In this article, we discuss 5 stocks to buy when everyone is selling. If you want to read about some more stocks to buy when everyone is selling, click 10 Stocks to Buy When Everyone is Selling.
5. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 96
Alibaba Group Holding Limited (NYSE:BABA) is a diversified technology company. The stock has suffered amid a regulatory crackdown in China but latest signs indicate that the crackdown may be easing. Chinese Vice-Premier Liu He recently told top tech executives that the government would “properly manage” the relationship in the battle for key core technologies. COVID lockdowns in China have recently boosted the stock and the firm has been quietly buying back shares to calm investors as well.
On May 16, JPMorgan analyst Alex Yao upgraded Alibaba Group Holding Limited (NYSE:BABA) stock to Overweight from Underweight and raised the price target to $130 from $75, noting that the uncertainties facing the Chinese internet stocks were beginning to abate.
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) in Q1, with 14.4 million shares worth more than $1.5 billion.
In its Q1 2022 investor letter, Baron Funds, 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 have eliminated 6 holdings during the first quarter (including) Alibaba Group Holding Limited (NYSE:BABA). We have sold our Alibaba Group Holding Limited (NYSE:BABA) position as the company continues to face competitive challenges and regulatory pressures remain, making it difficult (if not impossible) to appropriately assess the range of outcomes and associated probabilities for the future profitability of the business.”
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 111
The Walt Disney Company (NYSE:DIS) operates as an entertainment company. The stock is trading at nearly 40% below record highs amid park closures due to COVID-19. However, these closures do not represent a long-time concern as most economies around the world have returned to normal and those remaining are likely to follow suit soon. The firm is impressing on the streaming front, with subscribers growing 33% year-on-year in the second quarter. The company has pricing power with a massive original content library to draw from as well.
On May 12, BMO Capital analyst Daniel Salmon maintained a Market Perform rating on The Walt Disney Company (NYSE:DIS) stock with a price target of $140, highlighting that the stock was “the type of blue chips investors will want to buy once the market stabilizes”.
At the end of the fourth quarter of 2021, 111 hedge funds in the database of Insider Monkey held stakes worth $6.9 billion in The Walt Disney Company (NYSE:DIS), up from 101 the preceding quarter worth $9.4 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and The Walt Disney Company (NYSE:DIS) was one of them. Here is what the fund said:
“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. The Walt Disney Company (NYSE:DIS) announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. The Walt Disney Company (NYSE:DIS) has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. Although the company has avoided the market meltdown of 2022, recent signs suggest that the overall volatility is beginning to catch up with the stock as well. The stock dropped by about 5% in mid-May after the firm said it expected an $8 billion hit from supply chain pressures in 2022. However, despite the forecast, the firm continues to deliver on the earnings front, managing positive growth in earnings per share and revenue in the first quarter. It also has strong pricing power due to the iPhone brand.
On May 20, Wedbush analyst Daniel Ives maintained an Outperform rating on Apple Inc. (NASDAQ:AAPL) stock with a price target of $200, highlighting that the firm was a “compelling name to own and ride out the market storm”.
At the end of the fourth quarter of 2021, 134 hedge funds in the database of Insider Monkey held stakes worth $186 billion in Apple Inc. (NASDAQ:AAPL), up from 120 in the previous quarter worth $146 billion.
In its Q4 2021 investor letter, Berkshire Hathaway highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) – our runner-up Giant as measured by its yearend market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our “share” of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple Inc. (NASDAQ:AAPL) shares, an act we applaud. Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple Inc. (NASDAQ:AAPL) products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 144
Mastercard Incorporated (NYSE:MA) is a technology firm with core interests in transaction processing services. Although the short-term fortunes of the firm are linked to the health of the economy, the long-term catalysts for the stock outweigh the near-term concerns. The firm is responsible for nearly a quarter of the credit card network purchase volume. Since it is not a lender, it is not exposed to loan delinquencies during recessions either. The firm has a long runway of growth in emerging markets as well.
On May 17, Goldman Sachs analyst Will Nance initiated coverage of Mastercard Incorporated (NYSE:MA) stock with a Buy rating and a price target of $460, backing the firm to continue to deliver “best-in-class” earnings supported by secular tailwinds and strong operating leverage.
Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE:MA), with 5.8 million shares worth more than $2 billion.
In its Q1 2022 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE:MA) was one of them. Here is what the fund said:
“Mastercard Incorporated (NYSE:MA) (7.6% weight in the Fund): This company literally earns a percent based fee on dollars spent. When inflation increases the prices of goods across the economy, Mastercard’s revenue increases along with inflation. Thus, Mastercard Incorporated (NYSE:MA) in some respects is perfectly hedged against inflation with their revenue accelerating automatically when inflation surges.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 224
Meta Platforms, Inc. (NASDAQ:FB) is a tech firm that owns and runs social media platforms. In 2021, the firm posted topline growth of 31%. However, this growth has stalled this year and the firm has put on a hiring freeze to deal with the challenging macroeconomic environment. At the core, the firm remains a digital advertising firm, despite a recent pivot to the metaverse, and growth in this sector is likely to remain strong for years to come. The firm is also devising a long-term plan to compete with social media giant TikTok.
On May 16, Morgan Stanley analyst Brian Nowak kept an Overweight rating on Meta Platforms, Inc. (NASDAQ:FB) stock with a price target of $330, noting that the “combination of a revenue acceleration in the second half and cost discipline” could lead to significant free cash flow for the firm.
At the end of the fourth quarter of 2021, 224 hedge funds in the database of Insider Monkey held stakes worth $31.8 billion in Meta Platforms, Inc. (NASDAQ:FB), compared to 248 in the preceding quarter worth $38.5 billion.
In its Q1 2022 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“Meta Platforms, Inc. (NASDAQ:FB), the parent company of Facebook, reported excellent operating results in 2021. Its revenue increased 37%, operating earnings increased 40%, and the company generated $40 billion of free cash flow. Despite these excellent results, Meta experienced extreme volatility in its stock price during the first quarter. We believe that two factors are responsible for this volatility. First, the company quantified the headwind to revenue from Apple’s recent privacy changes in the amount of approximately $10 billion for 2022. Meta is rebuilding its advertising technology, and we believe the long-term headwinds from Apple’s privacy changes will be limited because Meta Platforms, Inc. (NASDAQ:FB) will create a suitable solution. Second, Meta continues to invest heavily into its Reality Labs segment, also known as the metaverse. While we believe the metaverse presents great opportunity for Meta Platforms, Inc. (NASDAQ:FB), we are not assigning any value to it in our valuation work. While 2022 may be challenging for Meta, the company’s competitive advantages are still intact, and the company trades at a significant discount to our estimate of its intrinsic value. Despite our concerns about a possible recession, we expect Meta to return to double-digit bottom line growth next year.”
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