This article by Usman Kabir with my photo is in today's Yahoo! News.
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Inflation fears and a dramatic drop in the prices of cryptocurrencies over the past few weeks have hit growth stocks. Amid uncertainty regarding federal policy on interest rates and non-fungible tokens, investors are flocking to value offerings and gold as a hedge against volatile bets. The shift represents a unique buying opportunity in growth firms that are trading at lower prices than expected but have plenty of room to climb higher. Investors are closely watching Reddit forum WallStreetBets, which has become a vibrant community for stock discussions and has a strong effect on broader market dynamics.
Some of the firms presently popular on the forum include Amazon.com, Inc. (NASDAQ: AMZN), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL), and NVIDIA Corporation (NASDAQ: NVDA), among others. On July 19, growth stocks pushed the S&P 500 and the NASDAQ to new highs as US President Joe Biden held a meeting with Federal Reserve Chair Jerome Powell and told the media afterwards that inflation was only temporary and that the White House was taking all steps necessary to support a post-pandemic economic recovery.
The fears around inflation had grown amid market crash predictions by investors like Michael Burry and statistics released by the Labor Department that showed that consumer prices in the United States in June had increased by most in thirteen years, with cars and trucks comprising more than one-third of the surge in the Consumer Price Index amid a rebound in the cost of travel-related services after a disappointing 2020. News agency Reuters reports that inflation concerns have also led to consumer sentiment in early July to touch five-month lows.
These statistics, however, seem not to have affected the investment mindset of retail investors who populate WallStreetBets. Growth stocks dominate the list of most mentioned stocks on the forum. As retail investors exert a growing influence on the overall market dynamics, investors can gain important insight into growth offerings by monitoring Reddit forums. These retail investors have transformed the world of finance by coming out on top in a battle with hedge funds this year. It remains to be seen whether they can sustain this victory.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
With this context in mind, here is our list of the 10 growth stocks Reddit's WallStreetBets is buying. These stocks were ranked using hedge fund data maintained by Insider Monkey. The ratings that market experts from different investment advisory firms have assigned to these stocks were also considered. In order to filter out meme stocks, the list has been compiled using companies that have positive ratings, at least five or more hedge funds with stakes, and at least double digit mentions on Reddit over the past day.
Growth Stocks Reddit's WallStreetBets Is Buying
10. Sundial Growers Inc. (NASDAQ: SNDL)
Number of Hedge Fund Holders: 7
Sundial Growers Inc. (NASDAQ: SNDL) is ranked tenth on our list of growth stocks Reddit's WallStreetBets is buying. The company’s shares have returned 67% to investors in the past six months. The firm is based in Canada and makes and sells cannabis products. The stock stands to benefit from a recent draft proposal that is seeking to legalize marijuana across the United States. The draft bill has been backed by major cannabis firms even though it proposes new taxation on these companies.
On May 13, investment advisory Canaccord upgraded Sundial Growers Inc. (NASDAQ: SNDL) stock to Hold from Sell. The price target on the stock was also increased to 70c from 65c. Shaan Mir, an analyst at the firm, said the firm was trading near implied valuation.
At the end of the first quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $18 million in Sundial Growers Inc. (NASDAQ: SNDL), up from 2 the preceding quarter worth $2 million.
Alongside Amazon.com, Inc. (NASDAQ: AMZN), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL), and NVIDIA Corporation (NASDAQ: NVDA), Sundial Growers Inc. (NASDAQ: SNDL) is one of the stocks Reddit's WallStreetBets is buying.
9. Riot Blockchain, Inc. (NASDAQ: RIOT)
Number of Hedge Fund Holders: 12
Riot Blockchain, Inc. (NASDAQ: RIOT) stock has returned 968% to investors over the past year. It is placed ninth on our list of growth stocks Reddit's WallStreetBets is buying. The company concentrates on cryptocurrency mining operations. It has a fleet of more than 7,000 miners for the purpose. On July 8, the firm announced that it had produced 243 Bitcoin in June, up 500% from the 48 Bitcoin produced in June 2020. The announcement brings the total number of Bitcoin mined this year by the firm to 1,167.
