On November 25, the stock market saw a significant surge, with the Dow Jones Industrial Average jumping 440 points to a new record close of 44,736.57. The S&P 500 also reached a new high, gaining 0.3% to 5,987.37, while the Russell 2000 index, which focuses on small-cap stocks, hit an all-time high, increasing 1.47% to 2,442.03. The Nasdaq also rose, closing 0.27% higher at 19,054.84. CNBC reported that the market’s strong performance was attributed to President-elect Donald Trump’s nomination of Scott Bessent, the founder of Key Square Group, as Treasury secretary. Investors are optimistic that Bessent, a hedge fund manager, will be supportive of the equity market and help mitigate some of Trump’s protectionist policies, such as his stance on tariffs.
US Stocks Poised for Continued Growth
In an interview with CNBC on November 25, Brian Belski, Chief Investment Officer at BMO Capital Markets, expressed his bullish stance on the US stock market, stating that it remains the best asset in the world. He emphasized that despite the negativity and doubts surrounding the market, his team has consistently maintained a bullish stance since 2009.
Belski pointed out that many investors are too focused on valuation, which he believes is the world’s worst metric for predicting forward performance. Instead, he emphasizes the importance of earnings growth consistency, where the US is expected to outperform other regions.
He also highlighted the potential for catch-up growth in the financial sector, particularly in the areas of scale, asset managers, and discretionary spending. His team’s research suggests that earnings in the US financial sector are massively understated, and he expects a big catch-up trade on the earnings front.
Regarding valuation, Belski dismissed the idea of assigning a specific valuation metric, such as a P/E ratio, as simplistic. Instead, his team uses a macro P/E longer-term trend and a dividend discount model to evaluate the market. He believes the S&P 500 can reach 6,700, driven by US growth and earnings consistency.
Brian Belski has been bullish on small-cap stocks for well over a year and believes small-cap stocks are a good value play. He also implies that small-cap stocks are undervalued, citing various valuation metrics such as price-to-sales, and price-to-book, as well as operating metrics such as return on assets and return on equity. He suggests that these metrics indicate that small-cap stocks are a good value investment opportunity.
The US stock market continues to show resilience and strength, with the Dow Jones Industrial Average and S&P 500 reaching new highs. The nomination of Scott Bessent as Treasury secretary has injected a sense of optimism into the market. With the market’s strong performance and positive outlook, investors are well-positioned to take advantage of the current trend. With that in context, let’s take a look at the top 8 stocks to buy in 8 different sectors for the next 3 months.
Our Methodology
To compile our list of the top 8 stocks to buy in 8 different sectors for the next 3 months, we used Insider Monkey’s database to research stocks in 8 different sectors. We picked stocks from different sectors that were the most popular among elite money managers. The final list is ranked in ascending order of the number of hedge fund holders, as of Q3 2024.
Why do we care about what hedge funds do? 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).
Top 8 Stocks To Buy In 8 Different Sectors for the Next 3 Months
8. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Sector: Energy
Founded in 1882 as part of the Standard Oil Trust, Exxon Mobil Corporation (NYSE:XOM) is one of the world’s largest publicly traded oil and gas companies, with a significant presence in 60 countries around the globe, with a diverse portfolio of operations that include exploration and production, refining, manufacturing, and various activities across its upstream, downstream, and chemical segments.
Exxon Mobil Corporation (NYSE:XOM) provides energy solutions to a wide range of sectors, including transportation, manufacturing, energy generation, and consumer markets. The company’s extensive portfolio of products includes crude oil, natural gas, refined fuels, motor oil, and industrial lubricants, as well as a wide range of petrochemicals, including olefins, aromatics, and ethylene glycol.
In the wake of Europe’s shift away from Russian energy resources, Exxon Mobil Corporation (NYSE:XOM) is capitalizing on new opportunities in the region. On November 21, Reuters reported that ExxonMobil is set to drill a well off the coast of Cyprus in January 2025 as part of its efforts to explore natural gas in the region.
Exxon Mobil Corporation (NYSE:XOM) has spent the past two years collecting detailed seismic data and has identified several large prospects in the area. The upcoming drilling operation will test two new wells, Pegasus and Electra, with Electra being a highly promising discovery, although further appraisal drilling is needed to confirm its viability.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Sector: Consumer Staples
Walmart Inc. (NYSE:WMT) is a global, omnichannel retailer that operates a network of discount department stores, grocery stores, and hypermarkets in the United States and 19 other countries. In addition to its retail and wholesale stores, the company manages e-commerce websites and mobile applications. Walmart Inc.’s (NYSE:WMT) operations are divided into three segments: Walmart US, Walmart International, and Sam’s Club.
