Novo Nordisk A/S (NYSE:NVO), a leading global biopharmaceutical company headquartered in Denmark that specializes in treatments for diabetes, obesity, and other chronic diseases. Novo Nordisk and Eli Lilly, another holding in the Fund, are leaders in the GLP-1 (glucagon-like peptide 1 agonists) class of diabetes treatments, a $15 billion market that is growing rapidly but still has just 3% penetration of diabetes prescriptions globally. Diabetes drugs in the GLP-1 class include Trulicity (Eli Lilly), Ozempic (Novo Nordisk), and Rybelsus (Novo Nordisk). These drugs stimulate insulin secretion and inhibit glucagon secretion, which helps lower blood sugar levels. GLP-1s also slow stomach emptying and increase how full you feel after eating, which reduces appetite and can lead to weight loss. We believe Novo Nordisk’s diabetes franchise will continue to generate solid growth driven by Ozempic and Rybelsus. We are particularly excited about the growth prospects for Novo Nordisk’s anti-obesity franchise, which is just getting started with the launch of Wegovy. In a 68-week clinical study of adults living with obesity or excess weight with a medical problem, adults taking Wegovy lost on average 35 pounds or roughly 15% body weight. There are over 650 million people living with obesity globally and only 2% are treated with an anti-obesity medication. Even with more conservative assumptions about the addressable patient population, we think Novo Nordisk’s obesity franchise can exceed $10 billion in sales over time. Novo Nordisk launched Wegovy in June 2021 but faced supply constraints due to overwhelming demand and manufacturing constraints at a contract manufacturer. Management has indicated supply issues will ease in the second half of 2022. Novo Nordisk’s pipeline includes new diabetes and anti-obesity medications that improve upon its existing portfolio. We think Novo Nordisk A/S (NYSE:NVO) can generate double-digit revenue and earnings growth for many years.”
4. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 100
Free Cash Flow TTM: $89 Billion
Alibaba Group Holding Limited (NYSE:BABA) is a diversified technology company. The stock has slid in the past few days after the Securities and Exchange Commission in the United States added it to the list of companies that could possibly face delisting in the United States. The move is part of a broader move by US regulators that have asked Chinese firms to allow independent auditors to review the financials of Chinese companies trading in the US. There are also reports that Jack Ma, the founder of the firm, will cede control over the company.
On July 19, Bernstein analyst Robin Zhu upgraded Alibaba Group Holding Limited (NYSE:BABA) stock to Outperform from Market Perform and raised the price target to $130 from $115, predicting that the incremental gross merchandise value share of the firm will improve in the coming quarters.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA), with 14.4 million shares worth more than $1.5 billion.
In its Q1 2022 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“We took advantage of price volatility to add to three of our most heavily discounted European businesses, including new purchases in 4Q 2021 and we reinitiated a position in Alibaba Group Holding Limited (NYSE:BABA), as the shares became even more heavily discounted amid broad China volatility in the period.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Free Cash Flow TTM: $65 Billion
Alphabet Inc. (NASDAQ:GOOG) is a diversified technology company. The company has delayed the plans to end the use of third-party cookies in the Google Chrome browser to 2023, according to recent reports. This has given a small boost to internet advertising stocks. Per the reports, the company plans to give internet ad tech firms more time to test a cookie-less approach. Google has already said it will be testing this approach through an initiative dubbed the Privacy Sandbox.
On July 27, Evercore ISI analyst Mark Mahaney maintained an Outperform rating on Alphabet Inc. (NASDAQ:GOOG) stock and lowered the price target to $140 from $155.50, appreciating the surprisingly solid second quarter earnings report of the firm.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG), with 2.3 million shares worth more than $6.6 billion.
In its Q2 2022 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Alphabet Inc. (NASDAQ:GOOG) grew its core search revenues +24% on a +30% year-ago comparison. Despite this stellar top-line performance, shares sold off as the market began to discount fears of a recession. However, the stock has outperformed relative to other holdings as core Google Search has been less affected by disruptions related to Apple’s privacy initiatives. Alphabet’s Cloud segment is generating revenue at a $24 billion run rate but is still running at a loss. We think this business can generate much better margins at some point. In the meantime, the Company has 4% to 5% of shares authorized for repurchase which is an attractive use of capital as the stock trades for about just 18X 2023 consensus estimates.”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Free Cash Flow TTM: $65 Billion
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology firm. The company has stepped up the pursuit of Amazon in the cloud sector by asking prominent tech giants in the sector, like Google and Oracle, for help to speak to the US government in this regard. Amazon controls nearly 33% of the high-growth cloud infrastructure space in the US. The company has also reached out to firms like VMware, Dell Technologies, IBM, and Hewlett Packard Enterprise with a set of talking points for the meeting.
On July 27, Wedbush analyst Daniel Ives maintained an Outperform rating on Microsoft Corporation (NASDAQ:MSFT) stock and lowered the price target to $320 from $340, noting that the underlying metrics around cloud and commercial bookings were strong for the firm.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT), with 27.8 million shares worth more than $8.5 billion.
In its Q1 2022 investor letter, Carillon Tower Advisers, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Microsoft Corporation (NASDAQ:MSFT) reported positive results driven by personal computing strength, but analysts were especially positive on its growth outlook for its Azure cloud-computing services.”
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Free Cash Flow TTM: $106 Billion
Apple Inc. (NASDAQ:AAPL) is a diversified technology company. On July 28, the company posted earnings for the third fiscal quarter, reporting earnings per share of $1.20, beating market estimates by $0.05. The revenue over the period was $82.9 billion, up close to 2% compared to the revenue over the same period last year. The product revenue was $63.36 billion, compared to $63.95 billion in the third quarter of 2021. The iPhone revenue was $40.67 billion, up from $39.57 billion in the third quarter of 2021.
On July 29, Evercore ISI analyst Amit Daryanani maintained an Outperform rating on Apple Inc. (NASDAQ:AAPL) stock and raised the price target to $185 from $180, noting that the firm was uniquely positioned to sustain sales and EPS growth beyond the 2023 fiscal year.
At the end of the first quarter of 2022, 131 hedge funds in the database of Insider Monkey held stakes worth $182 billion in Apple Inc. (NASDAQ:AAPL), compared to 134 in the preceding quarter worth $186 billion.
In its Q2 2022 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) 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 Inc. (NASDAQ:AAPL) 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.”
You can also take a peek at 10 Penny Stocks Redditors are Buying in August and 10 Best Nickel Stocks to Buy Now.