On July 1, investment advisory B Riley maintained a Buy rating on Riot Blockchain, Inc. (NASDAQ: RIOT) stock but increased the price target to $51 from $44, noting that the crackdown on crypto mining in China represented an opportunity for American miners.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Riot Blockchain, Inc. (NASDAQ: RIOT) with 2.2 million shares worth more than $120 million.
Riot Blockchain, Inc. (NASDAQ: RIOT) is one of the stocks Reddit's WallStreetBets is buying, just like Amazon.com, Inc. (NASDAQ: AMZN), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL), and NVIDIA Corporation (NASDAQ: NVDA).
8. MicroStrategy Incorporated (NASDAQ: MSTR)
Number of Hedge Fund Holders: 20
MicroStrategy Incorporated (NASDAQ: MSTR) is a firm that markets analytics software and related services. It is ranked eighth on our list of growth stocks Reddit's WallStreetBets is buying. The company’s shares have offered investors returns exceeding 302% over the course of the past twelve months. The firm has invested heavily in cryptocurrencies in recent months, using the proceeds from a bond sale in late June to buy more than 13,000 Bitcoin worth close to $500 million. Each coin cost the firm $37,617.
On April 5, investment advisory William Blair initiated coverage of MicroStrategy Incorporated (NASDAQ: MSTR) stock with an Outperform rating. Bhavan Suri, an analyst at the firm, identified the firm as a leading enterprise analytics software vendor.
At the end of the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $132 million in MicroStrategy Incorporated (NASDAQ: MSTR), up from 15 in the previous quarter worth $134 million.
MicroStrategy Incorporated (NASDAQ: MSTR) is one of the stocks Reddit's WallStreetBets is buying, alongside Amazon.com, Inc. (NASDAQ: AMZN), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL), and NVIDIA Corporation (NASDAQ: NVDA).
In its Q1 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and MicroStrategy Incorporated (NASDAQ: MSTR) was one of them. Here is what the fund said:
“MicroStrategy Incorporated was among the top contributors to performance. MicroStrategy is a global leader in enterprise analytics software and services. MicroStrategy’s core software platform provides customers with visualization and reporting capabilities, mobility features and custom applications to help with complex business questions. Today, MicroStrategy has over 4,000 customers worldwide. In August 2020, MicroStrategy decided to make bitcoin its preferred reserve currency. To date, MicroStrategy has purchased over 90,000 bitcoins at an aggregate purchase price of $2.17 bi11 ion and an average price of over $23,985 per bitcoin. Going forward, MicroStrategy plans to use excess cash generated by its core business to purchase additional bitcoin.
Shares of MicroStrategy outperformed in the first quarter due to the appreciation of the company’s bitcoin asset, as the price of
bitcoin relative to the U.S. dollar rose materially in the quarter. This bitcoin appreciation was driven by concerns about U.S. dollar inflation as well as other public companies deciding to acquire bitcoin to diversify reserve assets. MicroStrategy is establishing itself as a thought leader in the bitcoin space, and the company hosted an event at its February user conference to help other organizations understand the benefits of bitcoin as a reserve asset. MicroStrategy’s core software business is also benefitting from its status as a leader in the bitcoin space, with the increased public attention aiding MicroStrategy’s recruitment and marketing efforts as the software business continues to transition to a cloud-based subscription model.”
7. Public Storage (NYSE: PSA)
Number of Hedge Fund Holders: 26
Public Storage (NYSE: PSA) stock has offered investors returns exceeding 67% over the course of the past year. It is placed seventh on our list of growth stocks Reddit's WallStreetBets is buying. The firm operates as a real estate investment trust that concentrates on self-storage facilities. It is based in California and has a market cap of over $55 billion. On June 24, investment bank UBS gave the firm a Neutral rating and a $310 price target. The returns on the stock (66%) have outperformed the returns on the S&P 500 (37%) over the past few months.
On July 20, investment advisory Morgan Stanley maintained an Equal Weight rating on Public Storage (NYSE: PSA) stock and raised the price target to $287 from $266. Ronald Kamdem, an analyst at the firm, also raised earnings expectations to reflect pricing strength of storage REITs.
At the end of the first quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $929 million in Public Storage (NYSE: PSA), down from 31 in the preceding quarter worth $1 billion.
Amazon.com, Inc. (NASDAQ: AMZN), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL), and NVIDIA Corporation (NASDAQ: NVDA) are stocks Reddit's WallStreetBets is buying, just like Public Storage (NYSE: PSA).
