7 stocks that are still favorites of hedge funds

Many of the hedge fund favorites are tech companies, my analysis of the most popular stocks among the 40 largest hedges fund shows. Moreover, the top five hedge funds in 2022 hold names widely followed as Coca Cola (NYSE:KO).

The media tends to cover the stocks most widely held by hedge funds closely, making these stocks popular among retail investors. And after the market rebounded for four straight weeks this summer, investors may want to copy trades from top hedge funds to avoid missing out on the market rebound.

Stocks with a green grade have the best prospects.

In the quantitative table above, six of the seven companies receive high marks on quality and growth. Although Uber (NYSE:UBER) has poor ratings, the stock is still bottoming in the $20s.

In the smartphone market, Apple (NASDAQ:AAPL) and Qualcomm (NASDAQ:COMQ) have strong growth prospects, so hedge funds can’t risk leaving these stocks out of their portfolios.

Although inflation is causing some consumers to cut back on spending on certain items, they are unlikely to avoid upgrading their smartphones. Still, consumers can put off buying Apple’s latest iPhone.

But such behavior will only keep Apple’s earnings from rising for one or two quarters. In the meantime, the vast majority of iPhone users will likely continue to buy apps, listen to Apple Music, and subscribe to Apple TV.

BABA Ali Baba $90.57
AAPL Apple $175.67
KO Coca Cola $65.12
NFLX netflix $243.00
NVDA Nvidia $185.20
COMQ Qualcomm $149.25
UBER UberTechnologies $30.80

Alibaba Group (BABA)

A photo of the Alibaba (BABA) app on a smartphone.

Source: BigTuna Online / Shutterstock.com

Ali Baba (NYSE:BABA) is still a hedge fund favorite despite its slow growth and potential cancellation of the NYSE .

Alibaba, however, has alternatives. For example, the company can list its shares on the Hong Kong Stock Exchange, allowing current holders of BABA shares to convert their holdings into shares listed in Hong Kong.

Software bank (OTCMKTS:SFTBY) plans to sell its shares of Alibaba. Software bank will use contracts to leave its position over time. As a result, the risk of the stock unloading too quickly will be minimized, reducing the chances of the stock price falling when Softbank sells its BABA stock.

Softbank needs to raise funds as it has invested in many illiquid start-ups.

Apple (AAPL)

Apple stock looks too cheap here for investors to pass up

Source: mama_mia / Shutterstock.com

Apple (NASDAQ:AAPL) the stock bottomed around $130 in early summer. Apple reportedly told its suppliers to do 90 million of his latest iPhoneiPhone 14.

Apple enjoys strong brand recognition and customer loyalty. After the prices of its supplies rise due to inflation, Apple will likely raise iPhone prices. For example, it could keep iPhone 13 prices at their current levels even after the iPhone 14 launches. After launching new iPhones in the past, Apple has reduced prices for its older models.

This year, investors should expect the company to raise prices for its new iPhone by up to 15% over last year’s new models. Apple stores are always crowded, suggesting there is strong demand for the company’s Macbooks, iPads and smartphones.

In its third fiscal quarter, Apple’s revenue grew 2% year-over-year to $83 billion, and it generated earnings per share of $1.20.

Coca Cola (KO)

bottles and cans of coca-cola.  coke is a top notch stock

Source: Fotazdymak / Shutterstock.com

Coca Cola (NYSE:KO) reported that its net revenue increased 12% year-over-year in the second quarter. Its overall unity case volume increased by 8% I. For the full year, the company expects revenue growth of 12-13%.

CEO James Quincey said Coca-Cola accelerated its growth by dominating the industry, while the company increased its market share.

While inflation is compressing the purchasing power of consumers in some parts of the world, in countries like China and Southeast Asia, inflation is only running at around 3% per year. Yet as consumers redefine their drinking habits, they are not reducing their purchases of Coca-Cola products, its CEO reported.

Coca-Cola has a favorable sales mix and to cope with inflation it has raised its prices. The company will pass on its increased costs to its customers. Coke’s price increases will be minimal, however, as it has hedged its exposure to the commodities it uses.

