In this article, we discuss 5 stocks to buy now before the bull market begins. If you want to see more stocks in this selection, check out “Pretty Good Outlook”: 10 Stocks to Buy Now Before the Bull Market Begins.
5. Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge Fund Holders: 47
Share Price Decline YTD as of August 16: 56.63%
Lyft, Inc. (NASDAQ:LYFT) is a California-based company that operates a marketplace for on-demand ride sharing in the United States and Canada. Although Lyft, Inc. (NASDAQ:LYFT) stock has plummeted about 57% year to date, the increasing concern about climate change will eventually reduce the number of vehicles owned and people will resort to public transport or ride sharing services. This is a positive catalyst that can make Lyft, Inc. (NASDAQ:LYFT) stock rebound.
Guggenheim analyst Ali Faghri on August 15 reiterated a Buy rating on Lyft, Inc. (NASDAQ:LYFT) and lowered the price target on the shares to $28 from $32 following the Q2 results. The analyst believes intermediate-term guidance should promote competitive rationalization within the group. He also sees better incremental margins in the next few years.
According to Insider Monkey’s Q1 data, 47 hedge funds were long Lyft, Inc. (NASDAQ:LYFT), up from 43 funds in the earlier quarter. Alkeon Capital Management is the biggest position holder in the company, with 5.6 million shares worth $217.6 million.
Here is what Rowan Street Capital has to say about Lyft, Inc. (NASDAQ:LYFT) in its Q1 2022 investor letter:
“Lyft (NASDAQ:LYFT): We sold Lyft in Q1 ’22 to fund the acquisitions of our 3 new positions as we’ve outlined. We had owned Lyft for a little less than 3 years and realized approximately 50% gain on the stock. The new companies we bought with the proceeds from the sale are significantly better businesses, in our view.”
4. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 63
Share Price Decline YTD as of August 16: 20.95%
MercadoLibre, Inc. (NASDAQ:MELI) operates online commerce platforms in Latin America. The stock has plummeted about 21% year to date as of August 16, however, as consumer spending increases, the e-commerce industry is bound to get a boost. This will help MercadoLibre, Inc. (NASDAQ:MELI) stock to recover. On August 3, MercadoLibre, Inc. (NASDAQ:MELI) reported its Q2 results, announcing an EPS of $2.43 and a revenue of $2.60 billion, outperforming Wall Street consensus by $0.50 and $90.17 million, respectively.
On August 8, JPMorgan analyst Marcelo Santos raised the price target on MercadoLibre, Inc. (NASDAQ:MELI) to $1,350 from $1,300 and maintained an Overweight rating on the shares. The analyst lifted estimates on MercadoLibre, Inc. (NASDAQ:MELI) after its Q2 results, factoring in a robust profitability outlook from credit operations, which he said are demonstrating strong economics. The analyst is confident that MercadoLibre, Inc. (NASDAQ:MELI) will retain its leading position in Latin America e-commerce.
Among the hedge funds tracked by Insider Monkey, David Blood and Al Gore’s Generation Investment Management is the largest stakeholder of MercadoLibre, Inc. (NASDAQ:MELI), with 441,529 shares worth $525.19 million. Overall, 63 hedge funds were bullish on the stock at the end of Q1 2022.
3. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 100
Share Price Decline YTD as of August 16: 47.64%
PayPal Holdings, Inc. (NASDAQ:PYPL) is an American multinational financial technology company that facilitates digital payments. As American consumer spending rises, PayPal Holdings, Inc. (NASDAQ:PYPL) shares are likely to rebound from the 48% year to date decline they have suffered.
On August 16, Daiwa analyst Kazuya Nishimura upgraded PayPal Holdings, Inc. (NASDAQ:PYPL) to Outperform from Neutral with a price target of $116, up from $85. While operating visibility “remains murky,” the notable decline in PayPal Holdings, Inc. (NASDAQ:PYPL)’s earnings prospects since last year seems to have played out, while multiple optimistic catalysts appear to be falling into place, such as cost reductions and a commitment to achieve capital returns with Elliott Investment Management on board, said the analyst.
According to Insider Monkey’s data, 100 hedge funds were bullish on PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of Q1 2022, compared to 110 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management is the biggest shareholder of the company, with 16.7 million shares worth about $2 billion.