6. Chewy, Inc. (NYSE: CHWY)
Number of Hedge Fund Holders: 32
Chewy, Inc. (NYSE: CHWY) is a Florida-based ecommerce firm that is famous for the variety of pet products offered on its platform. It is ranked sixth on our list of growth stocks Reddit's WallStreetBets is buying. The company’s shares have returned 69% to investors over the past year. The company recently posted earnings results for the first quarter, beating market estimates on revenue and earnings per share. It also increased guidance on net sales and year-on-year growth for this fiscal year.
On July 16, investment advisory Exane BNP Paribas initiated coverage on Chewy, Inc. (NYSE: CHWY) stock. The advisory assigned it an Outperform rating. The price target on the stock was set at $101.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Chewy, Inc. (NYSE: CHWY) with 1.3 million shares worth more than $113 million.
In its Q4 2020 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Chewy, Inc. (NYSE: CHWY) was one of them. Here is what the fund said:
“One of our investment themes over the last several years has been the “humanization of pets,” which refers to the increasing amount of time and money that people are devoting to their animals. This theme has become even more evident during the pandemic, as many families and individuals have adopted pets while spending more time at home. Today, more than 85 million US households have pets. In 2015, roughly 7% of pet products in the U.S. were bought online. By 2019, that number had increased to 22%. Moreover, the pandemic has caused pet parents, new and experienced alike, to sign up for delivery of pet supplies in order to avoid trips to physical stores. 72% of pet owners made at least one online purchase for their pets in the past 12 months and 39% of those were subscription-based purchases.
Chewy (tkr: CHWY) is the largest pure-play pet “e-tailer” in the world, offering “the personalized service of a neighborhood pet store combined with the convenience and speed of e-commerce.” The company was founded in 2011 and was bought by PetSmart in 2017, for $3 billion. In June, 2019, Chewy went public. All of its sales are currently U.S.-based. The company has co-headquarters with one facility in Dania Beach, Florida and one in Boston, Massachusetts, and employs about 12,000 people. Chewy offers a selection of high-quality pet food, treats, supplies, and pet healthcare products.
In addition to one-time sales, Chewy is creating a recurring revenue model through its “autoship” program. This is essentially a subscription service for products that are sent at intervals specified by customers and includes such items as food and medicine. Customers are more profitable the longer they stay with the company, as their “lifetime value” grows. The company is organized around providing an exceptional customer experience. Chewy has 10 fulfillment centers scattered across the US, which enable cost-efficient overnight shipments to about 80% of the U.S. population and cost-efficient two-day shipments to nearly 100%. This allows Chewy to provide excellent service to the company’s more than 12.7 million active users.
Chewy’s ability operate profitably in the future hinges on two key variables: growing its customer base and more efficiently managing its fulfillment costs through automation of its fulfillment centers, thereby decreasing labor costs. Chewy has a smart, experienced management team and the company is expected to become profitable at the end of this fiscal year.”
5. Novavax, Inc. (NASDAQ: NVAX)
Number of Hedge Fund Holders: 38
Novavax, Inc. (NASDAQ: NVAX) stock has returned 62% to investors over the past twelve months. It is placed fifth on our list of growth stocks Reddit’s WallStreetBets is buying. The firm operates in the biotechnology sector and focuses on the development of vaccines that treat serious infectious diseases. On July 2, news agency Reuters reported that Taiwan had chosen to get the COVID-19 vaccine developed by Novavax through the COVAX global sharing scheme, ordering more than 4.7 million shots of the vaccine through the program.
On June 15, investment advisory Cantor Fitzgerald maintained an Overweight rating on Novavax, Inc. (NASDAQ: NVAX) stock and raised the price target to $272 from $217, citing enhanced conviction for a coronavirus vaccine developed by the company.
At
the end of the first quarter of 2021, 38 hedge funds in the database of
Insider Monkey held stakes worth 1.2 billion in Novavax, Inc. (NASDAQ:
NVAX), up from 37 in the previous quarter worth $1 billion.
