In this article, we will be taking a look at the 15 best short-term stocks to buy now. To skip our detailed analysis of current stock market dynamics, you can go directly to see the 5 Best Short-Term Stocks To Buy Now.
When you’re looking for stocks to invest in for the short-term, typically, it is better to buy stocks that have been showing an upward price trend and sell the ones that have had poor returns. This strategy is known as momentum investing. It works on the basis of the rationale that once a trend is established, it is likely to continue. So once a stock has begun performing either really well or poorly, it’s likely to continue performing that way in the near future. The main trick behind momentum investing, however, is that once even the well-performing stocks have reached what seems to be their peak, a momentum investor would sell those shares too. Because of this practice, the Wall Street adage “buy low, sell high” has become a famous saying familiar to all momentum traders.
While momentum trading, if practiced safely, can yield attractive results, it is a strategy that must be implemented carefully. In times of market volatility, this form of investing is particularly vulnerable. For instance, by October 2022, the market saw the S&P 500 decline by 23.2% year-to-date, while other indexes did not fare much better. However, 2023 seems to be a better year for momentum trading as the market has seen a rally already in January. S&P 500 ETFs returned 6.3% in January. These ETFs lost 2.5% in February, reducing their year-to-date returns to 3.6%.
Considering the above, stocks like salesforce.com, inc. (NYSE:CRM), Roblox Corporation (NYSE:RBLX), and Advanced Micro Devices, Inc. (NASDAQ:AMD) are posting strong gains in 2023. These are some of the companies momentum investors should look at seeing as analysts predict upside potential for all of them, and they are already embarking on an upward price trend. We have added these companies to our list of the best short-term stocks to buy now, considering how momentum stocks seem perfect investments for traders looking for short-term positions.
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Let’s now take a look at the 15 best short-term stocks to buy now.
Our Methodology
For our list below, we have selected price momentum stocks that have posted year-to-date gains above 20% and one-year declines also above 20%. We have also mentioned the upside potential of these stocks. These figures are updated as of February 28. To ensure we have selected the best stocks, we have used Insider Monkey’s hedge fund data for the fourth quarter to pick momentum stocks that were popular among the 943 hedge funds tracked by Insider Monkey in that quarter. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number of shareholders.
Best Short-Term Stocks To Buy Now
15. Lucid Group Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 17
One-year Return as of February 28: -69.57%
Lucid Group Inc. (NASDAQ:LCID) is an automobile manufacturing company. It is based in Newark, California. The company develops electric vehicle technologies.
A Buy rating was reiterated on Lucid Group Inc. (NASDAQ:LCID) shares on February 23 by R.F. Lafferty’s Jaime Perez.
Lucid Group Inc. (NASDAQ:LCID) shares have been volatile recently, posting year-to-date gains of 43.35% but a one-year decline of 69.57%. Regardless, analysts see a 9.97% upside on the stock. Lucid Group Inc. (NASDAQ:LCID) is expected to achieve higher profitability in the coming years, and it has already narrowed its losses in 2022. The company reported a net loss of $4.7 billion in 2021, compared to a net loss of $1.3 billion in 2022.
There were 17 hedge funds long Lucid Group Inc. (NASDAQ:LCID) in the fourth quarter, with a total stake value of $48.2 million.
Lucid Group Inc. (NASDAQ:LCID), like Salesforce.com, inc. (NYSE:CRM), Roblox Corporation (NYSE:RBLX), and Advanced Micro Devices, Inc. (NASDAQ:AMD), is among the most popular short-term stocks hedge funds are piling into today.
14. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 27
One-year Return as of February 28: -67.57%
Coinbase Global, Inc. (NASDAQ:COIN) is a financial exchanges and data company based in Wilmington, Delaware. The company provides financial infrastructure and technology for the crypto-economy.
On February 22, Oppenheimer’s Owen Lau reiterated an Outperform rating on Coinbase Global, Inc. (NASDAQ:COIN) shares and placed an $84 price target on the stock.
The company’s shares have risen by 87.41% year-to-date while falling by 67.57% in the past year. Oppenheimer analysts have noted that an increasing number of institutional investors are buying the dip in Coinbase Global, Inc. (NASDAQ:COIN), which could drive up retail engagement for the company. They are optimistic about the company and see its share price rising in the near future.
ARK Investment Management was the largest shareholder in Coinbase Global, Inc. (NASDAQ:COIN) at the end of the fourth quarter, holding 9.2 million shares. In total, 27 hedge funds were long the stock, with a total stake value of $575 million.
13. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 28
One-year Return as of February 28: -31.90%
Palantir Technologies Inc. (NYSE:PLTR) is an information technology company. It builds and deploys software platforms for the intelligence community.
