We recently published a list of 10 Best Upside Stocks To Buy Right Now. In this article, we are going to take a look at where Applovin Corp. (NASDAQ:APP) stands against other best upside stocks to buy right now.
On March 8, Bob Elliott, Co-Founder, CEO, and CIO of Unlimited, and Kara Murphy, CIO of Kestra Investment Management, joined ‘Closing Bell Overtime’ on CNBC to talk about the week’s market action. In a discussion on whether stocks or gold were the better choice in the current economic climate, Bob Elliott noted that stocks were facing tough circumstances due to elevated expectations at the start of the year, which had begun to adjust downward. He highlighted concerns about fiscal tightening, tariff volatility, and weaker employment conditions. However, he emphasized that these factors were overshadowed by potential tax policy changes, immigration restrictions, and efforts to curb federal spending, which could impact nominal GDP growth. Kara Murphy was asked about diversification, which is a topic that gained traction after a prolonged period where mega-caps and tech stocks dominated returns. She pointed out that diversification had been undervalued for two years but was now proving its worth as bonds and international funds outperformed US stocks. Murphy suggested that a diversified portfolio was essential for navigating the market, as it was no longer reliant on just a few high-performing stocks.
The conversation then turned to the push-and-pull between monetary and fiscal policies. Elliott discussed the volatility caused by rapid changes in policy, such as tariffs, which made it difficult for investors to have high conviction in any direction. This volatility was forcing professional money managers to reduce risk, which led to a decrease in long positions in leveraged investments and a reduction in short interest positions. Elliott highlighted the challenge of finding incremental buyers for risk assets in such an uncertain environment. Murphy reflected on the market’s valuation at the start of the year, and noted that while valuations were high, they alone were not a reliable timing indicator for market corrections. She emphasized that earnings momentum would be crucial in the second half of the year, with a potential shift in relative strength from the MAG7 stocks to other parts of the market. Murphy cautioned that high expectations meant companies needed to continue meeting those expectations to sustain market performance.
As the discussion underscored the complexities and uncertainties of the current market environment, it emphasized the importance of diversification in investment strategies.
Methodology
We first sifted through stock screeners, online rankings, and internet lists to compile a list of the best stocks with analysts’ upside potentials over 50%, as of March 10. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.
Applovin Corp. (NASDAQ:APP)
Upside Potential as of March 10: 105.19%
Number of Hedge Fund Holders: 95
Applovin Corp. (NASDAQ:APP) provides a software platform for advertisers and app developers to optimize marketing and monetization. Through its integrated suite of tools, which include AppDiscovery, MAX, Adjust, and Wurl, it connects advertisers with audiences across mobile and connected TV.
On February 28, the company received a strong endorsement from Benchmark Co. analyst Mike Hickey. He reaffirmed a Buy rating and a $525 price target and countered the recent short seller reports that accused Applovin Corp. (NASDAQ:APP) of exaggerating its AI advertising benefits. Hickey emphasized the company’s solid business model, open and honest operations, and adherence to industry rules and financial standards to dismiss the short seller claims as baseless.
The company’s AXON algorithm, which is a core component of its AI-powered advertising platform, is ongoing self-learning and engineering enhancements for growth. The Software Platform, which will be renamed “Advertising” in future reports, generated $835 million in revenue, which represents a 66% year-over-year increase. Applovin Corp. (NASDAQ:APP) is expanding its AI advertising capabilities beyond mobile gaming, with a successful e-commerce pilot. Early data shows advertisers seeing substantial returns. The company plans to scale this segment in 2025 by reallocating resources and launching a self-service platform to reach more advertisers.
ClearBridge Mid Cap Strategy is bullish on Applovin Corp. (NASDAQ:APP) due to its leading mobile advertising platform, AI-driven growth potential, and strong free cash flow generation. It stated the following regarding the company in its Q4 2024 investor letter:
“Stock selection in IT was the greatest contributor to performance on strength in AppLovin Corporation (NASDAQ:APP) and Marvell. AppLovin is the world’s leading mobile game and app advertising platform, providing software for marketing and monetization, powered by its proprietary AI targeting engine Axon. We see opportunity for AppLovin to continue to expand and grow its share of the market for mobile app marketing at a time when mobile gaming ad spend is recovering from a higher-rate-driven trough. We also see the potential for the company to expand its addressable market to include e-commerce advertising, around which initial forays have been encouraging. With strong incremental margins and management keeping expenses controlled, the company should be able to drive significant free cash flow growth as revenue continues to scale.”
Overall, APP ranks 4th on our list of best upside stocks to buy right now. While we acknowledge the growth potential of APP as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than APP 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.