In this piece, we will take a look at the top stocks that are popular with mutual fund managers according to Goldman Sachs.
As the fourth quarter of 2024 starts, the market is once again back to debating about the Federal Reserve’s interest rate cuts. The latter half of September saw some much overdue optimism on Wall Street as the Federal Reserve kicked off its rate cut cycle through a 50 basis point cut. Since the day of the rate cut and the close of September, the flagship S&P and the broader NASDAQ index gained 2.6% and 3.5% respectively.
However, the start of October saw the return of nervousness that investors have been dealing with since the start of the rate hiking cycle and worries of a recession. The S&P and the NASDAQ dropped by 1.1% and 1.5% after labor market data saw the US market add 254,000 in nonfarm payrolls and 8.040 million overall jobs measured by the Labor Department’s JOLTS survey. Both of these releases beat economist expectations, leading to sharp drops in markets as investors now factored out a 50 basis point cut at the next meeting of the Federal Reserve.
The latest drops despite a strong labor market are indicative of how investors expect nothing but a perfectly balanced data set since in August, Magnificent 7 stocks, which are generally dependent on robust discretionary and corporate spending, lost $800 billion in market value after unemployment jumped by 4.3% in July for its highest value since September 2021.
However, even though markets pared back their gains in October, the fact still remains that drops due to a strong labor market are nevertheless better than ones that follow a slow market. This is because the former scenario promises a robust economic outlook. Soon after the fresh labor data that caused jitters in October, investment bank Goldman Sachs was out with yet another 2024 target for the benchmark S&P index. The bank now expects the S&P to close 2024 at 6,000 points, a sizeable bump over its first 2024 target of 4722 points, with the latest estimate being its fourth revision of the 2024 target so far. The first revision saw the bank bump up 2024’s S&P closing estimate to 5,100 points in late 2023, and two subsequent revisions saw further upside as it predicted that the index would close out at 5,200 and 5,600 points.
The latest revision now sees the bank estimate that the index will close at 6,000 points – for a 4.3% upside over the recent closing value of 5,751 points. It is based on the bank’s optimism about the third quarter earnings cycle, as the index revision was followed by an upward earnings revision as well. Heading into earnings, Goldman believes that in 2025, the S&P’s earnings per share will now sit at $268. This is a 4.7% upward revision from the bank’s previous estimate of $256 and it assumes that earnings will grow by 11.2% next year over the 2024 earnings estimate of $241. This isn’t the only growth estimate in the banks’ latest market outlook since the report also sees it introduce an S&P earnings target for 2026. As per Goldman, in 2026, the S&P will deliver earnings per share of $288 to mark a 7.4% annual growth and a stronger 19.5% growth over this year’s earnings.
For a market that first struggled with worries of a recession in August and is now re calibrating expectations for the interest rate cut cycle, it’s important to see what’s driving the bank’s optimism. Led by chief US equity strategist David Kostman, analysts have built their optimism on the back of strong economic performance. In the note, Kostin comments that his firm’s “forward EPS estimates reflect a steady macro outlook.” He adds that “the primary driver of the upward revision to our 2025 EPS estimate is greater margin expansion,” since the “macro backdrop remains conducive to modest margin expansion, with prices charged outpacing input cost growth.” This backdrop, as you might expect, is driven by bullish expectations about the US economy. As per Kostin, the 2025 EPS estimate is driven by Goldman’s assumption that “sales will grow by 5%, roughly in line with nominal GDP growth (vs 4% previously).”
Yet, despite the optimism, the analysts are also wary about short term turbulence in the stock market. October is the last month before a hotly contested US presidential election, and investors have also felt jitters from ongoing hostilities in the Middle East. Consequently, Kostin warns that as “everyone is in the pool” right now, with the election looming and the mutual fund fiscal year ending on October 31st, stocks could see some shifts as the big players rotate their positions. As an example of the volatility that the market is facing right now, the analyst points out that the Chicago Board’s CBOE volatility index jumped by 30% over the past five trading days to signal that “volatility is no longer the coach on the sidelines: it is the player on the field.”
Speaking of mutual funds, they’ve done quite well this year. We took a look at the brief performance of mutual funds as part of our coverage of Goldman Sachs’ Top Fund Manager Stock Picks: 25 Best Overweight Stocks. This revealed that as per BofA, during the first quarter, 64% of actively managed mutual funds beat their benchmarks during Q1, for their best set of performance over the past 17 years. This also marked a significant improvement over last year’s performance when 38% of these funds had beaten the benchmarks.
The Fed’s interest rate cut also means that hedge fund shifted their positions. Financial services firms and banks in particular benefit from interest rate cuts as their deposit costs drop and they can earn more by maintaining existing rates. Consequently, according to Goldman, in the week before the Fed interest rate cut, hedge funds bought banks and financial services stocks at the fastest pace since 2023. This falls in line with what UBS Wealth Management’s Brad Bernstein shared in his comments after the rate cut when he explained that lower rates make financials attractive since “the improving yield curve for their balance sheet and what that means for their ability to lend at higher rates and pay cheaper rates on cash savings.”
With these details in mind, let’s take a look at the stocks that mutual funds piled into in Q2 according to Goldman Sachs.
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Our Methodology
For our list of Goldman Sachs’ top stocks that are popular with mutual fund managers, we used the bank’s list of 20 Russel 1000 stocks that mutual fund managers had grown their positions in during Q2 2024. The stocks are ranked by the number of funds that increased their portfolio allocation versus those that had decreased it.
For these stocks, we also mentioned the number of hedge fund investors. 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).
20. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Mutual Funds: 16
Number of Hedge Fund Investors in Q2 2024: 69
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a cybersecurity company that has been in the news in 2024 for all the wrong reasons. The firm’s faulty software update in July bricked roughly 8.5 million computers worldwide. The impact was widespread, with airlines and other businesses being unable to provide services to customers. Consequently, CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s hypothesis as now shifted to how the aftermath of the impact might affect its growth and whether it will experience customer churn. The outage led to CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s shares dipping by 42% in July, but the firm seems to be recovering as the stock is up by 33% since it bottomed out in early August. Additionally, investors are on the lookout for what the firm’s management believes is the current customer sentiment. On this front, an analyst note from TD Cowen released in October provided insights. After maintaining a Buy target and a $38 rating for the stock, analysts opined that “MSFT is unlikely to cut CRWD off from accessing telemetry data out of the kernel given the mission criticality of the Falcon EDR platform product (deployed at >29k customers, 70% of Fortune 100).” However, they cautioned that CrowdStrike Holdings, Inc. (NASDAQ:CRWD) needs at least two quarters to gain insight into customer contract renewals of the ill fated Falcon system, noting that “We understand that a more precise quantification of the revenue uplift potential requires two more quarters of patience before management obtains sufficient visibility into that pipeline.”
Baron Funds mentioned CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2024 investor letter. Here is what the fund said:
“CrowdStrike Holdings, Inc. is a cloud-architected SaaS cybersecurity vendor offering endpoint security, threat intelligence, and cyberattack response services. Shares continued their strong performance from the first quarter and were again a top contributor, rising 19.5% in the second quarter on better execution than peers in the broader security space. The company reported strong quarterly results with 33% year-over-year revenue growth, driven by customers consolidating their cybersecurity spend on CrowdStrike with free cash flow margins reaching 35%. With accelerating market share gains in its core endpoint detection and response offering, emerging products including Cloud, Identity, and SIEM reaching material scale, and newer products in data protection and AI ramping quickly, net new annual recurring revenue and total revenue look to sustain a long duration of growth. With its leading competitive positioning in cybersecurity, the growing threat landscape (which is also driven by the advancements in AI, making hackers more dangerous), its unique lightweight, single-agent, architecture, and its platform approach, we retain conviction in CrowdStrike, which is emerging as the security platform to beat in terms of scale, profitability, and free cash flow conversion.”
19. Becton, Dickinson and Company (NYSE:BDX)
Number of Mutual Funds: 16
Number of Hedge Fund Investors in Q2 2024: 65
Becton, Dickinson and Company (NYSE:BDX) is one of the largest medical instruments companies in the world. The firm’s product portfolio covers a diverse set of products such as drug detectors, catheters, inventory optimization systems, and drug collection products. Its size and scale provide Becton, Dickinson and Company (NYSE:BDX) with considerable resources as evidenced by the firm’s trailing twelve month revenue of $19.8 billion and cash and equivalents of $1.4 billion. It also provides the firm with key economies of scale that are necessary to keep margins high. Yet, these economies also mean that Becton, Dickinson and Company (NYSE:BDX) has to maintain or grow its revenue otherwise its margins suffer due to high operating expenditure. The stock is down 3.4% year to date on the back of two key factors. One factor behind the weak sentiment is Becton, Dickinson and Company (NYSE:BDX)’s China revenue. As of its latest quarter, the firm’s international revenue was $2.1 billion, which accounted for 42% of its sales. A slowdown in China meant that international revenue remained flat, adding to woes as Becton, Dickinson and Company (NYSE:BDX)’s pharmaceutical and biomedical businesses have also failed to grow. As a result, for the nine months ending in June, the firm’s revenue has grown by a modest 3.2% while its expenses have jumped by 3.5%.
To mitigate some of its growth challenges, Becton, Dickinson and Company (NYSE:BDX) is focusing on acquisitions. Here’s what management shared on this front during the Q3 2024 earnings call:
“Today, BD has a $4 billion-plus business in health care automation and informatics AI and we’ll increase this to over $5 billion as we complete the acquisition of Critical Care. This expands BD in the smart critical care space and creates new opportunities to combine AI-driven monitoring with systems such as infusion technologies to simplify nursing workflow and improve patient care.
Looking ahead to 2030, we view health care process automation and informatics AI as having the potential to become a business exceeding $7 billion as we continue to build more connected, automated and intelligent solutions to transform the core processes underlying care delivery.”
18. SBA Communications Corporation (NASDAQ:SBAC)
Number of Mutual Funds: 17
Number of Hedge Fund Investors in Q2 2024: 45
SBA Communications Corporation (NASDAQ:SBAC) is a specialty real estate investment trust that focuses on owning and operating communications properties. Its shares are down 7% year to date which is unsurprising given the impact of high interest rates on real estate stocks and the turbulence in the telecommunications industry. Carriers typically expand their networks when rates are low since expansion requires them to generate vast sums of capital before the towers can be brought online to provide services and generate revenue. Similarly, REITs like SBA Communications Corporation (NASDAQ:SBAC) rely on debt to finance their portfolio. Telecom activity is also influenced by consumer spending, and these three factors combined have impacted SBA Communications Corporation (NASDAQ:SBAC)’s stock. As a result, while in the short term the stock remains depressed, a solid foundational base as evidenced by $6.2 billion in net property, plant, and equipment sets up the firm well to capitalize on an uptick in telecom spending. Additionally, an international presence means that a stronger dollar also reduces SBA Communications Corporation (NASDAQ:SBAC)’s revenue. Analyzing its finances, during H1 2024, while its International leasing revenue grew by $3.3 million on a constant currency basis, on an adjusted basis it dropped by $1.8 million.
Carillon Tower Advisors mentioned SBA Communications Corporation (NASDAQ:SBAC) in its Q2 2024 investor letter. Here is what the fund said:
“SBA Communications operates as a real estate investment trust (REIT) with a focus on wireless communications infrastructure. The company continues to face revenue headwinds due to a leading wireless provider decommissioning surplus towers following its merger with another provider. This strategic move has adversely impacted the outlook of SBA Communications’ future financial performance. We have sold the stock.”
17. The Gap, Inc. (NYSE:GAP)
Number of Mutual Funds: 17
Number of Hedge Fund Investors in Q2 2024: 39
The Gap, Inc. (NYSE:GAP) is the tumultuous American retailer whose shares have been on quite a ride this year. After they soared by 49% in March, after the firm’s Q4 2023 revenue of $4.3 billion and net income of $185 million beat analyst estimates. This indicated to investors that The Gap, Inc. (NYSE:GAP)’s turnaround plans were moving in the right direction, and in late May and early June, investors further rewarded the firm by sending the stock soaring by another 43%. This came on the back of another beat, with The Gap, Inc. (NYSE:GAP)’s Q1 revenue of $3.39 billion in revenue and $0.41 in EPS beat estimates of $3.29 billion and $0.14. However, since August, the stock is down by 13.37% primarily on the back of a weakening consumer environment that might create hurdles in The Gap, Inc. (NYSE:GAP)’s plans to reshape its brand and forgo promotions in favor of strong brand identity.
