16 Best Strong Buy Stocks To Invest In
In this article, we will discuss the 16 best strong buy stocks to invest in. If you want to explore similar stocks, you can also take a look at 5 Best Strong Buy Stocks To Invest In.
We have seen a lot of investor repositioning in recent days as the global banking crisis has created market panic. The markets are unclear of whether the Fed will do a quarter point rate hike or if it will pause. However, as banking failures unfold, the markets are beginning to adopt the view that a Fed pause or a Fed halt should be the right course of action. According to CME Group's FedWatch tool, so far, there is a 28.4% chance of the Fed not raising interest rates and a 71.6% chance that the Fed decides to go with a quarter point hike.
Strategist Says "I Think The Smartest Move Is To Stop"
On March 20 Colliers Securities' chief global strategist, Mark Grant, appeared in an interview on CNBC to discuss the current market situation and the Fed. Mark Grant noted that the current market environment is extremely volatile and he thinks it can get worse. Mark Grant thinks that the American and European banking crisis are expected to spell further trouble for both nations' financial systems. He said that markets "don't understand the potential liabilities of American banks, bondholders, and European banks, it's a mess". Mark Grant thinks that the banking failures are a consequence of both Fed policy and also poor management at regional banks like SVB. Here are some comments from Mark Grant:
"The part of the problem, in my opinion, the Fed stayed at interest rates that were way too low for too long, ever since the financial crisis of 2008-9. And then they made a second mistake which was raising interest rates much too quickly and too aggressively, and that is feeding into the financial stability of many of the regional banks in the country."
Mark Grant thinks that the Fed should stop raising interest rates as this would be the "the smartest move". He thinks the Fed should realign its focus to dealing with systemic risk and allow the markets to settle down. Once that is achieved, he thinks the Fed can continue to bring inflation down to 2%.
The stock market is extremely volatile right now and investors should position carefully. In times like these, it can be useful to look at Strong Buy stocks that institutional investors have hefty positions in. We have compiled a list of the 16 best Strong Buy stocks to invest in right now according to analysts and hedge funds. Stocks that hold consensus Strong Buy ratings among Wall Street analysts and are popular among elite hedge funds include Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT).
New York Wall Street sign.
Our Methodology
To determine the best Strong Buy stocks to invest in, we scanned Insider Monkey's database of roughly 943 elite hedge funds and went through the 50 most popular stocks among money managers. We then sourced the average price targets and consensus ratings for each stock from TipRanks. We narrowed down our selection to stocks that were the most widely-held by hedge funds and had a consensus Strong Buy rating among analysts. We have ranked these stocks in ascending order of the number of hedge funds that have positions in them.
Best Strong Buy Stocks To Invest In
16. Palo Alto Networks, Inc. (NYSE:PANW)
Average Upside Potential as of March 20: 18.55%
Number of Hedge Fund Holders: 85
Palo Alto Networks, Inc. (NYSE:PANW) is an American cybersecurity software company that is on the radars of both hedge funds and analysts. Over the past 3 months, the stock has received 27 Buy ratings and 2 Hold ratings from Wall Street analysts and has an average price target of $224.21. The stock's average price target represents an upside of 18.55% from its share price on March 20.
On February 22, Loop Capital raised his price target on Palo Alto Networks, Inc. (NYSE:PANW) to $225 from $200 and maintained a Buy rating on the shares.
At the end of Q4 2022, 85 hedge funds held positions in Palo Alto Networks, Inc. (NYSE:PANW) worth $3.27 billion. Of those, Citadel Investment Group was the top shareholder in the company and held a stake worth $363.7 million.
Here is what ClearBridge Investments had to say about Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q4 2022 investor letter:
“Stock selection within the IT sector was the main detractor from relative performance during the period. In addition to rate hikes compressing the multiples of longerduration, high growth companies, recession concerns were also a headwind. IT companies which had proven resilient against customer budget reductions earlier in the year are starting to feel the impact of spending slowdowns as companies further scrutinize expenses in light of economic uncertainty. For example, Palo Alto Networks, Inc. (NASDAQ:PANW), which provides enterprise security solutions including next-generation firewalls and threat detection software, faced a challenging environment as customers delayed purchases and orders. However, we remain convinced of the company’s long-term growth prospects as an industry leader in a critical field and as digital attacks and ransomware continue to grow.”
