In this article, we will be taking a look at the 7 best halal stocks to buy now (debt free). You can skip the detailed analysis and head directly to The Best Halal Stock to Buy Now (Debt Free).
Halal Investing: Debt-Free Stocks, Islamic Funds, and Shariah-Compliant Indices
Islamic equity investing, also known as Halal investing, has gained significant traction recently as Muslim investors seek to align their financial decisions with their religious beliefs. One of the key principles of Islamic finance is the avoidance of interest (riba) and excessive debt, which has led to the emergence of debt-free Halal stocks as a viable investment option. Debt-free Halal stocks are shares of companies that operate by Islamic principles and have zero interest-bearing debt on their balance sheets. These companies finance their operations through retained earnings, equity financing, or other Shariah-compliant methods.
The global halal market, encompassing food, finance, cosmetics, pharmaceuticals, and tourism, is projected to reach a staggering $7.7 trillion by 2025, more than doubling from $3.2 trillion in 2015. Muslim millennials, with an estimated combined spending power of $2.45 trillion, are driving the demand for halal products and services. If we talk about the prices of halal stocks, the average price of halal stocks in the US varies depending on the company and sector.
Several Islamic funds offer exposure to US-traded stocks that comply with Shariah principles. One of the most popular and well-established funds is the Amana Growth Fund, which is managed by Saturna Capital. This fund invests in a diversified portfolio of Halal stocks listed on major US exchanges, adhering to strict Islamic investment guidelines. The fund has returned 9.3% so far this year, 2.5 percentage points less than the category, earning it a D. Over the last year, the fund has returned 26.0% (grade of D), 10.2% over the previous three years (grade of A), 17.8% over the previous five years (grade of A), and 14.9% annually over the previous ten years (grade of A). Another notable fund is the Azzad Ethical Fund, which is managed by Azzad Asset Management. This fund seeks to invest in companies that operate by Islamic principles and have strong financial performance and growth potential.
The S&P High Yield Dividend Aristocrats Shariah Index tracks Shariah-compliant companies within the S&P 1500 Composite that have consistently increased their dividend payments for at least 20 years. This index focuses on long-standing, dividend-growing companies adhering to Shariah principles. Currently, the index is down 3.97% for the year but has achieved a 5-year return of 9.11%.
Stocks
Our Methodology
We chose stocks with debt-to-equity ratios lower than 0.15 as part of our research. Then, we ranked the stocks on the basis of the number of hedge funds holding a stake in them as of Q1, 2024. If two stocks had the same number of hedge fund holders, we tie-broke them on the basis of their debt to equity ratios, with stocks with lower debt/equity ratios outranking the stocks with higher debt/equity ratios.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
Here is our list of the 7 best halal stocks to buy now (debt free).
7. Archer Aviation Inc. (NYSE:ACHR)
Number of Hedge Fund Holders: 20
D/E Ratio: 0.09
Archer Aviation Inc. (NYSE: ACHR) is a promising debt-free company in the urban air mobility space and it stands among the best halal stocks to buy now (debt free). Archer Aviation Inc. (NYSE: ACHR) has a bullish outlook from analysts, with a consensus “Strong Buy” rating and an average 12-month price target of $7.63, representing a potential upside of 131.21% from the current price of $3.30.
Analysts are optimistic about Archer Aviation’s prospects, with 3 “Buy” ratings and 1 “Hold” rating from the 4 Wall Street analysts covering the stock. The highest price target is $12.00, while the lowest is $4.50.
The hedge fund that holds the highest number of shares in Archer Aviation Inc. (NYSE: ACHR) is ARK Investment Management LLC, managed by Cathie Wood. ARK added 13.46% to its position, holding $130.56 million worth of ACHR shares, which comprise 0.01% of its portfolio. Other notable hedge funds holding ACHR include Moore Capital Management LP (managed by Louis Moore Bacon), with $693,000 worth of shares (0.01% of portfolio), and HBK Investments LP (managed by David Costen Haley), with $346,500 worth of shares (<0.01% of portfolio).
The company’s adjusted EBITDA loss stood at $77.6 million in Q1 2024 and maintained strong liquidity position of over $520 million at the end of Q1. Archer flew over 100 test flights in Q1, keeping them on track to exceed their goal of 400 flights this year.