The Gap, Inc. (NYSE:GAP)’s management commented on its strategy during the Q2 2024 earnings call:
“We are building stronger brand identities, supported by trend-right products, amplified through more compelling storytelling with an innovative media mix that is translating to greater cultural relevance. We are working to provide our customers with a more engaging omnichannel experience and aim to execute with excellence. Each brand is at a different point in the process and I’m encouraged by the improvements we are driving across the portfolio. I’ll take you through how these elements are showing up at each one of our brands, starting with Old Navy. Over the past year, our operational rigor has enabled us to strengthen Old Navy’s foundation and brand identity. We are winning in key categories with more clarity in pricing and in-store navigation connecting our customers with products they want and compelling storytelling.
As a result, we are driving market share gains and positive comps. Our trend-right product is driving share growth in women’s, which is important as she is the gateway to the family.
Our strategic pursuit to lead in the active category is paying off with sizable market share gains, and we are leading again with dresses as we regain the number one position in the category according to Circana. We also see an opportunity to lean further into denim with an expanded offering, a dynamic in-store and online experience, supported by a new campaign expressing our evolving brand identity work. Old Navy’s marketing is becoming more relevant as evidenced by the impact of the submarine campaign. This successful campaign featured Tracee Ellis Ross and Yara Shahidi, who exuded a carefree Spirit of Summer, dressed in on-brand stylish offerings, it was a great indication of our new and exciting creative for Old Navy.
We are a stronger Old Navy than we were a year ago, and we will continue to operate with this level of rigor as we execute our brand reinvigoration playbook. Now let’s turn to Gap. We are focused on reigniting Gap’s leadership in trend-right products and creative expression through big ideas and culturally relevant messaging, returning to our roots as a pop culture brand. While we’ve achieved great progress with five consecutive quarters of share gains for the brand and seven consecutive quarters of share gains in women’s, we continue to be relentlessly pursuing better. The response to our Linen Moves campaign has been fantastic as we’ve become a destination for linen. Our focus going forward is on repeating these types of creative expressions that leverage our heritage rooted in music and dance and declare a trend statement.”
16. Gilead Sciences, Inc. (NASDAQ:GILD)
Number of Mutual Funds: 17
Number of Hedge Fund Investors in Q2 2024: 62
Gilead Sciences, Inc. (NASDAQ:GILD) is a diversified drug manufacturer and pharmaceutical company. Its products help patients with AIDS, hepatitis, fungal infections, hypertension, and other ailments. Gilead Sciences, Inc. (NASDAQ:GILD) has sizeable resources at its disposal, as evident through its cash and equivalents of $3.7 billion. These allow the firm to operate on the dual operating fronts that are key for any pharma company’s hypothesis. The first of these fronts is generating revenue through existing products. Gilead Sciences, Inc. (NASDAQ:GILD)’s HIV/AIDS treatment Biktarvy is the talk of the town, and it generated $3.2 billion in Q2 2024 sales. Another HIV treatment Descovy generated $485 million in sales during the same period, and together, the pair accounted for 53.6% of Gilead Sciences, Inc. (NASDAQ:GILD)’s $6.9 billion in revenue. On the second front, the firm is currently developing lenacapavir for HIV, seladelpar for cholangitis, trodelvy for lung cancer, and domvanalimab for gastrointestinal cancers. Consequently, Gilead Sciences, Inc. (NASDAQ:GILD)’s performance in these trials will determine its share price movements, and growth in HIV market penetration can create tailwinds.
Parnassus Investments mentioned Gilead Sciences, Inc. (NASDAQ:GILD) in its Q1 2024 investor letter. Here is what the fund said:
“Gilead Sciences, a global biopharmaceutical company, saw its shares decline as a cancer drug failed to expand into additional lung indications, denting investor faith in the company’s oncology franchise. We maintain confidence in Gilead’s core HIV franchise and ability to expand into cancer treatment portfolios.”
15. F5, Inc. (NASDAQ:FFIV)
Number of Mutual Funds: 17
Number of Hedge Fund Investors in Q2 2024: 25
F5, Inc. (NASDAQ:FFIV) is a software as a service (SaaS) company. It provides cloud based security products that allow users to virtually and securely work with their software. It is one of the more interesting SaaS stocks that you’re likely to come across since F5, Inc. (NASDAQ:FFIV) has successfully transformed itself from providing information technology hardware products to cloud computing software. This has proven to be quite important, as the growth in cloud computing has led a host of businesses to shift away from expensive hardware deployments to cheap, lean, and specialized virtualization software products. Additionally, IT spending has slowed down in today’s high interest rate era, and investors were impressed with F5, Inc. (NASDAQ:FFIV)’s ability to pivot into software in July when they sent the shares soaring by 13%. This was after the firm’s fiscal third quarter results that saw its revenue and EPS of $695 million and $2.44 beat analyst estimates of $686 million and $1.98. The high margin software business has served F5, Inc. (NASDAQ:FFIV) well, as while its revenue dropped from the year ago figure of $395 million, in Q3, net income grew from $89 million to $144 million. Looking forward, guidance beat for the full year could create tailwinds while troubles with software subscription renewals could create headwinds.
During the Q3 2024 earnings call, F5, Inc. (NASDAQ:FFIV)’s management commented on what its witnessing in its hardware product demand:
“Look, I think we have seen hardware stabilize over the last several quarters as customers have digested inventory. And over the last several quarters, we have seen a number of customers still sweating their assets in the current macro-environment, but we’re starting to see that change. And so for this year, we are about at the levels we think we’re going to be this year. But going into next year, our view is that there — the demand signals on hardware are pretty good. And so our expectations is that hardware, next year, will certainly not decline, possibly could be up relative to this year. And it’s driven by a few use cases, Tim. Number one is we have a strong pipeline of tech refresh activity and this is largely from customers that have digested their inventory or customers that were sweating assets and no longer can do that at this point.