Walmart Inc.’s (NYSE:WMT) extensive footprint, broad product range, and convenience provide it with a strong competitive edge in the retail industry. Customers benefit from a wide selection of products and numerous store locations. The company’s store and club businesses continue to expand, with the pickup segment growing even faster. Walmart (NYSE:WMT) is enhancing delivery speed and accuracy while offering more options through advancements in e-commerce. For the three months ended on October 31, Walmart Inc. (NYSE:WMT) reported a 15% increase in membership income. The company’s e-commerce sales increased 26%, driven by club-fulfilled pickup and delivery.
Walmart (NYSE:WMT) is actively exploring practical applications for generative AI to enhance the experiences of its members, customers, and associates. By leveraging large language models and external data, the company is developing its own AI solutions. For example, generative AI has been used to improve the company’s product catalog. Additionally, the company introduced an AI-powered search feature on its app and website, offering customers better support through a new shopping assistant that provides ideas and advice.
6. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 95
Sector: Industrial
GE Aerospace (NYSE:GE), formerly General Electric, focuses on the design, manufacture, and service of jet engines and other aerospace technologies. The company’s customers include commercial airlines, defense contractors, and governments. GE Aerospace (NYSE:GE) benefits from a resurgence in air travel and increased defense spending globally.
On October 22, GE Aerospace (NYSE:GE) announced results for the third quarter ending September 30. The company’s revenue increased 6% year-over-year to $9.8 billion, with operating margins rising by 1,560 bps to 20.3%. GE Aerospace’s (NYSE:GE) total orders increased 28% to $12.6 billion, as a result, the company revised its forecast for earnings and cash guidance for the year.
On the sales front, GE Aerospace (NYSE:GE) is experiencing significant momentum. The company has secured widebody commitments from EVA Air and Qatar Airways, which will drive growth and increase its market share. The company has also announced a ten-year service agreement with Emirates, focusing on the electrical load management system for its Boeing 777 fleet.
GE Aerospace’s (NYSE:GE) defense business is also thriving, with a major commitment from the Polish Ministry of National Defense for over 200 T700 engines to power Boeing Apache Guardian helicopters. Furthermore, the company has been selected to overhaul and upgrade GEnx-2B engines for the United States Air Force, underscoring its expertise and reputation in the defense sector.
5. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 112
Sector: Healthcare
UnitedHealth Group Incorporated (NYSE:UNH) is the largest health insurer in the U.S., providing health benefits and services through its UnitedHealthcare and Optum segments. The company’s diverse business model spans insurance, healthcare delivery, and data analytics, making it a dominant player in the industry. UnitedHealth Group Incorporated (NYSE:UNH) generates revenue from premiums on risk-based products, fees from various services, sales of healthcare products, and services & investments.
On November 22, UnitedHealth Group Incorporated (NYSE:UNH) received a favorable ruling in a lawsuit it filed against the Centers for Medicare & Medicaid Services (CMS) regarding the company’s Medicare Star Ratings for the 2025 plan year. A federal judge in Texas ordered CMS to recalculate UnitedHealth Group Incorporated’s (NYSE:UNH) ratings, which were allegedly downgraded due to a single phone call handled by its call center.
UnitedHealth Group Incorporated (NYSE:UNH) is leveraging Artificial Intelligence (AI) to drive efficiency and cost savings. One of the ways the company is utilizing AI is by automating its call centers, which receive over a million calls per day. By implementing AI-powered solutions, the company aims to divert or resolve customer concerns without the need for human interaction, potentially saving the company billions of dollars over the next several years.
The company is also exploring various AI use cases to streamline its operations and improve customer experience. By adopting AI technology, UnitedHealth Group Incorporated (NYSE:UNH) is positioning itself for long-term growth and success. In their Q3 investor letter, Mairs & Power Growth Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH):
“One great example of this is UnitedHealth Group Incorporated (NYSE:UNH), a long-term holding of the Fund. Founded in 1974 in Minnetonka, Minnesota, UnitedHealth Group has grown to become the largest managed care organization in the United States. UnitedHealth Group is already working on multiple AI use cases that could potentially save the company billions of dollars in efficiencies over the next several years. For instance, the company’s call centers receive more than a million calls per day. AI could potentially divert or resolve customer concerns without human interaction. We fully admit the company is not perfect and has its ups and downs. Earlier this year, the company was caught up in a large data breach from a company it acquired in 2022. Healthcare is also deeply political, and UnitedHealth Group can often find itself in the political crosshairs during an election year. We’ve seen these political risks play out before and believe UnitedHealth Group will again emerge unscathed.”
4. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Sector: Financials
Visa Inc. (NYSE:V) is a global leader in digital payments, offering payment solutions to individuals, businesses, and governments worldwide. The company makes money through the fees it charges financial institutions and merchants for accessing its network. Visa Inc. (NYSE:V) is shifting its focus towards cashless transactions and has embraced digital wallets, contactless payments, and advanced fraud prevention technologies to align with modern payment trends.