Coca-Cola will also maintain profitability by focusing on productivity. For example, it may seek to develop closer relationships with its key suppliers.

netflix (NFLX)

The Netflix logo on a tablet with headphones and a bowl of popcorn nearby.

Source: Ricosta / Shutterstock.com

netflix (NASDAQ:NFLX) reported that it lost 970,000 net subscribers in the second quarter. This was better than its previous forecast of a loss of 2 million net subscribers.

CEO Reed Hastings said the company has developed strong contents. His hit shows included ozark and stranger things. Additionally, the company used marketing to slow the decline of its customer base while improving its service.

NFLX stock owners come to terms with the fact that linear streaming demand growth is over. In the coming years, Netflix must optimize its price changes in order to minimize its customers’ turnover.

It also needs to create better content to deter customers from canceling their subscriptions. In the second half, the company expects to generate stronger growth, in line with its usual seasonal trends.


Close up of mobile phone screen with nvidia corporation logo on computer keyboard.  NVDA stock.

Source: Shutterstock

Nvidia (NASDAQ:NVDA) report weak sales in the second quarter. The semiconductor company reported preliminary second-quarter revenue of $6.7 billion, up from its previous forecast of $8.1 billion. The revenue shortfall is mainly due to lower than expected gaming revenue.

NVDA stock fell, then reversed. Hedge funds are betting that the company’s price cuts will revive demand for its products.

During the pandemic and the cryptocurrency boom, retailers sold Nvidia graphics cards for more than double the suggested retail price. When the pandemic lockdown ended and crypto prices fell, so did their prices.

Hedge funds are betting Nvidia’s sales will rebound after Q2. The odds are better that sales will pick up after the first quarter of 2023, but investors can’t predict how soon the oversupply of Nvidia products will be eliminated.

Qualcomm (QCOM)

Qualcomm (QCOM) logo on an exterior panel

Source: Raked Akshdeep Kaur / Shutterstock.com

Qualcomm (NASDAQ:COMQ) provided fourth quarter revenue forecasts of between $11.0 billion and $11.8 billion. The drop in guidance overshadowed its strong third-quarter revenue, which jumped 37% year-on-year to $10.9 billion.

During the company’s earnings conference call, Chief Financial Officer Akash Palkhiwala said elevated uncertainty in the global economy and the impact of anti-Covid measures in China would slow the company’s orders in the second half of 2022. Conversely, Qualcomm’s CDMA technology gross margins increase in the second half. Additionally, many handsets will have more processors from Qualcomm.

Qualcomm has growth drivers in the 5G market. Although the company lowered its 5G unit sales forecast, it will increase the average selling price of its 5G products.

Another growth driver for Qualcomm is the radio frequency front end market. The RF segment is growing because automotive Internet of Things and Wi-Fi systems need Qualcomm’s RF offerings. Qualcomm has won over $900 million in RF front-end design with automakers.

Patient investors should hold QCOM shares for the long term.

UberTechnologies (UBER)

2 Key Reasons Why Uber Stock Will Withstand the Pandemic

Source: NYCStock / Shutterstock.com

Uber Technologies (NYSE:UBER) job record gross bookings. from $29.1 billion in the second quarter, as its gross bookings jumped 33% year-on-year. The ride-sharing company’s revenue soared 105% year-over-year to $8.07 billion.

But Uber lost $2.6 billion in the second quarter, including a $1.7 billion loss generated by its investments in other businesses. However, its Monthly Active Platform Consumers (“MAPC”) grew 21% year-on-year to 122 million.

For the third quarter, Uber expects gross bookings of $29 billion at $30 billion and EBITDA, excluding certain items, of $440 to $470 million. To meet the guidelines, Uber’s investments will have to pay off.

For example, he relaunched its carpooling concept, UberX Share. Past aggressive investments have propelled Uber ahead of the competition. Now, however, its end market is weaker, so Uber must reduce its investment. He should take advantage of his platform advantages to stay ahead of their peers.

As of the date of publication, Chris Lau had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Chris Lau is a contributing author for InvestorPlace.com and many other financial sites. Chris has over 20 years of stock market investing experience and leads the do-it-yourself value investing market on Seeking Alpha. He shares his stock picks so readers get actionable insights for strong returns on investment.

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