And we’re starting to see that the close rates on this pipeline are going to be pretty strong. Specifically in the service provider space where they have sweated assets very aggressively, we’re now starting to see large programs come up again for CapEx in hardware in service provider. And also, we’re starting to see AI as a catalyst on the horizon for hardware. So, specifically for the few large enterprises or service providers that are building large AI factories. And one of the big issues in building these large GPU clusters, obviously, is the cost of training these models. And our technology specifically are high capacity, high performance, traffic management technology, BIG-IP is perfectly suited to improve the efficiencies of these large AI factories and thereby reduce the cost of them.”
14. American Tower Corporation (NYSE:AMT)
Number of Mutual Funds: 17
Number of Hedge Fund Investors in Q2 2024: 63
American Tower Corporation (NYSE:AMT) is a technology focused real estate investment trust. Its customers include businesses in the data center, communications, and broadcasting industries. The firm’s exposure to data centers has proven to be pivotal for its share price performance as American Tower Corporation (NYSE:AMT)’s stock is up by 37% over the past twelve months despite the tough interest rate driven environment for real estate and communications stocks coupled with the competition that broadcasting is facing from streaming. Over the past 12 months, the Dow Real Estate Index has gained 25%, confirming investor bullishness for American Tower Corporation (NYSE:AMT). The firm has been helped by several fronts. For starters, its presence in 25 countries means that it can capture AI generated data center demand in several countries. Additionally, American Tower Corporation (NYSE:AMT) has also sold its India business which improves its income statement. The REIT also signs contracts ranging between 5 to 10 years which provide investors with greater visibility into its future cash flows and helps protect against economic downturns.
ClearBridge Investments mentioned American Tower Corporation (NYSE:AMT) in its Q2 2024 investor letter. Here is what the fund said:
“American Tower, which we also added this quarter, is a great example of a new position that has a less expansive upside, but immensely compliments our overall portfolio positioning and utility. The company, which boasts incredible fundamental stability and built-in growth and inflation protection via its customer contracts, currently trades near decade lows across a variety of valuation measures.”
13. Tapestry, Inc. (NYSE:TPR)
Number of Mutual Funds: 19
Number of Hedge Fund Investors in Q2 2024: 32
Tapestry, Inc. (NYSE:TPR) is a luxury apparel and accessories company. Some of its products include handbags, sunglasses, gloves, and belts. This makes it one of the rare cyclical and consumer oriented stocks that have managed to gain 19% year to date and a stronger 62% over the past twelve months. Consumer sentiment has weakened in America because of high rates and inflation, but despite this, Tapestry, Inc. (NYSE:TPR) has managed to avoid revenue drops. Part of this is due to the firm’s customer base as luxury product buyers are typically better insulated against insulation when compared to the everyday consumer. For instance, during its fiscal fourth quarter, Tapestry, Inc. (NYSE:TPR)’s revenue and EPS stood at $1.59 billion and $0.92, respectively. These beat analyst revenue estimates of $1.57 billion and $0.88. The beats were fueled by the firm’s recovery in Europe where its sales grew by 17%. Tapestry, Inc. (NYSE:TPR) is also looking to expand its portfolio by acquiring rival firm Capri, which owns Michael Kors. Any positive development on this front could mean that the stock does well. Additionally, with the economic conditions yet to improve in America for consumers, the narrative is also focused on Tapestry, Inc. (NYSE:TPR)’s ability to control costs.
Tapestry, Inc. (NYSE:TPR)’s management shared details about another key market, China, during the Q4 2024 earnings call:
“Well, we are building and continue to drive a healthy business. That’s been our focus not only in China, but around the world and I think evidenced in our margin delivery that continues at Tapestry, but like many others, we’re seeing macro headwinds impacting the landscape. Despite this, we did grow in fiscal ’24. And as we think about the forward view, we are expecting the market to be basically in line in fiscal ’25 with where it was in ’24. But we — our long-term view on China and the opportunity that exists in that market has not changed. We’re taking a prudent approach in the short term in how we’re planning and in our guidance, but we continue to stay close to the consumer. Our teams are moving as that consumer is moving. We’re building the business in a very healthy way in the market. And maybe I’ll toss it to Todd to give some color around what we’re seeing at Coach specifically.”
12. ON Semiconductor Corporation (NASDAQ:ON)
Number of Mutual Funds: 20
Number of Hedge Fund Investors in Q2 2024: 45
ON Semiconductor Corporation (NASDAQ:ON) is an American semiconductor manufacturer that makes chips that are used in electric cars, industrial applications, and other products. Some of its products include power management chips, signal amplifiers, and sensors. ON Semiconductor Corporation (NASDAQ:ON) is a key player in the electric vehicle industry since it makes and sells silicon carbide chips that are used in EV power management. Consequently, the fact that the semiconductor manufacturer’s shares are down by 13.5% year to date is unsurprising since the EV industry has struggled to generate high demand due to higher rates. Additionally, ON Semiconductor Corporation (NASDAQ:ON)’s exposure to EVs also means that as more companies enter the market, lower prices could translate into margin problems for the firm. Amidst the turmoil, the firm is now pursuing a downsizing strategy through which it plans to shift some of its chip manufacturing needs to contracted fabs. This could spell trouble if demand picks up, and potential tailwinds for ON Semiconductor Corporation (NASDAQ:ON) include stable demand from Volkswagen and an acquisition to grow its presence in the industrial and defense markets.
Artisan Partners mentioned ON Semiconductor Corporation (NASDAQ:ON) in its Q1 2024 investor letter. Here is what the fund said:
“ON Semiconductor is a leading designer and manufacturer of chips for power management and image sensing. From a battery-electric vehicle (EV) standpoint, ON is a leading producer of silicon carbide chips. Shares have been under pressure as the company grapples with multiple quarters of inventory right-sizing across the entire auto supply chain and slower-than-expected growth of EV sales. However, ON is seeing smaller sales declines than peers due to market share gains, and we believe the company will be equally well positioned if automakers rebalance their efforts from full EVs toward hybrid vehicles. We remain patient.”
11. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Mutual Funds: 20
Number of Hedge Fund Investors in Q2 2024: 45
Coinbase Global, Inc. (NASDAQ:COIN) is one of the largest cryptocurrency trading platform providers in the world. This has served the firm’s stock well in 2024 as the shares are up 7.5% year to date and 113% over the past 12 months. Firms like Coinbase Global, Inc. (NASDAQ:COIN) benefit from the growing acceptance and availability of Bitcoin. Consequently, its stock soared by 42% in H1 2024 as Bitcoin ETFs created ripples in the cryptocurrency industry and on Wall Street. However, the second half has seen Coinbase Global, Inc. (NASDAQ:COIN)’s shares drop by 24.2% as the economic picture has remained complex. The stock tanked by 20% in the first week of August as weak labor market data generated fears that America was headed for a recession. Then, Coinbase Global, Inc. (NASDAQ:COIN) dropped by an additional 30% in the last week of August and the first week of September due to legal troubles with the SEC and a manufacturing slowdown which further stoked recessionary fears. On a micro level, Coinbase Global, Inc. (NASDAQ:COIN) could see tailwinds if initiatives such as retirement planning pick up with new age investors and retail volumes grow in the aftermath of a consumer recovery.
Patient Capital mentioned Coinbase Global, Inc. (NASDAQ:COIN) in its Q2 2024 investor letter. Here is what the fund said:
“Coinbase Global (COIN) was a top detractor following cryptocurrencies lower throughout the quarter. While cryptocurrencies are going through a digestion period following the all-time high reached by Bitcoin in March, we believe it is still the early innings for institutional adoption and exposure to cryptocurrencies. We believe Coinbase continues to solidify its position as the platform of choice for the crypto-ecosystem and will benefit from this increasing demand over time.”
10. Crown Castle Inc. (NYSE:CCI)
Number of Mutual Funds: 21
Number of Hedge Fund Investors in Q2 2024: 38
Crown Castle Inc. (NYSE:CCI) is a telecommunications real estate investment trust headquartered in Houston, Texas. The firm operates by leasing cell towers and fiber optic lines for communications. Its reliance on the telecommunications industry for its revenue means that Crown Castle Inc. (NYSE:CCI) flourishes when companies have easy access to money to lease infrastructure and grow their networks. Consequently, the stock is down 4.6% year to date, but it appears to have reversed the trend after Crown Castle Inc. (NYSE:CCI)’s earnings report in July. These results saw the firm’s second quarter site rental revenue of $1.58 billion beat analyst estimates of $1.56 billion and its $251 million in net income surpass analyst estimates of $235 million. These beats were key for Crown Castle Inc. (NYSE:CCI) as it has struggled to control costs and maintain revenue growth, leading to activist Elliot Management taking a stake in the company. Cost control and a potential sale of its business units to generate cash could further ease the firm’s troubles, especially since it maintained its full year outlook in Q2 to signal to investors that perhaps a turnaround was just around the corner.
Aristotle Partners mentioned Crown Castle Inc. (NYSE:CCI) in its Q2 2024 investor letter. Here is what the fund said:
“During the quarter, we sold our positions in Crown Castle and Veralto and invested in American Water Works.
We first invested in Crown Castle, a provider of telecommunications infrastructure (including towers, fiber and small cells), in 2021. During our holding period, tenancy ratios for the company’s tower business increased. However, the company’s fiber and small cell business segments have yet to deliver the expected benefits from the 5G network transition. Additionally, the CEO of Crown Castle stepped down at the end of 2023, influenced by Elliott Investment Management, an activist investor. Concurrently, the company has initiated a strategic and operational review of its fiber segment to determine whether to pursue a turnaround or a complete/partial sale. Given the uncertainty surrounding the company’s business strategy and new management team, we decided to exit the investment. We will continue to monitor the company from the sidelines.”
9. Broadcom Inc. (NASDAQ:AVGO)
Number of Mutual Funds: 21
Number of Hedge Fund Investors in Q2 2024: 130
Broadcom Inc. (NASDAQ:AVGO) is a diversified technology company with a presence in the hardware and software industries. In the former, the firm designs and sells modems, network adapters, ASICs, and others. These have a broad set of use cases from smartphones to data centers. Broadcom Inc. (NASDAQ:AVGO) also has a presence in the software industry through its cybersecurity division that provides the firm access to stable recurring revenue with high margins. As a result, large order wins, such as those for Apple’s iPhone or AI chips from OpenAI, carry the potential to create tailwinds for Broadcom Inc. (NASDAQ:AVGO)’s shares. The firm has also grown its presence in the software industry through its VMWare acquisition which enabled it to grow software revenue by 300% during its fiscal Q3. However, on the flip side, Broadcom Inc. (NASDAQ:AVGO) also faces risks from customers moving to in house products, such as Apple making custom modems for its smartphones.
Baron Funds mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter. Here is what the firm said:
“Broadcom Inc. is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure soware solutions. The stock rose during the quarter as it reported strong earnings on the back of its two key growth drivers, AI semiconductors and its acquired VMware soware business. The company once again increased its outlook for AI-related revenue, now expecting $11 billion or more this year (versus prior guidance for $10 billion), on the back of strength in both hyperscale custom compute and networking chips, where Broadcom maintains dominating share. In networking, Broadcom’s solutions are critical to enabling AI training factories to scale towards 100,000 chip clusters in the near term and 1 million chip clusters over the coming years. In AI custom compute, Broadcom designs custom accelerators for large consumer- internet AI companies (such as Google and Meta), who are building increasingly large AI clusters to drive improvements in user engagement and targeted advertising on their consumer media platforms. VMware remains on track to continue rapid sequential growth while simultaneously reducing operating expenses, driving faster-than-expected margin expansion and accretion, as management has simplified the product oering and is converting customers from a license model to subscriptions. We believe VMware will grow beyond the $4 billion near-term quarterly target, well above current analyst expectations. These two factors combined have caused a re-rating to the growth profile for the overall company. To quote CEO Hock Tan, “there is only one Broadcom. Period.”
