Top 7 Stocks To Buy if You Want To Channel Billionaire Steve Cohen
The markets are a tough place to navigate at the moment. On the one hand, stocks slid recently on Fed rate hike fears. But, on the other hand, we are in the middle of the economy coming back to life. So, if you are confused regarding the best stocks to buy, you are not the only one.
However, the best thing you can do is look towards investment gurus like billionaire Steven Cohen — founder and CEO of Point72 Asset Management — for inspiration.
Cohen’s success is built on high-risk, high reward trades. For example, during the late-’90s dot-com bubble, his firm regularly produced 70% returns on the back of several high-risk internet darlings and earned another 70% when he shorted those same stocks when the tech bubble burst in 2000.
We saw his investment prowess in full flow last year as well, with the guru making $1.4 billion in 2020 courtesy of a 16% gain in Point72′s main hedge fund. So, you can rest easy when picking the best stocks to buy after researching the hedge fund’s latest 13-F filing.
So what are some of Cohen’s top picks for stocks to buy? These seven stand out.
- Uber Technologies (NYSE:UBER)
- Baidu (NASDAQ:BIDU)
- Align Technology (NASDAQ:ALGN)
- Paya Holdings (NASDAQ:PAYA)
- Array Technologies (NASDAQ:ARRY)
- Western Digital (NASDAQ:WDC)
- Applied Materials (NASDAQ:AMAT)
Now, let’s dive in and take a closer look at each one.
Stocks to Buy: Uber Technologies (UBER)
The first name on the list should not come as a surprise. As one of the latest disruptor businesses in the new sharing economy, Uber should never be taken lightly.
Despite a challenging atmosphere, UBER stock has outperformed the S&P 500 by 12.9% and its sector by 7.3% in the past year.
However, the main reason to be bullish on the stock is the future. Drivers are slowly but surely returning to its ride-hailing platform, leading to a moderate reduction in passenger wait times.
Of course, we are still not firmly in the post-pandemic world. But with vaccines rolling out, we will continue to increase passenger count for Uber and other ride-hailing platforms.
That much was acknowledged by the company recently when it said the week of May 17th marked a new record for drivers returning to the road since the start of 2021, with active driver hours jumping 4.4% from the previous week. During the week, Uber said 33,000 drivers joined its U.S. platform during the week.
“With the economy bouncing back, drivers are returning to Uber in force to take advantage of higher earnings opportunities from our driver stimulus while they are still available,” said Carrol Chang, Uber’s head of U.S. and Canada driver operations, in a statement.
It is one of the largest positions in the portfolio at 2.39%, worth $467.69 million.
Baidu (BIDU)
Baidu is a stock that has had its fair share of ups and downs in the last few years. In 2018 and 2019, shares of the Chinese internet search giant did not do so well. But, they caught fire between late November 2020 and mid-February, increasing by 150% during this time.
Interestingly though, the stock is trading at a 47.48% discount to its 52-week high. For a mature company, this kind of oscillation is rare. After all, Baidu is no spring chicken. It’s been listed on the NASDAQ since 2005. It is the world’s second-largest search engine and accounts for roughly 70% to 80% of China’s online search market.
Then why is it underperforming? Well, there are several reasons. But chief among them is the US-China trade war, which shows no signs of slowing down and the emergence of rivals such as Sogou looking to close the gap.
However, does that mean Baidu has suddenly become a bad stock? Not a chance. According to CNBC data, in the last 12 quarters, the tech giant has beat estimates 11 times. No wonder ace investor Louis Navellier and Cohen both are bullish on this one.
Stocks to Buy: Align Technology (ALGN)
Align Technology is the world’s largest 3D printing manufacturer and makes Invisalign clear aligners used in orthodontics.
The company went public on January 26, 2001. So, again, this is not a new company. However, it is an industry leader. Therefore, one can understand the appeal of ALGN to a seasoned investor like Cohen.
Plus, the pandemic was an excellent tailwind for the company. Align Technology saw demand skyrocket for its clear teeth aligners throughout 2020 as people became hesitant to visit their local orthodontist’s office to get traditional teeth braces adjusted.