Some of the best Strong Buy stocks to invest in right now include Palo Alto Networks, Inc. (NYSE:PANW), Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT).
15. Danaher Corporation (NYSE:DHR)
Average Upside Potential as of March 20: 24.93%
Number of Hedge Fund Holders: 88
Danaher Corporation (NYSE:DHR) is a leading global manufacturer of medical, industrial, and commercial products. This January, Cowen analyst Dan Brennan updated his price target on Danaher Corporation (NYSE:DHR) to $320 from $340 and maintained an Outperform rating on the shares.
Danaher Corporation (NYSE:DHR) holds a consensus Strong Buy rating among analysts. Over the past 3 months the stock has received 10 Buy ratings and 3 Hold ratings. The stock has an average price target of $303.54, which implies an upside of 24.93% from current levels. Danaher Corporation (NYSE:DHR) is placed fifteenth among the best Strong Buy stocks to buy now.
Danaher Corporation (NYSE:DHR) was spotted on 88 investors' portfolios at the end of Q4 2022. These funds disclosed collective stakes worth $5.48 billion in the company, up from $4.91 billion in the previous quarter with 89 positions. As of December 31, Third Point is the largest investor in the company and has a stake worth $716.6 million.
Here is what Stewart Asset Management has to say about Danaher Corporation (NYSE:DHR) in its Q3 2022 investor letter:
“We also need to point out one global consequence of the rapid rise in interest rates: an irrepressibly strong dollar. This hurts the reported earnings of U.S. companies who sell their goods and services overseas. Foreign currency earnings translate into fewer dollars and thus lower earnings. Most of the companies in your portfolios gain a notable amount of earnings from their international operations. While the strength or weakness of a currency doesn’t change the quality of a business or its longer-term earnings power, it can change the reported earnings of a company over short periods of time. It is difficult to forecast this effect accurately because many of our companies manufacture where they sell, which to some extent dulls the sharp negative effect of a surging dollar. Danaher (NYSE:DHR), among others, is a good example.”
14. Thermo Fisher Scientific Inc. (NYSE:TMO)
Average Upside Potential as of March 20: 19.98%
Number of Hedge Fund Holders: 92
Thermo Fisher Scientific Inc. (NYSE:TMO) has received 12 Buy ratings and 1 Hold rating from Wall Street analysts over the past 3 months. The stock's average price target of $656.71 represents an upside of 19.98% from current levels. On February 2, Morgan Stanley analyst Tejas Savant raised his price target on Thermo Fisher Scientific Inc. (NYSE:TMO) to $670 from $613 and reiterated an Overweight rating on the shares. The analyst maintained the stock as his top pick.
92 hedge funds held stakes in Thermo Fisher Scientific Inc. (NYSE:TMO) at the close of Q4 2022. The total value of these stakes amounted to $7.03 billion, up from $6.83 billion in the previous quarter with 92 positions. As of December 31, Farallon Capital is the most prominent stockholder in the company and has a position worth $639.8 million.
Here is what Polen Capital had to say about Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q4 2022 investor letter:
“Thermo Fisher Scientific Inc. (NYSE:TMO) is a leader in attractive end markets with a skilled management team who has demonstrated the ability to consistently and wisely allocate capital. It is the world leader in serving science. It is a globally scaled supplier serving more than 400,000 customers working within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, research institutions, and government agencies. Thermo provides many of the products and services that companies in these industries, particularly pharma and biotech, need to operate and drive science forward. The company manufactures and sells instruments, reagents, and consumables used for a wide range of applications in labs.
Sales are also well balanced geographically, including leading scale in emerging markets, according to our research.
The business meets all our financial guardrails. We view Thermo Fisher as an extremely durable business, and we expect mid- to high-single-digit organic revenue growth over the long term. With expanding margins and wise capital deployment, we expect mid-teens underlying earnings per share growth over the next three to five years.
We also think Thermo Fisher’s business would be very durable in an economic downturn as pharma and biotech customers account for roughly 60% of the company’s sales today and roughly 80% of sales are highly recurring consumables and services. Thermo received a COVID boost as they supply COVID PCR tests as well as some products used in the production of COVID vaccines. As such, it is in the process of growing over that excess demand. We expect the company to move past this growth headwind by the back half of 2023. At approximately 24x our estimate for nexttwelve-months earnings per share, we believe Thermo’s valuation is attractive for this type of consistent, well-managed, and durable business.”