8. AbbVie Inc. (NYSE:ABBV)
Number of Mutual Funds: 21
Number of Hedge Fund Investors in Q2 2024: 67
AbbVie Inc. (NYSE:ABBV) is a global pharmaceutical giant with a diverse product portfolio. The firm’s products range from helping cancer patients to allowing beauty enhancement and treating eye disorders. Its financial heft is evident from AbbVie Inc. (NYSE:ABBV)’s $55 billion trailing twelve month revenue sits at $55 billion and $13.1 billion in cash and equivalents. Roughly 68% of the firm’s revenue comes through three drugs. These are its arthritis drugs Skyrizi and Rinvoq and another arthritis drug Humira. AbbVie Inc. (NYSE:ABBV)’s scale and resources have enabled it to pivot to Skyrizi and Rinvoq after the Inflation Reduction Act forced it to negotiate Humira prices. They also enable the firm to have a robust drug pipeline. AbbVie Inc. (NYSE:ABBV) has two drugs in phase three trials. These are its ovarian cancer treatment Elahere and its Parkinson’s drug called Tavapadon. Positive developments for these could unlock additional revenue for AbbVie Inc. (NYSE:ABBV) and help it mitigate pain points such as struggling Botox and Juvederm sales particularly in China due to adverse macroeconomic conditions.
PGI Jennison mentioned AbbVie Inc. (NYSE:ABBV) in its Q2 2024 investor letter. Here is what the fund said:
“AbbVie Inc. (NYSE:ABBV) is a global pharmaceutical company with a commercial presence in four key therapeutic verticals: immunology, hematology/oncology, neuroscience, and aesthetics. AbbVie’s flagship product Humira is widely used across multiple immunology indications (totaling $21b in worldwide FY22 sales, or 37% of overall sales in the last year before biosimilar entry) but is declining steeply due to U.S. biosimilar entry in 2023. However, AbbVie’s successful development and launch of next-gen immunology drugs Skyrizi and Rinvoq should enable revenues and earnings to grow strongly from its trough earnings-per-share (EPS) in 2023, with Skyrizi and Rinvoq now expected to generate >$27B in sales by 2027, driving an HSD revenue compound annual growth rate (CAGR) from 2024 to 2029. Importantly, AbbVie faces limited patent cliffs through the end of the decade post-Humira. We turned more constructive on AbbVie stock in late 2023 due to these dynamics but decided to reduce exposure following the stock’s rapid run-up to start the year. This was driven by our expectation that faster-than-expected Humira erosion and one-off headwinds in 2025 will reduce growth to below consensus 2025 expectations. As a result, we were underweight AbbVie again by the time the market started reacting to the 2025 concerns, which were crystallized by management commentary on the 1Q earnings call. We have since exited our position.”
7. Carvana Co. (NYSE:CVNA)
Number of Mutual Funds: 22
Number of Hedge Fund Investors in Q2 2024: 61
Carvana Co. (NYSE:CVNA) is an internet based used car retailer that enables customers to buy and inspect cars online and then pick them up from its iconic vending machines. Since it is both a traditional company and a new age firm, Carvana Co. (NYSE:CVNA)’s hypothesis is driven by a combination of factors. For starters, the firm has to keep a close eye on its inventory and ensure that it buys only when prices are low and doesn’t sell at the wrong time. Additionally, as Carvana Co. (NYSE:CVNA) is an internet based firm, its margins see greater interest from investors as a lack of a traditional business model enables the firm to unlock lower costs. With used car prices in the US being in constant flux and falling due to a slow automotive industry making new car inventory build up, Carvana Co. (NYSE:CVNA) could see tailwinds in the future if prices stabilize following inventory correction. Lower rates help car sales, and as economic worries have started to dissipate, Carvana Co. (NYSE:CVNA)’s shares have risen by gaining 38% between September and October. However, a weakening credit environment could spell trouble, particularly as Carvana Co. (NYSE:CVNA)’s partner Ally Financial struggles with auto credit. Ally holds receivables from the car retailer and friction between them could reduce Carvana Co. (NYSE:CVNA)’s market impact.
Carvana Co. (NYSE:CVNA)’s management commented on the credit environment during the Q2 2024 earnings call:
“Sure. I think from a demographics perspective, I think, clearly, affordability was impacted pretty heavily over the last couple of years. I think there’s good news there, though. We have seen kind of higher levels of depreciation over the last 1.5 years. I think relative to CPI, car prices are now only probably about 3% higher than they were pre-pandemic. So I think we’ve closed a lot of that gap. Rates are obviously higher. So if you look at payments, payments are still about 10% higher than they were pre-pandemic for a similar car. So there’s probably a little bit of room for that to continue to improve. And that, of course, is impacting the lower end of the demographic spectrum probably more than the higher income end.
But I don’t think there’s anything too notable to call out there. I think we’re just focused on continuing to buy the cars that our customers are demanding on our site, getting those up, getting those reconditioned, delivering them to customers and giving them great experiences. And I think that’s what’s driving our success right now without too much focus on one group or another. From a credit perspective, I think credit clearly was kind of slowly moving back toward pre-pandemic normal after being very good in ’20 and ’21, and then probably crossover was a little bit worse in ’22 and parts of ’23. And I think many lenders ourselves included, started to tighten credit in the fourth quarter of ’23. What we’ve seen so far from that is performance that’s definitely in line with what we would have hoped to see.”
6. Johnson & Johnson (NYSE:JNJ)
Number of Mutual Funds: 23
Number of Hedge Fund Investors in Q2 2024: 80
Johnson & Johnson (NYSE:JNJ) is a well known healthcare and pharmaceutical company. A global brand name, the firm has considerable financial resources which enable it to target a variety of markets such as general well being, vaccines, and medical devices. Johnson & Johnson (NYSE:JNJ)’s cash and equivalents of $21.8 billion and trailing twelve month revenue of $86.5 billion also provide it with the benefit of high margins and a global market presence. However, as they say, the bigger you are, the harder you fall, and Johnson & Johnson (NYSE:JNJ) has experienced this first hand in 2024. The firm faced off with $6.4 billion in lawsuits in 2024 due to its talcum power and agreed to pay a whopping $700 million in settlements. These have impacted the share price, with Johnson & Johnson (NYSE:JNJ)’s shares down by 0.28% year to date. This is unsurprising since the pharma company continues to deal with its legal headaches as a subsidiary filed for bankruptcy for the third time in September to deal with liabilities and a media report claimed that Johnson & Johnson (NYSE:JNJ) had agreed to add $1.1 billion to its settlement. The liabilities are believed to be paid over more than two decades, but the firm is also developing new treatments simultaneously to grow revenue. These include a prostrate cancer drug and add to Johnson & Johnson (NYSE:JNJ)’s efforts to expand biologic production for cancer medicines by investing $2 billion in a new facility.