6. AAON, Inc. (NASDAQ:AAON)
Number of Hedge Fund Holders: 20
D/E Ratio: 0.04
AAON Inc. (NASDAQ:AAON) is a leading manufacturer of heating, ventilation, and air conditioning (HVAC) equipment, making it an attractive halal stock option for investors seeking Sharia-compliant investments.
AAON has a consensus rating of “Moderate Buy” from Wall Street analysts. The average price target for the stock is $105.00, representing a potential upside of 45.07% from the current price of $72.38. The stock trades at a forward PE ratio of 31.32, which is reasonable considering its growth prospects. AAON also pays a dividend of $0.32, with a yield of 0.44%.
AAON Inc. (NASDAQ:AAON) recently activated 432 solar panels at its new Exploration Center, making it one of the most sustainable and energy-efficient buildings in Tulsa. AAON’s stock has been on a tear, outperforming the S&P 500 year-to-date. The company recently announced a 3-for-2 stock split, which is often seen as a bullish signal and can attract more investors. In Q1 2024, 20 hedge fund portfolios held AAON Inc., a increase from 18 in the previous quarter.
In Q1 2024, the company’s gross profit margin expanded to 35.2%, up from 29.0% in Q1 2023 which was driven by favorable pricing and moderating cost inflation. AAON Inc. (NASDAQ:AAON)’s diluted earnings per share (EPS) rose 4.5% to $0.46, benefiting from a $4.4 million excess tax benefit from share-based compensation in the same period.
5. Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS)
Number of Hedge Fund Holders: 22
D/E Ratio: 0.12
Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS) is a promising debt-free, halal stock that analysts strongly recommend as a buy. The company is a clinical-stage biopharmaceutical firm developing a novel disease-modifying approach to target the underlying cause of Alzheimer’s disease.
Acumen Pharmaceuticals has a consensus rating of “Strong Buy” from Wall Street analysts, based on 4 buy ratings and no hold or sell ratings. The average 12-month price target is $13.50, representing a staggering 297% upside potential from the current price. Analysts are bullish on the company’s lead drug candidate ACU193 which is a monoclonal antibody that selectively targets toxic amyloid-beta oligomers believed to be a key driver of Alzheimer’s.
Among the largest hedge fund shareholders of Acumen Pharmaceuticals, Inc. (NASDAQ:ABOS) is RA Capital Management, holding shares valued at $60 million. The company’s cash runway is expected to fund operations into 2026, including the initiation of a Phase 2 trial for ACU193 in the first half of 2024. In Q1 2024, R&D expenses increased 43% to $12.4 million due to ALTITUDE-AD trial costs and G&A expenses rose 20% to $5.3 million, driven by higher headcount.
4. Adicet Bio, Inc. (NASDAQ:ACET)
Number of Hedge Fund Holders: 22
D/E Ratio: 0.08
Adicet Bio, Inc. (NASDAQ:ACET) is a clinical-stage biotechnology company focused on developing allogeneic gamma delta T cell therapies for cancer and autoimmune diseases. According to 7 analysts, the average rating for ACET stock is a “Strong Buy.” The 12-month stock price target is $15.17, representing a potential upside of 1,075.97% from the current price. Analysts are bullish on Adicet Bio due to its promising pipeline and upcoming catalysts, including clinical data readouts.
There are 22 hedge fund holders in the company as of Q1 2024. The hedge fund with the largest position in ACET is OrbiMed Advisors LLC.
In Q1 2024, Adicet Bio, Inc. (NASDAQ:ACET)’s research and development (R&D) Expenses were $23.9 million, down from $26.8 million in Q1 2023 and the general and administrative (G&A) Expenses stood at $7.0 million, up from $6.6 million in Q1 2023. The company is on track to initiate a Phase 1 clinical trial for ADI-001 in lupus nephritis in Q2 2024.
3. Absci Corporation (NASDAQ:ABSCI)
Number of Hedge Fund Holders: 27
D/E Ratio: 0.06
Absci Corporation (NASDAQ:ABSI) is a biotechnology company that utilizes artificial intelligence (AI) and synthetic biology to create next-generation protein-based drugs. The company’s AI-powered drug creation platform enables the design and development of novel proteins with enhanced properties for therapeutic applications. Absci Corporation stands third among the best halal stocks to buy now (debt free).