13. T-Mobile US, Inc. (NYSE:TMUS)
Average Upside Potential as of March 20: 27.59%
Number of Hedge Fund Holders: 94
94 hedge funds held stakes in T-Mobile US, Inc. (NYSE:TMUS) at the close of Q4 2022. The total value of these stakes amounted to $3.71 billion. The stock is one of the best Strong Buy stocks to buy now according to analysts and hedge funds.
This February, Citi analyst Michael Rollins raised his price target on T-Mobile US, Inc. (NYSE:TMUS) to $176 from $174 and maintained a Buy rating on the shares. The stock has received 12 Buy and 2 Hold ratings from Wall Street analysts over the past 3 months and holds a consensus Strong Buy rating.
As of December 31, Berkshire Hathaway is the leading investor in T-Mobile US, Inc. (NYSE:TMUS) and has disclosed a position worth $733.8 million.
12. ServiceNow, Inc. (NYSE:NOW)
Average Upside Potential as of March 20: 16.57%
Number of Hedge Fund Holders: 97
On January 26, RBC Capital analyst Matthew Hedberg raised his price target on ServiceNow, Inc. (NYSE:NOW) to $510 from $500 and maintained an Outperform rating on the shares.
ServiceNow, Inc. (NYSE:NOW) is placed twelfth among the best Strong Buy stocks to buy now. The stock holds a consensus Strong Buy rating among Wall Street analysts and has received 23 Buy ratings and 2 Hold ratings over the past 3 months. The stock's average price target, as of March 20, sits at $514.08.
ServiceNow, Inc. (NYSE:NOW) was held by 97 hedge funds at the end of Q4 2022. These funds held collective positions worth $3.85 billion in the company. As of December 31, SCGE Management is the largest shareholder in the company and has disclosed a position worth $363 million.
Here is what Polen Capital had to say about ServiceNow, Inc. (NYSE:NOW) in its Q4 2022 investor letter:
“ServiceNow, Inc. (NYSE:NOW) is an $80 billion market cap business based in California. Its purpose is to make the world of work, work better for people. Getting a job done in an enterprise (what the company refers to as “workflow”) usually requires different people in various functions of an organization to work together. Often, they rely on different technology systems and inefficient manual processes to complete each step of the job before moving on to the next.
ServiceNow believes the most effective digital transformation initiative utilizes tools that can integrate workflows across siloed systems, departments, processes, and people. The company is solving what is arguably the biggest pain point in the biggest profit pool in the world (enterprises). Consider the explosion in data growth and all the software point solutions emerging constantly. ServiceNow wrangles all this into a fully integrated dashboard on a global scale with global customers in every industry. Nearly 100% of revenues are subscription based with a 99% renewal rate, and the company currently has no direct competition, according to our research. ServiceNow started with IT workflow, and today, ~40% of net new annual contract value is in non-IT workflows. Through constant innovation, the business has continued to expand its total addressable market, and we think it can grow free cash flow (FCF) at a 20%+ annualized rate for the next three to five years. At less than 30x FCF, we thought the valuation was attractive.”
11. S&P Global Inc. (NYSE:SPGI)
Average Upside Potential as of March 20: 21.88%
Number of Hedge Fund Holders: 97
Over the past 3 months, credit ratings agency S&P Global Inc. (NYSE:SPGI) has received 12 Buy ratings from Wall Street analysts and holds a consensus Strong Buy rating. The stock's average price target of $407.67 implies an upside of 21.88% from its share price on March 20.
On February 13, Argus analyst John Eade raised his price target on S&P Global Inc. (NYSE:SPGI) to $400 from $380 and maintained a Buy rating on the shares. the stock is one of the best Strong Buy stocks to buy now according to analysts and hedge funds.
S&P Global Inc. (NYSE:SPGI) was spotted on 97 investors' portfolios at the end of Q4 2022 that disclosed positions worth $7.88 billion in the company. This is compared to 90 positions in the previous quarter with stakes worth $6.24 billion. The hedge fund sentiment for the stock is positive.
As of December 31, TCI Fund Management is the top investor S&P Global Inc. (NYSE:SPGI) and has a stake worth $3 billion in the company.
