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 Reddit Inc. (NYSE:RDDT) 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).
Photo by Annie Spratt on Unsplash
Reddit Inc. (NYSE:RDDT)
Upside Potential as of March 10: 56.74%
Number of Hedge Fund Holders: 87
Reddit Inc. (NYSE:RDDT) operates a global digital platform where users connect through communities centered on shared interests. It facilitates conversations and content sharing. It’s a collection of online forums, called subreddits, where users submit content, vote on it, and engage in threaded discussions.
In Q3 2024, the company’s advertising revenue surged 56% year-over-year and generated $315.1 million. This growth was attributed to a larger user base and more effective ad placement, particularly through “conversation placement ads” that use online discussions for targeted advertising. Additionally, the company’s ads are proving successful at all stages of the customer journey, with a notable impact on users nearing a final purchase.
Reddit Inc. (NYSE:RDDT) is improving its advertising capabilities through user-friendly tools and unique ad options. It’s seeing better results from “conversation ads” and testing new ad locations in comments to increase advertising space. JMP Securities is optimistic about the company’s advertising, and raised their price target to $190 from $160 while maintaining a Buy rating.
Overall, RDDT ranks 6th on our list of best upside stocks to buy right now. While we acknowledge the growth potential of RDDT 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 RDDT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
