In this piece, we will take a look at the 13 best stocks to buy that are on the rise. If you want to skip our primer on the stock market and momentum investing, then head on over to Stocks On the Rise: 5 Best To Buy Now.
After a tumultuous 2022 and a strong start to 2023, investors in the stock market are currently evaluating what’s ahead. The first half of this year was a surprising one for a lot of folks, as calls for a recession and the negative impact of the Federal Reserve’s rapid interest rates were widely believed to cause damage to the market. However, big tech and mega cap stocks came to the rescue, as the hype surrounding artificial intelligence and a broader economic strength evidenced by a robust labor market and GDP growth during the second quarter removed a lot of doubts about the strength or the weakness of the stock market.
Looking forward, August has been the month of earnings releases. When it comes to large companies, these reports are crucial to understanding what’s happening in the economy right now and what might lie ahead. Yet, even as investors look to earnings for clarity, one thing that is clear to everyone is that the rapid rate hiking cycle that shocked markets and created turmoil in short term corporate and consumer borrowing is now entering a new phase. In this phase, the question on everyone’s minds is not whether the Fed will significantly raise interest rates further. Instead, the main debate right now is for how long the rates, which currently stand at 5% – 5.25% and might be raised by 0.25% later this year, will stay at these levels before the central bank decides to cut them down and stimulate economic growth without the specter of inflation hanging over its head.
On this front, investment bank The Goldman Sachs Group, Inc. (NYSE:GS) came out with a fresh note as the second week of August was ending where it speculated about the timeline of the Fed’s interest rate cuts. Goldman Sachs is one of the few banks that has been increasingly doubtful of a recession in America even as others were expecting an economic downturn to hit as soon as the start of the second half of this year. Safe to say, the bank’s got a couple of things right this year, and its latest take on the interest rate question suggests that the rates should stay at high levels for nearly a year from now. Goldman’s note shares that a recession alone might be insufficient to force the Fed’s hand, and instead, inflation will be the driving factor behind any decision to reduce interest rates.
According to Goldman Sachs’ chief U.S. economist David Mericle:
(By Q2 2024), we expect core PCE inflation to have fallen below 3% on a year-on-year basis and below 2.5% on a monthly annualized basis, and wage growth to have fallen below 4% year-on-year. Those thresholds for cutting align roughly with the annual forecasts in the FOMC’s Summary of Economic Projections and the conditions at the outset of the last cutting cycle motivated by an intent to normalize from a restrictive policy stance as inflation came down in 1995.
In this environment, where the market is coming off of the surprising highs that it had reached by the end of July, one strategy for investing is momentum investing. As opposed to fundamentals investing, which takes a look at a firm’s business operations and its financial strength to gauge the suitability of an investment decision, a momentum based strategy focuses on the current trends in the market. This involves analyzing share price trends and movements to see which stocks are rising, and looking at indicators such as the relative strength index (RSI), the volume of shares being traded on the market, and the moving averages of stock prices. For more details on momentum investing, you can check out 10 Momentum Stocks Billionaires Are Loading Up On.
So, what stocks are on the rise lately as the market turns to guesswork around a drop in interest rates? Some of the top ones that we have identified are Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and Apple Inc. (NASDAQ:AAPL).
Our Methodology
To compile our list of the best stocks to buy that are on the rise, we used the top thirty holdings of the Invesco DWA Momentum ETF and ranked them by the number of hedge fund investors during the first half of this year. Out of these, the top 13 stocks were chosen as part of our list of the best rising stocks to buy.
Stocks On The Rise: 13 Best To Buy Now
13. Copart, Inc. (NASDAQ:CPRT)
Number of Hedge Fund Investors In Q1 2023: 48
Copart, Inc. (NASDAQ:CPRT) is an American firm that operates an online platform to enable people to buy and sells vehicles. It beat second quarter analyst EPS estimates by a wide margin, and the shares are up by a strong 44% year to date as they touched a 52 week high around mid July.
48 of the 943 hedge funds part of Insider Monkey’s Q1 2023 research had invested in Copart, Inc. (NASDAQ:CPRT). Bo Shan’s Gobi Capital is the firm’s largest shareholder since it owns 1.7 million shares that are worth $132 million.
Copart, Inc. (NASDAQ:CPRT) joins Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Apple Inc. (NASDAQ:AAPL) in our list of the stocks that are rising on the market.