Another area Johnson & Johnson (NYSE:JNJ) is focused on is medical devices. Here’s what management shared during the Q2 2024 earnings call:
“Turning to MedTech, we continue to advance our pipeline, launch new commercial products and integrate strategic acquisitions that broaden and further differentiate our portfolio. In cardiovascular, we are enhancing our portfolio and shifting into higher growth markets through strategic acquisitions such as Shockwave Medical. In May, we announced the launch of our CARTO 3 Version 8 electroanatomical mapping system. This is the latest version of our 3D heart mapping system, which has machine learning capabilities that increase efficiency, reproducibility, and accuracy in maps electrophysiologists use to treat atrial fibrillation and other arrhythmias. In pulsed field ablation, we initiated the commercial launch of the VARIPULSE platform in the EU and Japan receiving early positive physician feedback in the external evaluation period.
We also delivered results from the pivotal phase of the admIRE trial, where the VARIPULSE platform demonstrated 85% peak primary effectiveness with minimal adverse events, short PFA application times and low fluoroscopy exposure. In orthopedics, we received 510(k) FDA clearance for the clinical application of the VELYS Robotic-Assisted Solution in unicompartmental knee arthroplasty. This is designed for both medial and lateral procedures enabling surgeons to guide precise implant placement without a CT scan. In surgery, we launched the ECHELON 3000 in the U.S., which combines 3D stapling and gripping surface technology to enable greater staple line security. This has been shown to deliver 47% fewer leaks, reduce surgical risks and improve surgical outcomes.”
5. AT&T Inc. (NYSE:T)
Number of Mutual Funds: 24
Number of Hedge Fund Investors in Q2 2024: 71
AT&T Inc. (NYSE:T) is an iconic American telecommunications carrier that has been in business in one form or another since the 1800s. The firm provides broadband internet, telephony, and other connectivity services. The diversified product portfolio allows AT&T Inc. (NYSE:T) to benefit from cross selling like insurance companies as it can offer telephony or internet products to users that use only one of these services. AT&T Inc. (NYSE:T)’s size, as evidenced by its trailing twelve month net income of $12.5 billion is at the center of its hypothesis. This is in the form of the firm using its existing network coverage to penetrate the fiber internet market. Additionally, the firm has set ambitious goals of covering millions of homes through 5G networks, and these efforts could be helped by AT&T Inc. (NYSE:T)’s focus on becoming a pure play telecommunications company as evidenced by its recent sale of Dish.
AT&T Inc. (NYSE:T)’s management commented on 5G and fiber during the Q2 2024 earnings call:
“The durable trends in 5G and fiber are being driven by more than the solid individual execution within each business. We believe the success of our fiber business is driving growth in mobility and vice-versa as consumers increasingly prefer to purchase mobility and broadband together as a converged service. For example, today, nearly four out of every 10 AT&T Fiber households also choose AT&T as their wireless provider. As a result, our share of postpaid phone subscribers within the AT&T Fiber footprint is about 500 basis points higher than our national average. In our fiber business, we continue to achieve key penetration milestones faster than we anticipated and considerably faster than the fiber providers that do not operate wireless networks based on publicly available data.
A key reason for the strong performance is our ability to sell fiber to our mobile customers. Additionally, we’re able to reach new broadband customers through our substantial mobile distribution channels. The key point here is that our proven ability to drive higher share in both mobility and broadband through converged service penetration is the true benefit of owning and operating both 5G and fiber networks at scale. Over time, we expect this to drive greater returns on invested capital in both our mobility and broadband businesses than either would be expected to achieve as standalone operations. While our convergent strategy began with a focus on our owned fiber footprint, we also see attractive opportunities to expand the availability of AT&T Fiber, and our converged offers outside of it.”
4. Northern Trust Corporation (NASDAQ:NTRS)
Number of Mutual Funds: 25
Number of Hedge Fund Investors in Q2 2024: 33
Northern Trust Corporation (NASDAQ:NTRS) is a financial services company headquartered in Chicago, Illinois. The firm provides services such as wealth, investment, cash, and treasury management. Out of its $4.3 billion in interest and noninterest income in H1 2024, $2.3 billion or 53% came through trust, investment, and other fees. This is a key factor for Northern Trust Corporation (NASDAQ:NTRS)’s hypothesis, since it reduces the exposure that the bank has to interest rates when earning revenue. It also means that the bank can see a stable flow of funds even when interest rates are high and money typically moves to money market funds. Between December 2023 and June 2024, Northern Trust Corporation (NASDAQ:NTRS)’s assets under management and assets under custody grew by 6% to sit at $1.5 trillion and 9% to sit at $13 trillion. However, high interest rates have also made their mark. The bank’s H1 2024 interest income and interest expense sat at $4.9 billion and $3.9 billion, respectively. Over the year ago figures, these marked growths of 56% and 77%, respectively. This meant that interest income growth was outpaced by expenses, and as rates lower, Northern Trust Corporation (NASDAQ:NTRS) could see additional tailwinds. However, the bank might not be completely out of the woods as its interest income is also dependent on a large extent to floating rate assets.
Northern Trust Corporation (NASDAQ:NTRS)’s management shared details about its approach to shifting rates during the Q2 2024 earnings call:
“Oh, yes, the due from banks, and we can come back to you. I think that’s just noise in the reporting on a small denominator. But in general, on the betas, the — I mean, you saw the ECB reduction, we got effectively 100% beta on that. And so we’ve — at this point with rates at these levels, the betas are going to be very high. And so we — in that example, both the standard rate card and the negotiated rates both came down in conjunction with the Central Bank change and even the negotiated rates tend to be on a spread to Central Bank rates. And so we feel like, again, in this zone of where rates are, the spread shouldn’t change material.”
