We recently compiled a list of the 10 Best NASDAQ Stocks To Invest In Right Now. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against the other NASDAQ stocks.
This year has been a healthy year for the American stock market, fueled by a strong performance from technology stocks. Several indices capped their best week of the year in early September as stocks rose ahead of the Federal Reserve meeting where the central bank was expected to cut interest rates. NASDAQ has led the charge and registered a 20% growth during the first half.
While the index lists over 3,100 companies from various sectors, the rally has been led by its top seven holdings which account for 52% of the index. All of them being tech stocks. There is a mix of optimism and skepticism among investors on whether NASDAQ will be able to continue its good run over the second half of the year. Historical data over the past decade shows that in most instances, NASDAQ has finished stronger during the back half of the year. There have only been two years between 2014 and 2023 during which NASDAQ’s year-end returns were lower than first-half returns.
However, Fundstrat Global Advisors’ Tom Lee, who is generally bullish on the stock market, told CNBC earlier this month that investors need to be cautious, as stocks could fall 10% during the next eight weeks amid interest rate cuts and the nervousness around the upcoming presidential elections. The co-founder of the research firm also suggested that if the dip is too strong, it should be viewed as a buying opportunity for investors. Lee has largely been on the money and nailed most stock calls this year.
Other analysts also anticipate market volatility ahead of the presidential elections. Liz Young Thomas, the head of investment strategy at SoFi, while talking to Business Insider noted that stock activity lags between June and August while traders are on vacation. This results in strong market performance aided by thinner trade volumes. The activity jumps up significantly in September when they return to their desks, which often leads to stock price volatility. According to her, a two percent shift in share price in either direction has become the norm in September. However, during election years, the volatility is at its peak in mid-October instead of September, and the market returns to normalcy after the results are announced.
LPL Financial’s Adam Turnquist also expects seasonal shakiness in the months ahead, but pointed out, like Lee did, that the dip presents an opportunity to buy when the share is trading low and earn high returns when the market stabilizes.
Buying the September or October lows has been a very good trade. October, things start to improve, and then you have this November, December, year-end rally, typically very high average returns and high positivity rates for those months.
Both Turnquist and Young Thomas agreed that existing portfolios should not be readjusted because of seasonal volatility because it is short-term and hard to forecast.
With that said, let’s head over to see some of the best NASDAQ stocks to buy right now, given the current trends and future projections.
Methodology
We scanned Insider Monkey’s database of 912 hedge funds for the second quarter of 2024 to look for stocks listed on NASDAQ and picked the top 10 companies with the highest number of hedge funds having stakes in them. We ranked them in ascending order of hedge fund holders in each company.
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).
A team of developers working in unison to create the company’s messaging application.
Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) is an American multinational company headquartered in Menlo Park, California. It formerly operated as Facebook, Inc. until its rebranding in 2021. It is one of the largest technology companies in the world and owns popular social media platforms such as Facebook, Instagram, Threads, and WhatsApp. More than 3.2 billion people use at least one of Meta’s apps every day, according to CEO Mark Zuckerberg.
The company posted robust financial results during the second quarter of fiscal year 2024, with total revenue reaching $39.1 billion, representing a 22% year-over-year increase. Net income for the quarter was $13.5 billion, with an earnings per share of $5.16, comfortably beating analysts’ estimates of $4.72. Revenue from Meta Platforms, Inc. (NASDAQ:META)’s Family of Apps totaled $38.7 billion in Q2, up 22% from last year. Most of this was ad revenue, with the online commercial vertical being the largest contributor, followed by gaming.
Meta Platforms, Inc. (NASDAQ:META)’s ability to generate solid ad revenue despite global economic challenges has been the catalyst behind the company’s growth and has boosted investor confidence. Its share price has grown 58% year-to-date, with analysts predicting a further 1-2% increase in the coming months. There’s a consensus among Street experts on the stock’s Strong Buy rating.
Moreover, the company has spent billions in recent years on artificial intelligence, resulting in the launch of successful products like Meta Quest 3 and Ray-Ban Meta Glasses, whose demand has outpaced the company’s expectations. These investments in advanced technology have led to a general bullish sentiment about the stock’s long-term trajectory. According to Insider Monkey’s database as of Q2 2024, 219 hedge funds have a stake in the company, making it one of the best NASDAQ stocks to invest in right now.
Having said that, while Meta Platforms, Inc. (NASDAQ:META) looks set for long-term growth, some challenges on the horizon could impact the stock in the short term. One of them is the slowdown in revenue the company has anticipated for Q3 2024 compared to last year when much of the revenue was driven by a surge of China-based advertisers on its social media apps and the growth experienced by Reels impressions. That is unlikely to happen this year. Furthermore, the company plans on spending around $40 billion on capital expenditure this year, which could impact its short-term financials, and subsequently, its share price.
Overall META ranks 3rd our list of the best NASDAQ stocks to invest in right now. While we acknowledge the potential of META 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 timeframe. If you are looking for an AI stock that is more promising than META 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.