12. WESCO International, Inc. (NYSE:WCC)
Number of Hedge Fund Investors In Q1 2023: 51
WESCO International, Inc. (NYSE:WCC) is a supply chain and logistics products and services provider. Its second quarter earnings reflected an industrial slowdown, as the firm lowered its revenue guidance and also missed analyst EPS estimates. This led to a 20% share price drop, but despite this, the shares are up roughly 25% year to date.
As of March 2023, 51 of the 943 hedge funds polled by Insider Monkey had held a stake in the company. Out of these, WESCO International, Inc. (NYSE:WCC)’s biggest investor is Leonard Green’s Leonard Green & Partners with a stake worth $1.1 billion during the second quarter.
11. ON Semiconductor Corporation (NASDAQ:ON)
Number of Hedge Fund Investors In Q1 2023: 51
ON Semiconductor Corporation (NASDAQ:ON) provides power management semiconductor products to a variety of industries, including the electric vehicles sector. Its average analyst share price target is $120 for a sizeable upside over the current price.
51 of the 943 hedge funds part of Insider Monkey’s March quarter of 2023 survey had invested in ON Semiconductor Corporation (NASDAQ:ON). During the next quarter, the firm’s biggest shareholder was D. E. Shaw’s D E Shaw with a $204 million investment.
10. Builders FirstSource, Inc. (NYSE:BLDR)
Number of Hedge Fund Investors In Q1 2023: 51
Builders FirstSource, Inc. (NYSE:BLDR) is a construction products and services provider headquartered in Texas. The stock is up a whopping 132% year to date, and the shares are rated Buy on average.
After digging through 943 hedge fund portfolios for their Q1 2023 shareholdings, Insider Monkey discovered that 51 had bought and owned the firm’s shares. During Q2, the firm’s biggest investor was John Smith Clark’s Southpoint Capital Advisors courtesy of 1.6 million shares that were worth $217 million.
9. O’Reilly Automotive, Inc. (NASDAQ:ORLY)
Number of Hedge Fund Investors In Q1 2023: 52
O’Reilly Automotive, Inc. (NASDAQ:ORLY) sells car parts that cover a vehicle’s fuel, electrical, body, and other systems and components. It has consistently beaten analyst EPS estimates for all four of its latest quarters, including the second quarter.
During March 2023, 52 of the 943 hedge funds profiled by Insider Monkey held a stake in O’Reilly Automotive, Inc. (NASDAQ:ORLY). As Q2 2023 ended, the firm’s largest stakeholder was Charles Akre’s Akre Capital Management through an investment of $1 billion.
8. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Investors In Q1 2023: 63
Costco Wholesale Corporation (NASDAQ:COST) is a retailer whose shares tend to withstand losses on the market during an economic downturn. It missed analyst Q2 EPS estimates, but the stock is up a healthy 23% year to date.
Insider Monkey’s first quarter of 2023 survey of 943 hedge funds outlined that 63 had invested in the retailer’s shares. In the succeeding quarter, Ken Fisher’s Fisher Asset Management was Costco Wholesale Corporation (NASDAQ:COST)’s biggest shareholder, owning 2.6 million shares that are worth $1.4 billion.
7. Fiserv, Inc. (NYSE:FI)
Number of Hedge Fund Investors In Q1 2023: 64
Fiserv, Inc. (NYSE:FI) is a technology company that enables firms to make payments and conduct other operations. The firm posted strong results for its second quarter, as it upgraded the annual EPS figures and beat estimates for them in the quarter as well.
64 of the 943 hedge funds part of Insider Monkey’s database had held a stake in Fiserv, Inc. (NYSE:FI) during this year’s first quarter. During Q2, the largest shareholder was Natixis Global Asset Management’s Harris Associates through a stake worth $1.9 billion.
6. TransDigm Group Incorporated (NYSE:TDG)
Number of Hedge Fund Investors In Q1 2023: 67
TransDigm Group Incorporated (NYSE:TDG) is an American aircraft components manufacturer and seller. A slow recovery in global air travel should help the firm’s shares, and the stock is up 38% year to date.
As of Q1 2023 end, 67 of the 943 hedge funds surveyed by Insider Monkey had held the firm’s shares. During this year’s June quarter, Mark Massey’s AltaRock Partners was the biggest investor, owning 1.3 million shares that were worth $1.2 billion.
Mastercard Incorporated (NYSE:MA), TransDigm Group Incorporated (NYSE:TDG), Visa Inc. (NYSE:V), and Apple Inc. (NASDAQ:AAPL) are some stocks on the rise these days.
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Disclosure: None. Stocks On The Rise: 13 Best To Buy Now is originally published on Insider Monkey.