3. Apple Inc. (NASDAQ:AAPL)
Number of Mutual Funds: 31
Number of Hedge Fund Investors in Q2 2024: 184
Apple Inc. (NASDAQ:AAPL) is a consumer technology company that is a global giant. Its best selling and most valuable product is the iPhone lineup. The iPhone is responsible for 52% of Apple Inc. (NASDAQ:AAPL)’s sales, and the firm’s hypothesis is dependent on its ability to generate stable revenue through regular upgrade cycles. Its resources, as evidenced by a whopping $28.3 billion in cash and equivalent also mean that Apple Inc. (NASDAQ:AAPL) is able to continuously innovate its product lineup. The biggest example of this is the MacBook lineup where the firm has successfully replaced x86 processors made by Intel with its custom chips. This has allowed Apple Inc. (NASDAQ:AAPL) to de link its supply chain from an unreliable partner and benefit from tighter ecosystem control. However, the firm’s reliance on the iPhone means that if the phone disappoints, its shares tumble. Apple Inc. (NASDAQ:AAPL) stock lost 3% in mid September after an analyst note speculated that 2024 iPhone sales were lower over its predecessor over the year ago comparable period.
Baron Funds mentioned Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter. Here is what the firm said:
“Recent Activity This quarter we re-initiated a position in Apple Inc., a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shis, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on- device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
2. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Mutual Funds: 33
Number of Hedge Fund Investors in Q2 2024: 74
Marvell Technology, Inc. (NASDAQ:MRVL) is a specialty American semiconductor company headquartered in Wilmington, Delaware. It designs and sells chips for networking applications. Marvell Technology, Inc. (NASDAQ:MRVL)’s products include Ethernet switches, ASICs, and signal processors. These products are vital for every data center and cloud computing system, which makes it unsurprising that Marvell Technology, Inc. (NASDAQ:MRVL)’s shares are up by 35% over the past twelve months. The optimism is primarily because of a growth in data center build outs for artificial intelligence systems. When it comes to AI, Marvell Technology, Inc. (NASDAQ:MRVL) is also an enabler because of its ASIC design. These are chips designed to compute custom workloads, and as the AI industry increasingly searches for alternatives to NVIDIA’s expensive and scarce GPUs, Marvell Technology, Inc. (NASDAQ:MRVL) could see more orders. It has already made progress on this front by working with three companies to produce an AI accelerator.
Marvell Technology, Inc. (NASDAQ:MRVL)’s management shared insights about these chips during the Q2 2025 earnings call:
“Our AI custom silicon programs are progressing very well, with our first two chips now ramping into volume production.
Development for new custom programs we have already won, including projects with a new Tier 1 AI customer we announced earlier this year, are also tracking well to key milestones. Looking ahead to the third quarter of fiscal 2025 for our data center end market, we are forecasting revenue growth to accelerate into the high teens sequentially on a percentage basis. We expect the largest contributor to this growth will be our AI custom silicon programs as they begin to ramp meaningfully in the third quarter, further augmented by ongoing growth from our optics portfolio.”
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Mutual Funds: 50
Number of Hedge Fund Investors in Q2 2024: 92
Exxon Mobil Corporation (NYSE:XOM) is an American oil and gas company that is one of the biggest of its kind in the world. The firm has a considerable market presence and heft, as evidenced by its $341 billion trailing twelve month revenue and $31.5 billion in cash and equivalents. An oil major, Exxon Mobil Corporation (NYSE:XOM)’s hypothesis depends not only on global industrial growth and high oil prices but also on its ability to grow its productions and operations base to keep up with equally well capitalized rivals. On this front, Exxon Mobil Corporation (NYSE:XOM) has been busy beefing up its portfolio. The firm’s mega $60 billion acquisition of Pioneer Energy grows its operating footprint in America’s oil exploration hotbed, the Permian basin. Additionally, Exxon Mobil Corporation (NYSE:XOM) also has multiple projects worldwide in regions such as Guyana, Singapore, and the US slated to come online next year. These are expected to add billions to its annual earnings.
Madison Funds mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q1 2024 investor letter. Here is what the fund said:
“This quarter we are highlighting Exxon Mobile (XOM) as a relative yield example in the Energy sector. XOM is a leading integrated oil and natural gas company. It has upstream assets that develop and produce oil and natural gas, along with downstream refining and chemical manufacturing assets. We believe it has attractive low-cost acreage in the Permian basin and has a sizeable growth opportunity in Guyana. Further, we think XOM has a sustainable competitive advantage due to size and scale, and its ability to integrate refining and chemical assets provides a low-cost advantage versus competitors.
Our thesis on XOM is that it will grow production volumes of oil and gas moderately over the next few years, while limiting excessive capital investment that plagued the industry from 2014-2020. Production growth will come from its 2023 acquisition of Pioneer Natural Resources, which is the largest producer in the Permian basin. XOM plans to double its Permian output by 2027, to 2 million barrels per day. Capital spending will be limited to $20-25 billion per year through 2027, which should allow for significant amounts of cash to be returned to shareholders including a $35 billion share repurchase program and continued dividend increases. Higher oil prices would provide a tailwind to our thesis but are not necessary. We think XOM can grow earnings and cash flow if oil prices remain above $60 per barrel.
The fund purchased XOM in March 2024 at $111. At the time of purchase, XOM had a dividend yield of 3.3% and a relative dividend yield of 2.4x the S&P 500, which was above its 20-year average of 1.75x. The company has an AA-rated balance sheet by Standard & Poor’s and is a Dividend Aristocrat that has raised its annual dividend 41 years in a row. XOM is one of only two Energy companies on the Dividend Aristocrat list, which requires dividend increases for 25 consecutive years.”
XOM is one of the top stocks that mutual funds bought in Q2 according to Goldman Sachs. While we acknowledge the potential of XOM as an investment, our conviction lies in the belief that some 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 XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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