Ken Fisher’s Top 5 Growth Stock Picks

In this article, we will take a look at Ken Fisher’s top 5 growth stock picks. If you want to see more stocks in this selection, go to Ken Fisher’s Top 15 Growth Stock Picks.

5. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders: 117

Fisher Asset Management’s Holdings: $1,830,503,000

Percentage of Fisher Asset Management’s Portfolio: 1.37%

Salesforce, Inc. (NYSE:CRM) is a San Francisco, California-based provider of cloud-based customer relationship management (CRM) solutions.

On December 5, Phil Winslow at Credit Suisse assigned the stock a target price of $225 and an Outperform rating. The analyst noted that Salesforce, Inc. (NYSE:CRM) reported strong Q3 2022 results. Winslow shared that the 12% growth in customer revenue performance obligation (CRPO) was in line with the company’s guidance and analysts’ forecast, but it included a 1% percentage point (ppt) impact of currency headwind. During the quarterly results, Salesforce, Inc. (NYSE:CRM) maintained its revenue guidance at $30.9 billion to $31 billion for 2023 and increased its operating margin guidance from 20.4% to 20.7%.

Oakmark Funds shared its outlook on Salesforce, Inc. (NYSE:CRM) in its Q3 2022 investor letter. Here’s what the firm said:

“Salesforce, Inc. (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software over the past 20 years. The company earns 80% gross margins and grows 20% organically. Plus, virtually all of its revenue is recurring. We see Salesforce as a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability and capital return, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 3.9x next year’s revenues represents a significant discount compared to publicly traded peers and recent private market values in the software space that have similar growth profiles. We view this discount as an opportunity to invest in a great business at a good value.”

4. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 156

Fisher Asset Management’s Holdings: $4,062,723,000

Percentage of Fisher Asset Management’s Portfolio: 3.04%

Alphabet Inc. (NASDAQ:GOOG) is a Mountain View, California-based diversified technology holding company with leading online properties like Google and YouTube in its portfolio.

Alphabet Inc. (NASDAQ:GOOG) recently entered into a multi-year agreement with National Football League (NFL) that will give the conglomerate rights to the NFL Sunday Ticket. Thomas Champion at Piper Sandler noted this agreement as a positive development. The analyst thinks it would shift the flow of ad-spending from traditional TV to an over-the-top (OTT) medium that will generate healthy margins for Alphabet Inc. (NASDAQ:GOOG) in the long run. On December 22, the analyst assigned Alphabet Inc. (NASDAQ:GOOG) stock a target price of $122 with an Overweight rating.

Stewart Asset Management discussed its outlook on Alphabet Inc. (NASDAQ:GOOG) in its Q3 2022 investor letter. Here’s what the firm said:

“We invest in businesses with strong, resilient earnings growth which are less cyclical. In the pandemic recession of 2020, the aggregate earnings of the portfolios we manage did not decline year-over-year, and in fact grew, albeit modestly. Looking at the Great Recession which began at year-end 2007 and lasted to mid-year 2009 is helpful too. Our four largest current holdings in the portfolio weathered that period well. Alphabet (NASDAQ:GOOG), then called Google, reported earnings that doubled from 2007 to 2010.”

As of Q3 2022, Alphabet Inc. (NASDAQ:GOOG) was held by 156 hedge funds.

3. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 269

Fisher Asset Management’s Holdings: $5,638,171,000

Percentage of Fisher Asset Management’s Portfolio: 4.22%

Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based diversified technology company with a focus on e-commerce and cloud computing services. The company is also involved in advertising, artificial intelligence, and digital streaming.

In a note issued to investors on December 19, Mark Mahaney at Evercore ISI assigned Amazon.com, Inc. (NASDAQ:AMZN) stock a target price of $150 along with an Outperform rating. The analyst is bullish on the stock despite the expected weakness in demand for e-commerce and cloud computing services. However, there is a widespread belief that there will still be a significant secular shift in both these industries. Following the share price underperformance in 2022, Mahaney sees Amazon.com, Inc. (NASDAQ:AMZN) stock as an attractive investment for long-term investors.

Here’s what Farnam Street Investments said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:

“Change doesn’t just impact investors. Business people also bet for or against change. Jeff Bezos was once asked this exact question:

“You can build a business strategy around the things that are stable in time. It’s impossible to imagine a future ten years from now where a customer comes up and says, ‘Jeff, I love Amazon, I just wish the prices were a little higher.’ Or, ‘I love Amazon, I just wish you’d deliver a little slower.’ Impossible. So we know the energy we put into these things today will still be paying off dividends ten years from now. When you have something you know is true, you can afford to put a lot of energy into it.”

A lot of energy… and more than $172 billion in capital expenditure in the last fifteen years.

Deeper, slower moving layers turn exponential growth into “S-curves.” A rapidly dividing bacteria crashes into the resource-wall of its Petri dish. Nineteenth-century commercial robber barons were smacked by the governance layer of the Sherman Antitrust act. Amazon (NASDAQ:AMZN) Prime free shipping leaned on the creaking infrastructure of the U.S. Postal Service until it was forced to invest in its own infrastructure (all those delivery vans you see driving around).

Hopefully, next time you’re thinking about change, you can recall pace layers as a helpful construct to understand how successful systems change.

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Fisher Asset Management’s Holdings: $6,758,014,000

Percentage of Fisher Asset Management’s Portfolio: 5.06%

Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based diversified technology company with exposure in consumer electronics, cloud computing, personal computers, and software segments.

Keith Weiss at Morgan Stanley shortlisted Microsoft Corporation (NASDAQ:MSFT) stock as a top pick in the software industry. Mr. Weiss recommends picking companies that are focused on enterprise solutions and have a subscription-based revenue model. The analyst thinks the current stock price provides an attractive entry point for investors as Microsoft Corporation (NASDAQ:MSFT) is operating in key software segments of cloud, data management, and security. The demand for its offerings is still solid and durable. Presently, Microsoft Corporation (NASDAQ:MSFT) is in the middle of the $69 billion acquisition of Activision Blizzard, Inc. (NASDAQ:ATVI), which is pending due to regulatory requirements.

Here’s what TimesSquare Capital Management said about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2022 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) develops, licenses, and supports software solutions worldwide. Fiscal fourth quarter results were generally in line with consensus estimates, though profits missed slightly. While its Azure cloud business continues to perform well, the personal computer market has declined with inflation having an impact. Its shares experienced a -9% selloff.”

1. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 140

Fisher Asset Management’s Holdings: $8,178,151,000

Percentage of Fisher Asset Management’s Portfolio: 6.13%

Apple Inc. (NASDAQ:AAPL) is a California-based diversified technology company.

In an update issued on December 22, Laura Martins at Needham highlighted that Apple Inc. (NASDAQ:AAPL) would be able to benefit from a new revenue stream in the form of an advertisement-based version of Apple TV+. The analyst thinks that the premium streaming platform has the best-in-class demographics along with a gross profit margin of over 70%. Furthermore, despite the uncertain macroeconomic environment, the demand for Apple products and services is expected to remain strong in FY23 as well due to its strong brand equity. Ms. Martins has assigned Apple Inc. (NASDAQ:AAPL) stock a target price of $170 and a Buy rating.

Here’s what Wedgewood Partners said about Apple Inc. (NASDAQ:AAPL) in its Q3 2022 investor letter:

“Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”

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