In this article, we discuss the 5 stocks to buy as the Senate passes the Inflation Reduction Act. If you want to read about some more stocks to buy as the Senate passes the Inflation Reduction Act, go directly to 10 Stocks to Buy as the Senate Passes Inflation Reduction Act.
5. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 47
SolarEdge Technologies, Inc. (NASDAQ:SEDG) markets semiconductor equipment to the solar industry. Even though the company missed market expectations on revenue for the second quarter of 2022 in recently announced earnings results, the stock has gained in the past few weeks due to the successful passage of the Inflation Reduction Act in the US Senate. The new Act has set aside nearly $60 billion to incentivize solar and wind power manufacturing inside the United States.
On August 8, JPMorgan analyst Mark Strouse maintained an Overweight rating on SolarEdge Technologies, Inc. (NASDAQ:SEDG) stock and raised the price target to $419 from $373, noting that investor expectations with the industry would remain materially high in the coming months.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG), with 588,056 shares worth more than $188 million.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and SolarEdge Technologies, Inc. (NASDAQ:SEDG) was one of them. Here is what the fund said:
“The Strategy is well-exposed to this secular shift and to accelerated spending on alternative energy sourcing and generation. Growth in renewables should benefit SolarEdge Technologies, Inc. (NASDAQ:SEDG), a company we repurchased on weakness in the first quarter that develops electronics for solar installations and should take advantage of greater incentives for solar installations in many geographies. SolarEdge Technologies, Inc. (NASDAQ:SEDG) has expanded its products offering to address larger markets in commercial and utility solar on top of its traditional residential solar market.”
4. Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 66
Humana Inc. (NYSE:HUM) operates as a health and well-being firm. The Inflation Reduction Act has maintained tax credits for health firms and extended subsidies for health insurers under the Obamacare law. These subsidies, which were increased during the COVID-19 pandemic, keep the benefit hikes from expiring at the end of this year. People who purchase health insurance through Obamacare will enjoy nearly $64 billion of the total spending on healthcare that is included in the Act. Humana, one of the largest health insurers in the US, will benefit from this.
On July 28, Deutsche Bank analyst George Hill maintained a Buy rating on Humana Inc. (NYSE:HUM) stock and raised the price target to $514 from $450, appreciating the second quarter earnings beat of the firm.
At the end of the first quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Humana Inc. (NYSE:HUM), the same as in the preceding quarter worth $3.8 billion.
In its Q1 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Humana Inc. (NYSE:HUM) was one of them. Here is what the fund said:
“During the quarter, we also sold our position in Humana Inc. (NYSE:HUM) in favor of names that, in our opinion, offer more potential upside. Geographically, we ended the quarter with 53% of the portfolio in the U.S., 38% in the U.K. and Europe, and 9% in Asia.”
3. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 72
CVS Health Corporation (NYSE:CVS) is a Rhode Island-based company that provides healthcare services. Reports indicate that the company is planning to purchase competitor Signify Health that is worth close to $5 billion. The latter uses a platform that employs analytics to help health insurers. Health insurers are one of the biggest beneficiaries of the Inflation Reduction Act, that has extended tax credits and increased spending on health, although the bill also includes plans to negotiate over drug prices.
On August 8, analyst Michael Cherny maintained a Buy rating on CVS Health Corporation (NYSE:CVS) stock with a price target of $122, noting that the Signify deal would help the firm with continued evolution in the health sector.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Harris Associates is a leading shareholder in CVS Health Corporation (NYSE:CVS), with 4.1 million shares worth more than $421 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and CVS Health Corporation (NYSE:CVS) was one of them. Here is what the fund said:
“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of CVS Health Corporation (NYSE:CVS) which is well-positioned to help define the future of health care in terms of costs, quality and convenience.”
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 80
Tesla, Inc. (NASDAQ:TSLA) markets electric vehicles and clean energy solutions. Even though the Inflation Reduction Act has increased the minimum corporate tax and also includes plans to tax share buybacks, companies like Tesla are still likely to benefit from the plan since it includes massive tax credits and plans to spend hundreds of millions on new EV and battery manufacturing in the United States. The bill also incentivizes EV sales, which will help firms like Tesla post better delivery numbers.
On August 8, Canaccord analyst George Gianarikas maintained a Buy rating on Tesla, Inc. (NASDAQ:TSLA) stock and raised the price target to $881 from $815, noting that macro factors and price increase had the potential to affect the order rates of the firm.
At the end of the first quarter of 2022, 80 hedge funds in the database of Insider Monkey held stakes worth $11 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 91 in the previous quarter worth $12 billion.
Here is what Grantham Mayo Van Otterloo & Co. LLC has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla, Inc. (NASDAQ:TSLA). At its Battery Day last year, Tesla, Inc. (NASDAQ:TSLA) projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) operates as a visual computing firm. Inflation has affected the margins for companies like NVIDIA, which recently slowed hiring and warned that slowing PC and gaming unit sales could weigh on the firm in the near term. The bill also includes provisions for $369 billion in energy security and climate change programs. NVIDIA, one of the leading chipmakers in the US, will benefit from this as the chips it makes are used in many of these climate change technologies.
On August 8, Oppenheimer analyst Rick Schafer maintained an Outperform rating on NVIDIA Corporation (NASDAQ:NVDA) stock and lowered the price target to $250 from $300, noting that there was a weakness in PC and gaming unit sales.
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 Russell 2000 Basic Materials Dividend Stocks to Buy and 10 Utilities Stocks with Over 3% Dividend Yield.
