We recently compiled a list of the top 10 blue chip stocks to buy, according to analysts. In this article, we’ll take a look at how NVIDIA Corp. (NASDAQ:NVDA) stacks up against other blue-chip stocks.
Income-focused investment
The stock market is up an impressive 20% since the beginning of the year, but potential volatility is expected as the seasonally volatile months leading up to Election Day approach. The S&P 500 index has historically fallen 5% to 10% around elections, but tends to recover afterwards.
Instead of converting cash, investors are encouraged to take advantage of market declines. Historically, when the Fed cuts interest rates without an imminent recession, it creates a favorable environment for overall market performance. Mona Mahajan, senior investment strategist at Edward Jones, recently appeared on CNBC and offered similar thoughts on these latest market trends and where investors can find opportunities right now. We discussed this in our article about the 10 best WallStreetBets stocks to buy right now. Here is an excerpt.
“When asked if investors should consider cashing out and taking a vacation for the rest of the year, Mahajan advised against such a move. Rather, if there is a dip or correction in the market, It would be wise to take advantage of that opportunity, he suggested.Furthermore, lower borrowing costs due to Fed rate cuts typically lead to higher valuations, especially in sectors that have lagged in this regard. He emphasized that it will bring benefits to both individuals and companies.
Regarding investment strategies during a potential recession, he recommended focusing on cyclical sectors such as utilities and industrials while maintaining exposure to technology and artificial intelligence sectors. Mahajan emphasized that diversification will be key over the next 12 to 18 months. ”
Simeon Hyman, global investment strategist at ProShares Advisors, appeared on CNBC on Oct. 2 and emphasized “income” as a key focus, predicting a 10-15% return if geopolitical tensions worsen. highlighted the bond market opportunities that could be available. Despite the tensions, he believes the U.S. economy is stronger than the rest of the world.
Simeon Hyman emphasized the importance of the term “income” in the context of current market conditions, noting that the market is only 1% off its all-time high. This situation means a pay cut for income-oriented investors and highlights the challenges they face. However, there are some bright spots in the bond market. It currently offers enough yield to defuse worsening geopolitical tensions. For example, the yield on the 10-year Treasury note is close to 4%, which could drop to below 3% if a significant negative event occurs. This scenario offers investors the opportunity to realize 10% or 15% returns on bonds in a turbulent environment not seen in more than a decade.
Even though the market is currently down 3.7%, just under 4%, Hyman argued that rounding is having an effect. He expressed surprise at the performance given continued geopolitical tensions, but noted that the positive economic news in the United States continues. Specifically, we are seeing signs of a 50 basis point interest rate cut and a soft economic landing. An increase of just 0.1% from the previous month suggests that, if geopolitical issues can be ignored, the U.S. economy is faring better than other economies globally and remains on solid economic footing. are.
Additionally, Hyman proposed a covered call strategy that focuses on the Russell 2000 Index, which has underperformed relative to the S&P 500 Index. He explained that this strategy is beneficial because it allows investors to maintain a bullish position in smaller stocks while generating returns that can offset recent losses. cap. Historically, interest rate cuts have had a positive impact on small-cap stocks, and this strategy allows investors to take advantage of that trend while earning income through covered calls.
The current emphasis on bond markets as a viable investment option for risk-averse investors comes from Simeon Hyman, who highlighted the 10-15% return potential of bonds amid geopolitical tensions. This aligns well with the insights shared by Mr. Additionally, similar to the defensive strategy suggested by Hyman, you might seek out blue-chip stocks with reliable growth histories that can provide stability in uncertain market conditions. As investors look to track stock performance to find a strategy, here is a list of the top 10 best stocks to buy, chosen by analysts.
methodology
To create the list, we first scoured the Vanguard US Quality Factor ETF’s holdings to find those with an upside potential of 15% or more as of October 4, 2024. We then selected the 10 most popular stocks among elite hedge funds. Analysts were bullish. Stocks are ranked by analyst likelihood of upside.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 points (Learn more here Please take a look).
A close-up view of a colorful high-end graphics card connected to a gaming computer.
NVIDIA (NASDAQ:NVDA)
Average increase potential: 22.10%
Number of hedge fund holders: 179
NVIDIA Corp. (NASDAQ:NVDA) is known for its high-performance GPUs, which are widely used in gaming, artificial intelligence, data centers, and professional visualization. Its GPU is essential for performing advanced graphics and computing tasks and is a key component of many modern technologies such as self-driving cars, virtual reality, and supercomputers.
The company recently partnered with Accenture. Management recently spoke about the partnership and its new AI chip, Blackwell. Blackwell is currently manufactured in large quantities and is in high demand. AI helps companies accelerate innovation through our partnership with Accenture. In late August, management also approved a $50 billion stock repurchase program.
NetApp on September 25 released new AI tools that use NVIDIA technology to help businesses manage their data. Elon Musk’s company xAI uses 100,000 NVIDIA H100 GPUs for its AI project Colossal. Colossal may grow to use H200 GPUs and Blackwell chips in the future.
The company’s networking platform for AI, Spectrum X, is expected to be worth billions of dollars within a year. The company recently partnered with Salesforce to help businesses leverage AI and data more effectively. In September, the company also introduced a new AI tool called Aerial to improve wireless networks for mobile devices, robots, self-driving cars and 5G.
A software called CUDA gives you an edge over your competitors. But the company’s future depends on whether it can continue to innovate and find ways to make money from AI. CUDA is a tool that allows developers to use GPUs for various types of computing. Experts believe the company should focus more on robotics to grow.
Columbia Contrarian Core Fund said the following about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 Investor Letter:
NVIDIA Corporation (NASDAQ:NVDA) – NVIDIA continued its rally after reporting first-quarter results in May that featured record revenue growth of 262% year-over-year. On June 10, the company’s stock began trading on a split-adjusted basis following a 10-for-1 forward stock split, making it easier for both employees and investors to own the stock. Just a week later, the company officially surpassed Microsoft in market capitalization, making it the most valuable publicly traded company (though it would relinquish that title shortly thereafter). While other companies stand to benefit from artificial intelligence (AI) trends this year, NVIDIA stands out as the undisputed leader in this space, and its position is unlikely to be challenged for years to come. It’s low. NVIDIA continues to see very strong demand, and the recent introduction of Blackwell systems looks to be an exciting next phase of growth for NVIDIA stock. ”
Overall, NVDA ranks #6 on the list of best stocks to buy, according to analysts. While we appreciate NVDA’s potential as an investment, we also believe that AI stocks have great potential for high returns in the short term. If you’re looking for AI stocks with more promise than NVDA, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