4. DoorDash, Inc. (NYSE: DASH)
Number of Hedge Fund Holders: 38
DoorDash, Inc. (NYSE: DASH) is ranked fourth on our list of growth stocks Reddit’s WallStreetBets is buying. The company’s shares have returned 23% to investors over the past six months. The firm operates as a logistics platform connecting merchants to customers. It provides the largest food delivery service in the United States. On June 14, the company announced that it was partnering with PetSmart to facilitate delivery of pet-related products from more than 1,400 PetSmart stores nationwide.
On June 29, investment advisory Wells Fargo maintained an Overweight rating on DoorDash, Inc. (NYSE: DASH) stock and raised the price target to $215 from $170, highlighting several possible growth catalysts for the firm in the post-pandemic economy.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Coatue Management is a leading shareholder in the firm with 9.2 million shares worth more than $1.2 billion.
3. Teladoc Health, Inc. (NYSE: TDOC)
Number of Hedge Fund Holders: 42
Teladoc Health, Inc. (NYSE: TDOC) is a New York-based company that provides virtual healthcare services. It is placed third on our list of growth stocks Reddit’s WallStreetBets is buying. On July 14, the share price of the firm jumped close to 3% after it announced that it was partnering with software giant Microsoft to integrate the Solo platform of the former with the Teams platform of the latter. The move is part of a plan by both firms to strengthen the access to healthcare for patients who want virtual services.
On July 8, investment advisory Piper Sandler maintained an Overweight rating on Teladoc Health, Inc. (NYSE: TDOC) stock with a price target of $291, underlining that the firm was dominating direct-to-consumer behavioral healthcare.
At the end of the first quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $3.3 billion in Teladoc Health, Inc. (NYSE: TDOC), down from 50 in the preceding quarter worth $2.6 billion.
In its Q4 2020 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Teladoc Health, Inc. (NYSE: TDOC) was one of them. Here is what the fund said:
“Teladoc Health offers remote physician access to patients at home. After experiencing incredible levels of growth throughout the early stages of the pandemic as its unique value proposition rose to the forefront of the healthcare industry, the firm’s shares cooled off a bit as optimistic vaccine data slightly curtailed investor expectations for the firm’s future growth potential. We sold the stock.”
2. Roblox Corporation (NYSE: RBLX)
Number of Hedge Fund Holders: 46
Roblox Corporation (NYSE: RBLX) stock has returned 14% to investors over the past three months, It is placed second on our list of growth stocks Reddit’s WallStreetBets is buying. The company owns and runs an online entertainment platform. On June 15, research firm App Annie revealed that Roblox had topped mobile game grossing charts in the first three months of 2021. The firm is well-positioned to benefit from an increase in mobile gaming as home games become less popular as smartphones become more powerful.
On June 30, investment advisory Citic Securities initiated coverage of Roblox Corporation (NYSE: RBLX) stock with an Overweight rating and a price target of $96, noting that the firm was the leading multiplayer creation and social platform.
At the end of the first quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $3.3 billion in Roblox Corporation (NYSE: RBLX).
1. Advanced Micro Devices, Inc. (NASDAQ: AMD)
Number of Hedge Fund Holders: 62
Advanced Micro Devices, Inc. (NASDAQ: AMD) is ranked first on our list of growth stocks Reddit’s WallStreetBets is buying. The company’s shares have offered investors returns exceeding 51% over the course of the past twelve months. The firm operates as a semiconductor manufacturing company. On June 17, the share price of the firm jumped close to 4% after internet search engine Google announced that it would be using AMD chips to power Tau Virtual Machines used by the Google Cloud.
On July 15, investment advisory Citi upgraded Advanced Micro Devices, Inc. (NASDAQ: AMD) stock to Neutral from Sell and raised the price target to $95 from $17, highlighting that the firm was making strides in the server market.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Advanced Micro Devices, Inc. (NASDAQ: AMD) with 25 million shares worth more than $1.9 billion.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Advanced Micro Devices, Inc. (NASDAQ: AMD) was one of them. Here is what the fund said:
“We also exited our positions in Advanced Micro Devices. Our investment campaign in Advanced Micro Devices (AMD) began in the second half of 2018, and we have seen a new management team reinvigorate the company’s product portfolio of microprocessors for PCs and servers, graphics processors, and video game consoles. These new, higher-margin products have helped the company partially close its margin gap with peers and capture share from market leader Intel. While we believe there is meaningful runway for further share gains and margin expansion, AMD has appreciated far beyond our mid-cap market cap mandate, and we exited our position.”