Matthew Broome holds a Neutral rating on Palantir Technologies Inc. (NYSE:PLTR) shares as of February 14.
Palantir Technologies Inc. (NYSE:PLTR) shares have risen 25.2% year-to-date. The stock is incredibly volatile, but some investors are still bullish on it. One reason for this is the company identifying about 6,000 businesses with yearly revenues of about $500 million that could be potential clients for Palantir Technologies Inc. (NYSE:PLTR) with an average contract value of $9.33 million. Analysts see an upside of 8.4% on the stock.
Palantir Technologies Inc. (NYSE:PLTR) had 28 hedge funds long its stock in the fourth quarter, with a total stake value of $463.4 million.
12. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 29
One-year Return as of February 28: -28.10%
Roblox Corporation (NYSE:RBLX) is a communication services company based in San Mateo, California. The company develops and operates an online entertainment platform.
A Buy rating was reiterated on Roblox Corporation (NYSE:RBLX) shares on February 16 by analyst Benjamin Black at Deutsche Bank.
Analysts see an upside potential of 15.77% on Roblox Corporation (NYSE:RBLX) shares. The stock has risen by 31.56% year-to-date. Roblox Corporation (NYSE:RBLX) has also started off 2023 exceptionally well, with its daily active users rising by 19% year-over-year in January.
ARK Investment Management was the largest shareholder in Roblox Corporation (NYSE:RBLX) as well, at the end of the fourth quarter, holding 8.5 million shares. The total stake value in the stock, for the 29 hedge funds holding stakes in it, was $1.2 billion.
11. Nu Holdings Ltd. (NYSE:NU)
Number of Hedge Fund Holders: 31
One-year Return as of February 28: -33.73%
Nu Holdings Ltd. (NYSE:NU) is a diversified banking company based in Sao Paulo, Brazil. The company offers digital financial services and technology.
Wolfe Research analyst Darrin Peller holds an Outperform rating on Nu Holdings Ltd. (NYSE:NU) shares as of January 5.
Year-to-date share price gains for Nu Holdings Ltd. (NYSE:NU) stand at 42.98%, and analysts see a further upside on the stock of 27.95%. The company has expanded operations to Mexico and Latin America while increasing its customers from 20.1 million in the first quarter of 2020 to 70.4 million in the third quarter of 2022. With Nu Holdings Ltd. (NYSE:NU) shares trading at historical lows, analysts think now is the time to buy the stock before it peaks again.
Our hedge fund data for the fourth quarter shows 31 hedge funds long Nu Holdings Ltd. (NYSE:NU). Their total stake value was $1.2 billion.
10. Align Technology, Inc. (NASDAQ:ALGN)
Number of Hedge Fund Holders: 34
One-year Return as of February 28: -40.08%
Align Technology, Inc. (NASDAQ:ALGN) is a healthcare company based in Tempe, Arizona. It offers medical devices and Invisalign clear aligners, among more.
Elizabeth Anderson at Evercore ISI holds an Outperform rating on Align Technology, Inc. (NASDAQ:ALGN) shares as of February 2. The analyst also raised her price target on the stock from $230 to $375.
Align Technology, Inc. (NASDAQ:ALGN) has seen year-to-date gains of 46.05% and analysts forecast a further upside potential of 9.38% on the stock. The company is incredibly stable, with a net cash position of $948 million as of the third quarter.
At the end of the fourth quarter, Bares Capital Management was the largest shareholder in Align Technology, Inc. (NASDAQ:ALGN), holding 935,246 shares. In total, 34 hedge funds were long the stock, with a total stake value of $834 million.
Polen Capital, an investment management firm, mentioned Align Technology, Inc. (NASDAQ:ALGN) in its second-quarter 2022 investor letter. Here’s what the firm said:
“Align Technology shares declined significantly during the second quarter when management reported a meaningful deceleration in growth. Management cited a host of challenges, including COVID19 impacts, especially in China with restrictions and lockdowns under their zero-COVID policy, a weaker economic environment, inflationary pressures, supply chain disruptions, and the war in Ukraine, to name a few. Tough comparisons were also a reality— Invisalign case starts in 1Q22 were roughly flat, having lapped the 66% growth from the prior year. It’s not completely surprising that growth is slowing on such tough comparisons, but the company’s shares declined on the news.
By looking at Align’s three-year compound average growth rate (CAGR) to smooth out the ups and downs through COVID, key metrics like Invisalign case shipment, clear aligner revenue, and earnings per share have all grown ~20% during the trailing three years. We think this is quite respectable given the challenges during this period, but the lack of near-term momentum or visibility has not been well received in the current environment. According to our research, Align is the clear market leader, has global scale, a superior product, and still very modest market penetration. While growth may be challenged near term, we remain confident in the long-term growth opportunity.”
9. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 40
One-year Return as of February 28: -47.57%
Cloudflare, Inc. (NYSE:NET) is a cloud services provider. The company is based in San Francisco, California.
An Overweight rating was reiterated on Cloudflare, Inc. (NYSE:NET) shares by Andrew Nowinski at Wells Fargo on February 13. The analyst also raised his price target on the stock from $55 to $75.
Cloudflare, Inc. (NYSE:NET) has held an attractive and consistent gross margin since 2021. In the fourth quarter of 2021, its gross margin was 79%, and in the same quarter in 2022, it had fallen only 2 points to 77%. The company has also strongly retained its net revenue. In the fourth quarter, its net revenue retention rate was 122%. Cloudflare, Inc. (NYSE:NET) shares have gained 39.49% year-to-date despite their one-year decline, showing how the stock is incredibly volatile. Yet analysts still see a 9.67% upside to the shares.
There were 40 hedge funds long Cloudflare, Inc. (NYSE:NET) in the fourth quarter. Their total stake value was $635 million.
Baron Funds, an investment management company, mentioned Cloudflare, Inc. (NYSE:NET) in its third-quarter 2022 investor letter. Here’s what the firm said:
“We continued to build our position in Cloudflare, Inc. (NYSE:NET) during the quarter as the shares declined with the overall software space and the long-term risk/ reward balance became more compelling. The company reported a strong second quarter, with revenue growth accelerating to 54%, as well as better gross and operating margins. Third quarter guidance was also ahead of Wall Street expectations. Given Cloudflare’s proprietary network and massive global scale, its software products have a disruptive price-performance advantage over competitors. As the company introduces new products as well as disruptive packaging/pricing, its unit level economics should continue to improve over time, with the company already well ahead of its long-term gross margin target of 74%, reporting 78.9% for the second quarter. This drives strong cross/upselling activity with customers, reflected in strong net-dollar expansion rates in excess of 125%. Indeed, in the most recent quarters, customers purchasing five or more products reached 81% of the base, six or more products reached 70% of the base, and seven or more products reached 58% of the base. Enterprise penetration continues to be a key long-term driver, with 1,749 customers now spending over $100,000 annually with the company, growing 61% and now accounting for over 60% of total revenue. With approximately 152,000 paying customers at the end of last quarter, large enterprise customers still represent just 1% of total paid customers and thus a material growth opportunity in the coming years. We continue to have high confidence in the company’s ability to innovate at a rapid pace (announced 20 new products or enhancements in September alone), package and bundle with disruptive pricing, and take material share in its large and growing addressable markets.”
8. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 46
One-year Return as of February 28: -24.28%
Spotify Technology S.A. (NYSE:SPOT) is an audio streaming services provider operating globally. The company is based in Luxembourg City, Luxembourg.
Wells Fargo’s Steven Cahall upgraded Spotify Technology S.A. (NYSE:SPOT) shares from Equal Weight to Overweight on February 6. The analyst also raised his price target on the shares from $121 to $180.
Spotify Technology S.A. (NYSE:SPOT) has gained 42% year-to-date, and analysts expect the stock to go even higher, foreseeing an upside potential of 13.8%. The company has a solid business model, which is helped by the fact that today, Spotify Technology S.A. (NYSE:SPOT) is the most dominant global audio streaming platform. In the fourth quarter, the company’s revenue increased by 18% year-over-year.
Citadel Investment Group was the largest shareholder in Spotify Technology S.A. (NYSE:SPOT) at the end of the fourth quarter, holding 1.3 billion shares. In total, 46 hedge funds were long the stock, with a total stake value of $767 million.
Baron Funds, an investment management company, mentioned Spotify Technology S.A. (NYSE:SPOT) in its fourth-quarter 2022 investor letter. Here’s what the firm said:
“Spotify Technology S.A. (NYSE:SPOT) is a leading global digital music service offering on-demand audio streaming through paid premium subscriptions and an ad-supported model. Shares of Spotify were down on weakness in the company’s fourth quarter gross margin guide. We still view Spotify as a long-term winner in music streaming with potential to reach more than one billion active monthly users. Subscriber additions remain strong, price increases seem likely, and cost discipline has become a bigger focus.”
7. Blackstone Inc. (NYSE:BX)
Number of Hedge Fund Holders: 51
One-year Return as of February 28: -29.4%
Blackstone Inc. (NYSE:BX) is an asset management and custody banks company. It is based in New York.
You Fan, an analyst at CICC, initiated coverage of Blackstone Inc. (NYSE:BX) shares on January 12 with an Outperform rating and a $100 price target.
