In this article, we discuss 5 stocks that Reddit’s WallStreetBets is buying to survive the upcoming recession. If you want to read about some more stocks that Reddit’s WallStreetBets is buying to survive upcoming recession, check out Reddit’s WallStreetBets is Buying These 10 Stocks To Survive Upcoming Recession.
5. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 66
The Mosaic Company (NYSE:MOS) markets phosphate and potash crop nutrients. Fertilizer stocks gained in the past few months as inflation climbs and the Russian war in Ukraine weighs on food security globally. Moscow is one of the largest fertilizer exporters in the world. The crisis has also pushed other nations, like China, to put in place fertilizer export bans. This situation is likely to persist, benefiting stocks like Mosaic. The firm has a solid dividend history as well, with a decade of consistent payouts, making it a suitable recession stock.
On May 31, Piper Sandler analyst Charles Neivert maintained an Overweight rating on The Mosaic Company (NYSE:MOS) stock and raised the price target to $85 from $80, noting that grain prices will remain elevated and reset standard for midcycle levels in the coming months.
At the end of the first quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in The Mosaic Company (NYSE:MOS), compared to 46 in the preceding quarter worth $1.3 billion.
In its Q4 2021 investor letter, Ariel Investments, an asset management firm, highlighted a few stocks and The Mosaic Company (NYSE:MOS) was one of them. Here is what the fund said:
“We continue to believe recent aggressive fiscal and monetary policy will drive high levels of intransient (rather than transitory) inflation. Recent inflation numbers have exceeded our hawkish predictions. While we believed the Consumer Price Index might rise +4% in 2021, double the Fed target of +2%; it rose +7%, the highest level in forty years. Ariel Focus Fund has been well positioned for this environment as natural resource and material companies such as The Mosaic Company (NYSE:MOS) which returned +72.15% for the year. This was one of our two largest holdings at year-end and have performed well very early into 2022.”
4. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 74
AT&T Inc. (NYSE:T) is a media, communications, and technology firm. During periods of recession, investors often flock towards mature businesses that generate lots of cash. AT&T is one of these stocks. The company recently spun off the media business and is now solely focused on communications, making the valuation more attractive. It was also recently named among a basket of stocks by investment bank Morgan Stanley that are expected to weather the upcoming bear market.
On April 25, Goldman Sachs analyst Brett Feldman reinstated coverage of AT&T Inc. (NYSE:T) stock with a Buy rating and a price target of $23, noting that the valuation of the stock was “attractive, especially versus its large cap peers”.
At the end of the first quarter of 2022, 74 hedge funds in the database of Insider Monkey held stakes worth $4 billion in AT&T Inc. (NYSE:T), compared to 70 in the preceding quarter worth $4.9 billion.
In its Q4 2021 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and AT&T Inc. (NYSE:T) was one of them. Here is what the fund said:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T Inc. (NYSE:T) to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
3. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 78
Micron Technology (NASDAQ:MU) makes and sells semiconductor products. The mass selloff in the growth sector has created attractive valuations in the chip space. The sector, which has growth catalysts like increasing digitalization, virtual reality, autonomous driving, and the Internet of Things, is trading at discounted prices. The fundamentals of firms like Micron remain strong as chip demand is likely to increase despite macroeconomic headwinds, creating a buying opportunity for investors during a recession period.
On June 6, Citi analyst Christopher Danely maintained a Neutral rating on Micron Technology (NASDAQ:MU) stock and lowered the price target to $100 from $120, noting that the firm had margin upside in the semiconductor space.
At the end of the first quarter of 2022, 78 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Micron Technology (NASDAQ:MU), compared to 83 in the previous quarter worth $5.5 billion.
In its Q3 2021 investor letter, Hazelton Capital Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ:MU) was one of them. Here is what the fund said:
“It’s hard to explain how shares of Micron Technology (NASDAQ:MU), manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology (NASDAQ:MU) trades at just 8x 2022 estimate earnings. Micron Technology (NASDAQ:MU) is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) is a visual computing firm. On May 25, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $1.36, beating market estimates by $0.07. The revenue over the period was $8.28 billion, up 46% year-on-year and beating estimates by $190 million. The company is one of the most famous stocks on Reddit as retail investors, who like growth names, prefer it during a recession due to the strong fundamentals and rising chip demand.
On May 27, Baird analyst Tristan Gerra maintained a Neutral rating on NVIDIA Corporation (NASDAQ:NVDA) stock and lowered the price target to $165 from $225, noting that the firm was facing near-term headwinds but had very bright long-term prospects.
At the end of the first quarter of 2022, 102 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in NVIDIA Corporation (NASDAQ:NVDA), compared to 110 the preceding quarter worth $10.4 billion.
In its Q1 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVIDIA Corporation (NASDAQ:NVDA) chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is a diversified technology company. The company recently held the Worldwide Developers Conference, an annual event at which it showcases new tech. This year, the firm unveiled updates to iOS 16, the new M2 chip, and the new MacBook Air and MacBook Pro. The company is one of the few growth firms with pricing power and the ability to weather a crisis, since the sales of the firm are unlikely to be majorly hit during a recession. The brand power of the iPhone is a testament to this bullish view.
On June 3, Morgan Stanley analyst Katy Huberty maintained an Overweight rating on Apple Inc. (NASDAQ:AAPL) stock with a price target of $195, noting that there was a “path for App Store growth to reaccelerate” in the second half of 2022.
At the end of the first quarter of 2022, 131 hedge funds in the database of Insider Monkey held stakes worth $182 billion in Apple Inc. (NASDAQ:AAPL), compared to 134 in the preceding quarter worth $186 billion.
In its Q4 2021 investor letter, Berkshire Hathaway highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) – our runner-up Giant as measured by its year end market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our “share” of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple Inc. (NASDAQ:AAPL) shares, an act we applaud. Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple Inc. (NASDAQ:AAPL) products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
You can also take a peek at 10 Best EV Materials Stocks to Buy and 10 Best NFT Stocks to Buy Now.