Align Technology employed 24.4% more people in 2020. And boy, did they need them. On a trailing 12 months (TTM) basis, the top line has increased 16.9% and sold a record 1.6 million cases of clear aligners in 2020.
Paya Holdings (PAYA)
Paya is a payment processor service with over $30 billion in payments processed annually for over 100,000 customers. The company offers an integrated payment and commerce platform for B2B (business-to-business) operations in the education, government, healthcare, non-profit, and utility sectors.
The U.S. payments solutions provider went public last year in mid-October through a reverse merger with FinTech Acquisition Corporation III.
During the fourth quarter of 2020, Point72 Asset snapped up 3,288,843 shares in the North American payment processing service provider, bringing the total size of its holding to 4,489,443 shares worth $54 million.
Considering the asset-light nature of the business and its growth prospects, it is no surprise Cohen is bullish on this one.
Stocks to Buy: Array Technologies (ARRY)
Array Technologies manufactures ground-mounting systems used in large-scale solar energy projects. Through its DuraTrack and SmarTrack products, the company allows tracking the sun across the sky and accounts for seasonal differences in its path.
Array believes its tracking systems will improve the lifetime efficiency of solar array projects and that its SmarTrack system will increase energy production by 5%.
Although the ‘green tech’ company is headquartered in the United States, it has installations in 30 countries in more than 900 utility-scale projects.
The whole world is going green. Governments around the world are incentivizing green projects. The U.S. is no different. In his $2 trillion infrastructure plan, President Joe Biden promised to fight climate change and create new jobs. Array Technologies will undoubtedly benefit from these green policies in the U.S. and abroad. That makes it one of the best stocks to buy right now.
The company went public on Oct. 15 last year at an IPO price of $22 a share. It was described as the ‘first big solar IPO’ in the US for 2020. Shares closed the day at $36 and went as high as $54.78 earlier this year.
Now, let’s talk about Point72′s stake in the company. In Q4, the hedge fund purchased 531,589 shares. At the moment, its total holding stands at 0.73% and is worth $ 142.15 million.
Western Digital (WDC)
Western Digital hard disk drive manufacturer and data storage company founded on April 23, 1970, by Alvin B. Phillips, a Motorola employee, as General Digital.
It is one of the largest computer hard disk drive manufacturers and is the largest global producer of NAND flash chips. On a trailing 12 months (TTM), EPS has grown 39.8%, and top-line grew 1.3%.
In April, the disk drive and flash memory company reported revenue of $4.1 billion in the quarter ended March 31. It was down 1% year-on-year but was ahead of the guidance range of $3.8 billion to $4.05 billion. Non-GAAP EPS was $1.02 a share, handily beating the company’s forecast of 55 cents to 75 cents.
Looking ahead, Western is forecasting revenue of $4.4 billion to $4.6 billion for the June quarter, with non-GAAP profits of $1.30 to $1.60 a share. Consensus estimates are for revenues to reach $4.3 billion and EPS of $1.02 a share.
Since its business involves storage devices, data center systems, and cloud storage services, one can understand why billionaire Steven Cohen has an affinity for this company. Shares of Western Digital represent 1.84% of Point72 Asset Management’s holdings, with the 8.58 million in WDC stock worth $467.69 million.
Stocks to Buy: Applied Materials (AMAT)
California-based Applied Materials supplies material engineering solutions that manufacturers of semiconductors used in the design, product development, and fabrication of chips. There are no surprises for guessing why the company is attracting particular interest when we are going through a major semiconductor shortage.
As the industry entered 2020, everyone expected these chips to skyrocket because of the rollout of 5G devices. However, due to the novel coronavirus pandemic, demand for chips powering laptops, gaming devices, and internet infrastructure increased exponentially. The crisis has led to a bonanza for chip stocks, and Applied Materials is no different.
The top line and bottom line have increased by 15.7% and 34.7% in the last five years. Moreover, the markets have rewarded this performance in kind. AMAT has outperformed the S&P 500 by 375.5% and its sector by 216.9% in the last five years.
The 1.91-million-share position is a new one for Cohen. But it’s a sizeable one, representing 1.30% of total holdings and a market value of $255.17 million. Considering the semiconductor shortage, AMAT will make it onto several lists of stocks to buy at the moment. But it’s a great long-term investment, as the numbers show.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.