Absci Corporation (NASDAQ:ABSI) has an average 12-month price target of $8.67, with a high of $13.00 and a low of $6.00, according to the study of four Wall Street analysts conducted over the last three months. The current price of $4.51 has increased by 92.24% to this average. The analysts are optimistic about Absci’s differentiated AI-driven drug discovery platform, which combines artificial intelligence with wet lab technologies to create novel biologics. They see significant growth potential as the company advances its pipeline of drug candidates like ABS-101, ABS-201, and ABS-301
The largest institutional shareholder of Absci Corporation (NASDAQ:ABSI) is Fmr Llc (Fidelity), holding 6,863,544 shares. Hedge funds have been actively trading Absci Corporation’s stock in Q1 2024. Redmile Group, LLC increased its position by 2.8% during the quarter, further solidifying its position as the second-largest shareholder. Platinum Investment Management Ltd. Which is another notable hedge fund, reduced its stake by 7.3% but still holds 776,602 shares valued at $4.41 million. Affinity Asset Advisors LLC, a relatively new investor, acquired 1,025,000 shares worth $5.82 million, representing a 0.906% ownership stake in the company.
In Q1 2024, the company’s revenue stood at $900,000 and the R&D expenses were reported to be $12.2 million, down from $12.7 million in the prior year period. Their selling, general, and administrative expenses were $8.7 million in Q1 2024, decreased from $9.6 million in the prior year period and the company raised approximately $86.4 million in net proceeds from a public offering of common stock.
2. ACADIA Pharmaceuticals Inc (NASDAQ:ACAD)
Number of Hedge Fund Holders: 33
D/E Ratio: 0.13
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is a biopharmaceutical company focused on developing and commercializing innovative medicines for central nervous system (CNS) disorders and rare diseases. The company’s flagship product, NUPLAZID, is approved for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis. ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) has an average 12-month price objective of $27.75, with a high of $39.00 and a low of $17.00, based on the projections of 16 Wall Street analysts over the last three months. Compared to the current price of $15.03, this average shows an 84.63% rise.
A total of 33 hedge funds reported holding shares of ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) in Q1 2024. Baker Bros. Advisors LP remained the largest hedge fund holder with 42.8 million shares worth $792.5 million, comprising 9.9% of their portfolio. EcoR1 Capital LLC held 5.9 million shares worth $110.7 million, accounting for 2.8% of their portfolio.
In Q1 2024, the company reported total revenues of $205.8 million, a 74% increase year-over-year which was driven by:
- NUPLAZID net product sales of $129.9 million, up 10% year-over-year
- DAYBUE net product sales of $75.9 million (no sales in Q1 2023 as it was recently launched)
Their Cash, cash equivalents, and investment securities were $470.5 million as of March 31, 2024.
1. Arch Capital Group Ltd. (NASDAQ:ACGL)
Number of Hedge Fund Holders: 45
D/E Ratio: 0.14
Arch Capital Group Ltd. (NASDAQ:ACGL) is a leading Bermuda-based insurance and reinsurance company with a strong financial position and debt-free balance sheet which places it first among the best halal stocks to buy now (debt free). Arch Capital Group has an average 12-month price target of $108.58, with a high of $119.00 and a low of $92.00, based on the projections of 12 Wall Street analysts over the last three months. From the current price of $99.58, this implies a 9.04% gain.
In Q1 2024, 45 hedge funds held positions in Arch Capital Group Ltd. (NASDAQ:ACGL) stock. The hedge fund with the largest holding was Egerton Capital Limited, which held 3.4 million shares worth $314.3 million, comprising 3.03% of their portfolio. The second-largest hedge fund holder was Polar Capital, holding 3.1 million shares worth $287.3 million, making up 1.5% of their portfolio.
In Q1 2024, Arch Capital Group Ltd. (NASDAQ:ACGL)’s gross premiums written stood at $5.93 billion, up 24.1% year-over-year, and net premiums written were $4.09 billion, up 19.3% year-over-year. In the same period, net premiums earned were $3.42 billion, up 18.7% year-over-year.
Overall, GOOGL ranks first among the 12 best quantum computing stocks to buy now. You can visit 12 Best Quantum Computing Stocks To Buy to see the other quantum computing stocks that are on the hedge fund radar. While we acknowledge the potential of quantum computing companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.”
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