Visa Inc. (NYSE:V) is strategically positioned to benefit from the worldwide shift to a cashless society, a trend accelerated by digital transformation. While electronic payments have made substantial progress, cash remains the dominant transaction method in many emerging markets, providing significant growth opportunities. According to the Federal Reserve, cash usage accounted for just 16% of transactions in 2024, underscoring the increasing preference for digital payments, particularly among younger generations. Demographics like Gen Z and Millennials are key drivers of mobile and contactless payment adoption, reinforcing the broader transition to digital payment ecosystems.
Visa Inc.’s (NYSE:V) Consumer Payments segment is focused on expanding tap-to-pay and click-to-pay services, alongside tokenization initiatives. The company is also pursuing additional revenue streams through offerings such as Visa Direct, tailored commercial solutions for small and medium businesses, and Cross-Border solutions, which enhance its global reach and relevance in the evolving payments landscape.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Sector: Communication Services
Meta Platforms, Inc. (NASDAQ:META) is a leading social media and technology company, known for Facebook, Instagram, and WhatsApp. The company’s revenue is primarily driven by digital advertising. However, the company is investing heavily in the metaverse and is focusing on virtual and augmented reality.
On October 30, Meta Platforms, Inc. (NASDAQ:META) announced its financial results for the third quarter ending September 30. The company reported $40.59 billion in revenue, reflecting a 19% year-over-year increase. The company’s operating margin rose to 43%, compared to 40% in the same quarter last year. The focus on user engagement continues to yield significant results, with Family Daily Active People (DAP) across its Family of Apps (FoA) reaching 3.29 billion, marking a 5% year-over-year growth. This success is attributed to AI-driven personalization, which enhances the user experience and fosters greater interaction. Additionally, the average price per ad increased by 11% year-over-year.
The company’s Reality Labs division, dedicated to virtual and augmented reality, reported $270 million in revenue, accounting for a small portion of overall earnings. Although this segment continues to operate at a loss, CEO Mark Zuckerberg underscores its long-term potential to transform how people socialize, work, and transact within virtual environments. Meta Platforms, Inc. (NASDAQ:META) remains committed to significant investments in hardware, software, and content development to advance its vision for the metaverse.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Sector: Technology
Microsoft Corporation (NASDAQ:MSFT) is a global technology giant offering software, cloud computing, hardware, and services. The company’s key products include Windows, Office, Azure cloud platform, and LinkedIn. Microsoft Corporation (NASDAQ:MSFT) benefits from the growing adoption of cloud solutions and artificial intelligence and is heavily investing in its flagship products to dominate their respective markets.
On October 30, Microsoft Corporation (NASDAQ:MSFT) reported its Q1 2025 financial results for the period ending September 30. The company achieved 16% year-over-year revenue growth, reaching $65.6 billion. Cloud revenue increased by 22% year-over-year, with Azure’s revenue soaring 33%, driven by high-value contracts and the growing adoption of AI-powered services.
Azure continues to be a key growth driver for Microsoft Corporation (NASDAQ:MSFT), with Azure Arc adoption rising by over 80% year-over-year, exceeding 39,000 customers across industries such as telecommunications, consumer goods, and finance. During the quarter, Microsoft Corporation (NASDAQ:MSFT) expanded its data center capacity with new investments in Brazil, Italy, Mexico, and Sweden to meet the increasing demand for cloud and AI services. The company’s data center infrastructure now spans more than 60 regions globally.
Microsoft Corporation (NASDAQ:MSFT) also introduced Cobalt 100 VMs, which offer up to 50% improved performance for general-purpose workloads. Additionally, Microsoft Corporation (NASDAQ:MSFT) is developing an end-to-end AI application platform with Azure AI to enable customers to create custom copilots and agents.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Sector: Consumer Cyclical
Amazon.com, Inc. (NASDAQ:AMZN) is a global e-commerce and technology company, through Amazon Web Services (AWS). The company has transformed the retail industry and continues to broaden its influence through innovative technology and logistics. The company offers convenience, fast delivery, and an extensive product range.
On October 31, Amazon.com, Inc. (NASDAQ:AMZN) released its financial results for the third quarter ending September 30. The company reported net sales of $158.9 billion, reflecting an 11% year-over-year increase, and a remarkable $15.3 billion in net profit, a 54.54% rise compared to the third quarter of 2023.
Amazon.com, Inc. (NASDAQ:AMZN) has announced a significant investment in its Delivery Service Partner (DSP) program. In North America, the company is investing $2.1 billion, whereas in Japan, Amazon.com, Inc. (NASDAQ:AMZN) is making an investment of $161.95 million to support last-mile delivery innovation, safety, and technology for drivers.
Amazon.com, Inc.’s (NASDAQ:AMZN) pharmacy arm, Amazon Pharmacy, is accelerating its rollout of new pharmacies, aiming to offer fast and free delivery of prescription medications, by the end of 2025, nearly half of US customers are expected to be eligible for Same-Day Delivery of their prescription medications.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) to grow, 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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