Here is what Baron Funds had to say about S&P Global Inc. (NYSE:SPGI) in its Q4 2022 investor letter:
“Shares of rating agency and data provider S&P Global Inc. (NYSE:SPGI) increased 10.1% during the quarter as investors looked past weak debt issuance activity and anticipated a potential issuance rebound in 2023. Equity markets rose during the quarter, offering some reprieve to asset-based revenue headwinds. The company also hosted an Investor Day during which management provided medium-term financial guidance of 7% to 9% annual revenue growth and low to mid-teens annual EPS growth. We continue to own the stock due to the company’s durable growth characteristics that are underpinned by the secular trends of increasing bond issuance, growth in passive investing, and demand for data and analytics, while also benefiting from significant competitive advantages.”
10. The Walt Disney Company (NYSE:DIS)
Average Upside Potential as of March 20: 37.60%
Number of Hedge Fund Holders: 99
At the close of Q4 2022, 99 hedge funds held stakes in The Walt Disney Company (NYSE:DIS) worth $3.37 billion. Of those, Trian Partners is the leading shareholder in the company and has a stake worth $784.5 million.
This March, Wells Fargo reiterated its $141 price target on The Walt Disney Company (NYSE:DIS) and remained Overweight on the stock. Over the past 3 months, The Walt Disney Company (NYSE:DIS) has received 17 Buy ratings and 3 Hold ratings from Wall Street analysts and has an average price target of $128.24. The stock's average price target represents an upside of 37.60% from current levels. The Walt Disney Company (NYSE:DIS) is placed tenth on our list of the best Strong Buy stocks to buy now.
Here is what ClearBridge Investments had to say about The Walt Disney Company (NYSE:DIS) in its Q4 2022 investor letter:
“We exited The Walt Disney Company (NYSE:DIS) to focus on areas of the media industry with better risk/reward. Disney has significant exposure to consumer spending that is showing early signs of weakening. We decided to move on from the name as its traditional linear programming business is dissolving more quickly than expected, while its Disney+ streaming business cannot offset the affiliate fees and advertising revenue that the company has relied on for years. Disney’s parks business has done well recently due to strong pricing power but we have concerns that consumers will continue to spend on such discretionary purchases in a recessionary environment. At this point in the cycle, we believe Netflix has more ways to innovate and improve profitability.”
9. UnitedHealth Group Inc. (NYSE:UNH)
Average Upside Potential as of March 20: 27.65%
Number of Hedge Fund Holders: 110
On January 24, Deutsche Bank analyst George Hill raised his price target on UnitedHealth Group Inc. (NYSE:UNH) to $617 from $615 and maintained a Buy rating on the shares. Over the past 3 months, 9 Wall Street analysts have given Buy recommendations for the stock and 1 analysts recommends to Hold the stock. UnitedHealth Group Inc. (NYSE:UNH) has an average price target of $599.33 which represents an upside of 27.65% from its share price on March 20.
110 hedge funds held stakes in UnitedHealth Group Inc. (NYSE:UNH) at the end of Q4 2022. The total value of these stakes amounted to $11.4 billion, up from $10.3 billion in the previous quarter with 110 positions. As of December 31, GQG Partners is the most prominent shareholder in the company and has a stake worth $2.1 billion.
Here is what Distillate Capital had to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2022 investor letter:
“The largest sector change in the rebalance was a six-percentage point increase in technology. The biggest component of this increase was the introduction of a 4% weight in Apple, which is discussed further below. Offsetting this increased tech weight was a 3-percentage point decrease in industrials and a two-percentage point decline in health care. The biggest reductions in weight were UnitedHealth Group Incorporated (NYSE:UNH), which is capped at a 2% weight as it ranks in the bottom quartile of the fund by valuation.”
8. Alibaba Group Holding Limited (NYSE:BABA)
Average Upside Potential as of March 20: 79.05%
Number of Hedge Fund Holders: 113
Over the past 3 months, 14 Wall Street analysts have given their recommendations and price targets for Alibaba Group Holding Limited (NYSE:BABA). The stock has a consensus Strong Buy rating and an average price target of $146.23. The stock's average price target implies an upside of 79.05% from current levels.
On February 24, Truist analyst Youssef Squali raised his price target on Alibaba Group Holding Limited (NYSE:BABA) to $130 from $120 and maintained a Buy rating on the shares.
