We recently compiled a list of the 12 Best Blue Chip Stocks To Invest In According to Short Sellers. In this article, we are going to take a look at where Amazon.com Inc (NASDAQ:AMZN) stands against the other blue chip stocks.
“Investors Need a Reason to Buy”
While economic data may be scarce, every data point gives a new angle to the ever-uncertain economic conditions in the US. On September 12, Jason Draho, UBS Global Wealth Management Head of Asset Allocation, appeared in an interview on Yahoo Finance to discuss the market moves after the consumer price index (CPI) report was released on Wednesday.
Draho suggested how regular intra-day moves did not hold enough weight to impact or influence the Fed’s decision. However, he did acknowledge that the inflation data and Wall Street’s reaction to it make the case for a 25-basis cut, or more, in the upcoming Fed meeting.
Draho then hinted that investors are hoping for a soft landing and are looking for stronger reasons or economic cues to hold back, given that bad economic news, as of now, has not triggered investors as much. He also emphasized the need for more financial data and clarity on whether the Fed would be proactive with its rate cuts for further analysis.
Contrary to what investors wish, he believes the Fed will be rather hawkish than proactive with its rate-cutting cycle. He adds that while the market calls for 100 basis points in rate cuts by the end of this year, he does expect the Fed to signal way less.
He then shed light on supply challenges in the technology sector, hinting that demand is not the issue at the moment. He was particularly impressed by the earnings posted by AI companies. Draho expects tech companies to have strong balance sheets and strong earnings power by the end of 2024, making them attractive stocks despite the economic turmoil.
“Volatility Over the Last Several Weeks is Unwarranted”
On September 13, Andrew Krei, Crescent Grove Advisors co-chief investment officer, appeared in an interview on Yahoo Finance to share his bullish outlook on the economy and financial markets. Krei discussed the labor market trends and how they may impact the Fed’s decisions in the upcoming meeting.
Krei pressed that despite the “unwarranted” volatility over the past few weeks, the economic outlook remains favorable, with credit markets showing close to no signs of stress. Krei also shed light on the global economic backdrop, suggesting that international markets, especially Europe, Japan, and China were showing strong signs of recovery in trade and manufacturing.
As far as investment goes, Krei suggests that while mega-cap tech stocks have shown promising results, he is more bullish on stocks outside of the magnificent 7. He was particularly inclined to companies in healthcare, finance, and industrials, hinting that these sectors will benefit immensely from the easing cycle. He then suggested that investors must shift their focus to diversified stocks with lower valuations and relatively stronger risk-adjusted returns.
Whatever the state of the economy, some stocks are notorious for their strong and consistent financial results.
Photo by Bryan Angelo on Unsplash
Our Methodology
To come up with the 12 best blue chip stocks to invest in according to short sellers, we first went over multiple similar rankings, our own rankings, and ETFs to compile a list of blue chip stocks. We then found the companies with the lowest short float and ranked the top 12 with the largest number of hedge fund holders and lowest short float percentage. The stocks are sorted in descending order of their short interest.
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).
Is Amazon.com (AMZN) the Best Blue Chip Stock To Invest In According to Short Sellers?
Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Short % of Shares Outstanding: 0.77%
Amazon.com Inc (NASDAQ:AMZN) is fourth on our list of the 10 best blue chip stocks according to short sellers. Amazon.com Inc (NASDAQ:AMZN) is a technology company that specializes in e-commerce, online retail, streaming, and data cloud services.
We call Amazon the e-commerce giant because it is on track to capture over 40% of the e-commerce market in the United States. It is also worth noting that its proprietary cloud service, Amazon Web Services (AWS), increased its revenue by 17.2%, year-over-year in Q1 to 18.8% in Q2.
Amazon.com Inc (NASDAQ:AMZN) can also be considered a rising AI star. Over the past few months, the company has not only partnered with AI startups and the US government, but it has also been actively investing in the development of AI chips. Its AI journey does not end here. The tech company has powered its e-commerce platform with AI to help customers shop, and receive intuitive product recommendations, and ideal price packages.
Analysts are bullish on AMZN and their 12-month median price target of $220 points to an 18% upside from current levels. Overall, AMZN was held by 308 hedge funds at the close of Q2 2024 with total stakes amounting to $65.85 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $8.46 billion.
Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
Overall AMZN ranks 4th on our list of the best blue chip stocks to invest in according to short sellers. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