The company is considered well-diversified, managing multiple revenue streams and about $1 trillion in assets under management. Blackstone Inc. (NYSE:BX) shares gained about 19.27% year-to-date despite their one-year decline, showing the stock price’s volatility. Analysts forecast an upside potential of 13.36% on the shares, and consider it an incredibly appealing stock because of its 4.85% dividend yield offering significant passive income.
Blackstone Inc. (NYSE:BX) was found among the 13F holdings of 51 hedge funds in the fourth quarter. Their total stake value was $1.1 billion.
Baron Funds, an investment management company, mentioned Blackstone Inc. (NYSE:BX) in its fourth-quarter 2022 investor letter. Here’s what the firm said:
“Blackstone Inc. (NYSE:BX) was a detractor in the fourth quarter as shares sold off sharply in December after the company announced that it received redemption requests above monthly and quarterly caps in its non-traded REIT fund (BREIT) and would be limiting investor withdrawals. BREIT was one of Blackstone’s fastest-growing flagship retail fund vehicles and hence received outsized investor attention and media coverage. While redemptions themselves aren’t surprising given the stark performance dispersion between BREIT and publicly listed real estate, investors grew concerned that the decision to limit withdrawals would create a cascading effect, eventually force BREIT to liquidate assets and perhaps impair the growth of additional retail fund vehicles. Subsequently, Blackstone increased liquidity through the sale of a JV interest in Las Vegas casino assets at attractive prices and received a $4 billion investment from the University of California. While acknowledging the step back and near-term headwinds, we believe BREIT has plenty of runway to meet redemptions without being forced to liquidate assets
We recently reduced the size of the Fund’s investment in Blackstone Inc. because of our expectation of a slowdown in its growth outlook. We remain bullish, however, about the company’s long-term prospects. Blackstone is the world’s largest alternative asset manager with $1 trillion in assets under management and the largest real estate manager in the world. Blackstone has a premier brand, a global franchise, loyal customers, an exceptional balance sheet, and an excellent management team.
Following a 36% correction in its shares in 2022, we believe Blackstone’s valuation has become more compelling and may look for opportunities to acquire additional shares in the future.”
6. HubSpot, Inc. (NYSE:HUBS)
Number of Hedge Fund Holders: 53
One-year Return as of February 28: -25.38%
HubSpot, Inc. (NYSE:HUBS) is an information technology company offering a cloud-based customer relationship management platform for businesses. The company is based in Cambridge, Massachusetts.
Jefferies holds a Buy rating on HubSpot, Inc. (NYSE:HUBS) shares as of February 24. The firm also raised its price target on the stock from $400 to $450.
HubSpot, Inc. (NYSE:HUBS) saw a revenue increase of 27% in the fourth quarter, bringing the company’s revenue up to $470 million. The company diversified its income in this quarter, with about 45% of its revenue coming from international markets. This international revenue saw an increase of 23% year-over-year. HubSpot, Inc. (NYSE:HUBS) shares have risen by about 33.45% year-to-date, and analysts foresee a further upside potential of 16.28% on the shares.
Our hedge fund data for the fourth quarter shows 53 funds long HubSpot, Inc. (NYSE:HUBS), with a total stake value of $2.2 billion.
Artisan Partners, an investment management company, mentioned HubSpot, Inc. (NYSE:HUBS) in its second-quarter 2022 investor letter. Here’s what the firm said:
“Demand for HubSpot, Inc. (NYSE:HUBS)’s customer relationship management SaaS platform has been robust as companies continue to make front office investments. Despite positive fundamental momentum, shares traded lower during Q2 as investors rotated out of high-growth stocks with elevated multiples. Furthermore, the market has not been favoring solidly profitable businesses that are investing heavily to develop new products and drive new customer additions. Meanwhile, we are monitoring the company’s exposure to small-and-medium-sized businesses given the potential for a recession over the near-to-intermediate term. We recognize a downturn would likely have an impact on HubSpot’s growth metrics, though we believe its mission critical cloud tools— marketing and sales force automation, customer service and website content management—would prove relatively resilient. In addition, the company has moved toward serving somewhat larger customers in recent years, which should offer further protection. For these reasons, and with shares trading at an attractive discount to our PMV estimate, we added modestly to our position.”
Like Salesforce.com, inc. (NYSE:CRM), Roblox Corporation (NYSE:RBLX), and Advanced Micro Devices, Inc. (NASDAQ:AMD), HubSpot, Inc. (NYSE:HUBS) is a stock that many elite hedge funds have been eyeing recently.
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Disclosure: None. 15 Best Short-Term Stocks To Buy Now is originally published on Insider Monkey.
