5 Stocks Smart Investors Buy During Recessions

1. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 102   

NVIDIA Corporation (NASDAQ:NVDA) is a visual computing firm. A lagging economy and higher interest rates have weighed on the shares of the company in the past few months, resulting in almost a 50% decline in share price since late 2021. However, the firm remains in prime position to take advantage of the high demand for chips that are used across multiple consumer products. The firm has a gross profit margin of over 64% and annual revenue growth of over 61%, far ahead of peers.  

On May 23, Bernstein analyst Stacy Rasgon maintained an Outperform rating on NVIDIA Corporation (NASDAQ:NVDA) stock and lowered the price target to $225 from $325, noting the stock had been a victim of the growth sell-off. 

At the end of the first quarter of 2022, 102 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in NVIDIA Corporation (NASDAQ:NVDA), compared to 110 the preceding quarter worth $10.4 billion.

In its Q1 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:

“NVIDIA Corporation (NASDAQ:NVDA) is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.

We expect future growth to remain robust as NVIDIA Corporation (NASDAQ:NVDA) chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”

You can also take a peek at 10 Stocks Reddit’s WallStreetBets is Buying in July 2021 and Top Robinhood Stocks Popular on Reddit.

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