We recently published a list of 11 Best Extremely Profitable Stocks to Buy According to Analysts. In this article, we are going to take a look at where AppLovin Corporation (NASDAQ:APP) stands against other best extremely profitable stocks to buy according to analysts.
Fed’s Response to Inflation and Growth Challenges
We recently covered 10 Best Stocks to Buy Now For the Long Term, where we talked about the market outlook amidst the tariff situation and uncertainty. Here’s a piece from the article:
While the S&P 500 is hovering near correction territory, marking five years since its COVID-19 drawdown. Wyne noted that the risks appear evenly distributed between bullish and bearish outlooks. On one hand, the bears argue that softer economic data and rising consumer inflation expectations could worsen with tariff escalations, potentially leading to stagflation. On the other hand, bulls counter that weak sentiment data does not necessarily reflect hard economic indicators such as employment and retail sales, which remain robust. Wyne highlighted that bulls point out that long-term inflation expectations are still anchored near the Fed’s target, mitigating risks of a wage spiral. He pointed out that historically speaking, investing during sentiment troughs has yielded strong returns in subsequent months.
Lastly, closing his market outlook with some investment advice, Wyne suggests that balancing risks by maintaining strategic asset allocation might be a viable strategy. He added that investors should use equities for long-term capital appreciation and fixed income for hedging during slowdowns. In addition, tactical adjustments can help capitalize on emerging opportunities while adding resilience through assets like gold and infrastructure investments. Wyne stressed that despite market volatility since the COVID-19 drawdown, the S&P 500 has risen over 150%, which underscores the importance of staying invested through uncertainties.
Despite the market volatility, the Federal Reserve has decided to wait and see during the March 2025 Federal Open Market Committee meeting. On March 20, Cristina Dwyer, an analyst at J.P. Morgan Wealth Management, commented on the Federal Reserve’s decision to maintain the federal funds rate at 4.5%. She emphasized that this decision reflects the Fed’s cautious approach in light of a resilient economy and moderating inflation trends. While inflation remains above the Fed’s 2% target, core consumer prices have decelerated significantly over the past year, signaling progress in controlling price pressures. Dwyer noted that this steady economic backdrop allows the Fed to adopt a “wait-and-see” strategy, while carefully monitoring the effects of recent policy changes and external factors before making further adjustments.
Dwyer also highlighted the Fed’s decision to slow quantitative tightening by reducing its monthly cap on US Treasury redemptions from $25 billion to $5 billion starting in April. This move aligns with the broader efforts to balance monetary policy normalization without disrupting financial markets. However, she pointed out that uncertainty remains high due to recent tariff policies, which have contributed to elevated inflation projections for 2025.
For investors, Dwyer underscored the importance of reassessing portfolios in light of these developments. She advised ensuring diversification and alignment with long-term financial goals, as economic uncertainty persists and interest rate adjustments are expected later in the year. Despite weaker economic projections in the Summary of Economic Projections, such as lower GDP growth and higher unemployment forecasts, Dwyer noted that the Fed remains optimistic about continued economic expansion within a resilient macroeconomic environment.
Our Methodology
To curate the list of 11 best extremely profitable stocks to buy according to analysts we used Finviz stock screener, CNN, and Morningstar. Using the screener we aggregated a list of stocks with more than 30% TTM net profit margins and analyst upside potential of at least 20%. Next, we cross-checked the TTM net profit margin for each stock from Morningstar and analyst upside potential from CNN. Lastly, we ranked these stocks in ascending order of analysts’ average projected upside potential. We have also added hedge funds’ sentiment around each stock. Please note that the data was recorded on March 21, 2025.
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 Corporation (NASDAQ:APP)
TTM Net Profit Margin: 33.55%
Number of Hedge Fund Holders: 95
Analyst Upside Potential: 76.73%
AppLovin Corporation (NASDAQ:APP) is a technology company that offers AI-powered advertising solutions and software platforms to help businesses reach, monetize, and grow their global audiences. On March 13, Analyst Jason Bazinet from Citi maintained a Buy rating on the stock with a price target of $600.
The analyst noted that despite competitive overlaps with platforms like Meta, AppLovin Corporation’s (NASDAQ:APP) tools have continued to be effective, as evidenced by sustained client usage. This demonstrates the company’s ability to generate incremental sales for its clients. Moreover, the company has onboarded approximately 600 eCommerce customers, with 80% scaling their spending. It is also actively pursuing international expansion and enhancing its AdTech solutions for eCommerce, which is expected to catch up with its established mobile gaming ad model.
During the fiscal fourth quarter of 2024, the company grew its advertising revenue by 73%, which resulted in total revenue growing by 44% year-over-year. Moreover, the company has been able to maintain net profit margins of more than 33% thereby making it the best extremely profitable stock to buy according to analysts.
ClearBridge Mid Cap Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) 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 1st on our list of best extremely profitable stocks to buy according to analysts. While we acknowledge the potential of APP 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 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.