Alibaba Group Holding Limited (NYSE:BABA) was held by 113 hedge funds at the end of Q4 2022. These funds held collective positions worth $5.65 billion in the company, up from $4.14 billion in the preceding quarter with 105 positions. The hedge fund sentiment for the stock is positive. Alibaba Group Holding Limited (NYSE:BABA) is one of the best Strong Buy stocks to invest in right now according to analysts and hedge funds.
As of December 31, Coatue Management is the largest stockholder in Alibaba Group Holding Limited (NYSE:BABA) and has a position worth $440.5 million in the company.
Here is what Artisan Partners had to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2022 investor letter:
“Finally, within our technology theme, an area that we have trimmed heavily over the year, we exited Alphabet due to deteriorating fundamentals and reinitiated a position in Alibaba Group Holding Limited (NYSE:BABA), a stock we have owned previously, as it enters a new phase in its history, one most likely without founder Jack Ma after he became a lightning rod for the Chinese government’s technology crackdown beginning in late 2020. We are attracted to the company’s secular growth prospects in online and mobile commerce.”
7. Activision Blizzard, Inc. (NASDAQ:ATVI)
Average Upside Potential as of March 20: 17.00%
Number of Hedge Fund Holders: 129
Activision Blizzard, Inc. (NASDAQ:ATVI) was a part of 129 investors' portfolios at the close of Q4 2022 that disclosed stakes worth $9.52 billion in the company. This is compared to 96 positions in the preceding quarter with stakes worth $9.08 billion. The hedge fund sentiment for the stock is positive.
On February 16, Deutsche Bank analyst Benjamin Soff upgraded Activision Blizzard, Inc. (NASDAQ:ATVI) to Buy from Hold and maintained his $90 price target on the stock. The stock has received 12 Buy ratings from Wall Street analysts over the past 3 months and has a consensus Strong Buy rating. The stock's average price target sits at $92.42 and represents an upside of 17% from its share price on March 20.
As of December 31, Berkshire Hathaway is the leading shareholder in Activision Blizzard, Inc. (NASDAQ:ATVI) and has disclosed a stake worth $4 billion.
In addition to Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Activision Blizzard, Inc. (NASDAQ:ATVI) is also one of the most popular Strong Buy stocks among elite hedge funds and analysts.
6. Uber Technologies, Inc. (NYSE:UBER)
Average Upside Potential as of March 20: 49.84%
Number of Hedge Fund Holders: 135
Uber Technologies, Inc. (NYSE:UBER) is placed sixth on our list of the best Strong Buy stocks to buy now according to analysts and hedge funds. Over the past 3 months, Uber Technologies, Inc. (NYSE:UBER) has received 26 Buy ratings and 1 Hold rating from Wall Street analysts. The stock has an average price target of $47.62, which represents an upside of 49.84% from current levels.
This March, Deutsche Bank analyst Benjamin Black raised his price target on Uber Technologies, Inc. (NYSE:UBER) to $44 from $42 and maintained a Buy rating on the shares.
At the end of Q4 2022, 135 hedge funds were long Uber Technologies, Inc. (NYSE:UBER) and held stakes worth $5.70 billion. Of those, Alkeon Capital Management is the most prominent stockholder in the company and has disclosed a stake worth $316.7 million.
Here is what Artisan Partners had to say about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2022 investor letter:
“During the quarter, we began new GardenSM campaigns in Uber Technologies, Inc. (NYSE:UBER) and Shopify. In July, we initiated our position in Uber, a leader in global ride-hailing and online food delivery. We believe the company is wellpositioned to benefit from strong secular tailwinds in both of its core businesses. Earlier this year, management outlined a plan at its investor day to achieve $4 billion of free cash flow by 2024, an encouraging commitment given investors have maligned the company for years of being unprofitable. We witnessed solid progress toward achieving this goal in the company’s most recent earnings results, where it beat expectations for the quarter on both fronts and delivered positive FCF for the first time. The company also indicated it isn’t seeing any evidence of slowing demand. We recognize the execution risk associated with Uber achieving its long-term targets, and the path likely won’t be linear, which is why we are keeping our position size modest until we see signs of continued operational momentum in the coming quarters.”
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Disclosure: None. 16 Best Strong Buy Stocks To Invest In is originally published on Insider Monkey.