Here is what Wedgewood Partners has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2022 investor letter:
“PayPal Holdings detracted from performance despite the Company generating healthy growth. Revenue grew +8%, but closer to +15% when adjusted for the well-telegraphed roll-off of its eBay relationship. As the Company laps the headwinds of eBay and difficult year ago comparisons, we expect PayPal should drive long-term growth in the mid-teens. Much of this will be driven by further penetration into the Company’s nearly 450 million active users. PayPal’s user base has grown by +50% since the onset of the pandemic so it makes sense for management to focus on driving higher transactions per account and better monetize this historical windfall of users. In our opinion, the shares have discounted away all of PayPal’s pandemic user and revenue gains, so we added to positions during the quarter.”
2. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 109
Share Price Decline YTD as of August 16: 58.87%
Netflix, Inc. (NASDAQ:NFLX) stock has plummeted about 59% year to date. However, the company posted market-beating earnings for the second quarter of 2022. The Q2 EPS came in at $3.20, ahead of Wall Street estimates by $0.25. The shares gained over 5% on August 10, as part of the ongoing rally ever since Netflix, Inc. (NASDAQ:NFLX) posted the most recent earnings report.
Netflix, Inc. (NASDAQ:NFLX) stock has climbed 16% since the company reported Q2 earnings, as the narrative moves towards its improved free cash flow outlook and 2023 initiatives of advertising supported tier and paid sharing, despite “modest” subscriber growth expected in the second half of 2022, JPMorgan analyst Doug Anmuth told investors in a research thesis. The analyst thinks Netflix, Inc. (NASDAQ:NFLX) has urgency around both, raising revenue growth and generating higher free cash flow, with the latter supported by flattish content expenditure over the next few years. He maintained a Neutral rating on the stock with a $240 price target.
According to Insider Monkey’s data, 109 hedge funds were bullish on Netflix, Inc. (NASDAQ:NFLX) at the end of Q1 2022, compared to 113 funds in the previous quarter. Bill Ackman’s Pershing Square held a prominent stake in the company in Q1, comprising 3.10 million shares worth $1.16 billion.
Here is what Oakmark Fund has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q2 2022 investor letter:
“Netflix‘s stock price was down considerably after providing a weaker than expected outlook for both subscriber growth and profit margins. After meeting with management and scrutinizing our investment thesis, we lowered our estimate of business value to account for the company’s softer near-term guidance. However, we believe the decline in the company’s share price more than adjusts for this. Indeed, Netflix now trades for a discount to the S&P 500 Index on next year’s GAAP earnings despite our view that the company remains a much better than average business run by a highly accomplished management team. We believe the company’s lead in streaming remains intact and we expect terminal operating margins to be substantially higher than they are today. Furthermore, we are encouraged by Netflix’s potential to enhance revenue growth through advertising, the monetization of password sharing and further penetrating international markets.”
1. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 144
Share Price Decline YTD as of August 16: 26.33%
Uber Technologies, Inc. (NYSE:UBER) operates ride sharing applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. Uber Technologies, Inc. (NYSE:UBER) stock has fallen 26.33% year to date as of August 16. Wedbush analyst Daniel Ives on August 5 told investors that Uber Technologies, Inc. (NYSE:UBER)’s June quarter was “robust” and a step in the right direction, with its top and bottom lines ahead of estimates and much better than Wall Street anticipated. The analyst maintained an Outperform rating and a $38 price target on Uber Technologies, Inc. (NYSE:UBER), noting the company offered a solid September quarter guidance. He is also positive about Uber Technologies, Inc. (NYSE:UBER)’s capacity to generate profits while manoeuvring inflationary constraints and driver shortages that still prevail in some cities.
According to Insider Monkey’s Q1 data, 144 hedge funds were bullish on Uber Technologies, Inc. (NYSE:UBER), compared to 153 funds in the last quarter. Brad Gerstner’s Altimeter Capital Management held a significant stake in the company, with 17 million shares worth about $607 million.
Here is what ClearBridge Large Cap Growth Strategy has to say about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2021 investor letter:
“We have also been looking for multi-year secular trends outside of the IT and Internet sectors to help us maintain a portfolio that can perform well in markets with varied sector or factor leadership. In particular, electrification of the global economy and the transition to electric vehicles (EVs) are areas where we continue to add exposure. We are investing in the brains behind EVs through NXP in the control center and Aptiv for safety features. Global rideshare leader Uber will also be a key player in the transition from internal combustion engines to EVs.”
You can also take a look at Cliff Asness’ Short Position on AMC and His Top 10 Picks and 10 Defensive Stocks in Billionaire Ray Dalio’s Latest Portfolio.
