We recently compiled a list of the 10 Best Fortune 500 Stocks To Buy Now. In this article, we are going to take a look at where Booking Holdings Inc. (NASDAQ:BKNG) stands against the other Fortune 500 stocks.
Should Investors Be Overly Cautious?
The aggregate revenue of the Fortune 500 companies in 2023 reached a record $41 trillion, up 0.1% year-over-year. Profits also rose 2% after declining earlier in 2022. The US took the lead from Greater China with the most companies on the Fortune 500 list for the first time since 2018. It has 139 companies as of August this year, an increase of 3 from 2023, while Greater China has 133 companies, down 9 from last year.
The financial sector, including banks and insurance companies, led all industries with the most Fortune 500 companies. Collectively tech giants brought in $282 billion in net income, up from $233 billion the previous year. Currently, 13 companies are making their Fortune 500 debut, reflecting the world’s fascination with AI and weight-loss drugs.
While the S&P 500 has recovered most of its losses, the rebound is being led by sectors like real estate, utilities, and consumer staples rather than major tech companies. Investors are shifting focus due to concerns over economic growth and expectations of Fed rate cuts.
Still, it seems like investors think that while investment portfolios should be diversified given the current economic conditions, this sentiment does not imply divesting from tech stocks, which of course contribute greatly to the aggregate Fortune 500 revenue. Jason Draho, UBS Global Wealth Management head of Americas Asset Allocation, emphasized this sentiment and we covered this earlier in our article about the 10 Best Tech Stocks To Buy Right Now Under $10:
“…investors should view potential dips in tech stocks as good long-term buying opportunities, as 10% corrections are historically good entry points in tech… He thinks that this market volatility is acyclical. The recent sell-off in the tech sector was not primarily due to economic concerns but rather to sector-specific issues. Despite this, tech giants will continue to benefit from the AI CapEx investment story. While there may be short-term challenges, the long-term outlook for these companies remains positive… Draho also cautioned against over-concentrating portfolios in the sector. He suggested diversifying exposure by investing in sector leaders as well as companies likely to benefit from tech disruption as a way to manage potential downside risks in tech stocks.”
Just last week, Dan Greenhaus, Solus Alternative Asset Management’s chief strategist discussed markets, and the rebound’s staying power, all while suggesting that predicting the Fed’s next move had become more difficult.
He discussed the ongoing recession concerns, particularly after negative comments from financial representatives. Despite these worries, he believes the US consumer is performing well, the economy is stable, and corporate profits are exceeding expectations. This context suggests that the recent sell-off in certain AI stocks was followed by a justified rebound, as issues appear limited to recent trends.
The S&P 500 is currently facing resistance around the 5,600 level, a key point of concern for investors. Dan Greenhaus noted that the recent inversion of the yield curve raised anxiety but the 2-10-year curve is slightly positive. Despite these worries, credit spreads for investment-grade bonds remain stable, and overall cross-asset indicators suggest a stable market environment.
Recently, discussions around potential interest rate changes have gained momentum, particularly following insights from Goldman Sachs CEO David Solomon. He indicated a likely 25 basis point cut by the Federal Reserve, although he also acknowledged the possibility of a 50 basis point reduction. Greenhaus believes the Fed will opt for a 25 basis point cut, marking the start of a series of reductions. This perspective is supported by the normalization of inflation and a slowing economy.
According to Greenhaus, the cyclical components of the stock market appear to be performing well, indicating that the overall economic fundamentals remain robust, and there is no concrete case for any specific rate cut scenario. As Fortune 500 companies continue to generate record revenues and profits as well, investor sentiments should not be shifting drastically. With that being said, we’re here with a list of 10 best Fortune 500 stocks to buy now.
Methodology
We first looked at the list of Fortune 500 companies, as of 2024. We then selected 10 stocks from these Fortune 500 companies that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A fast-paced travel agent making a bookings for a family vacation package.
Booking Holdings Inc. (NASDAQ:BKNG)
Market Capitalization as of September 14: $131.63 billion
Number of Hedge Fund Holders: 96
Booking Holdings Inc. (NASDAQ:BKNG) is a leading online travel agency that connects travelers with a range of accommodation options, transportation services, activities, and other travel-related services. Through brands like Booking.com, Kayak, and OpenTable, it makes it easy for travelers to plan and book their trips online, spanning over 220 countries.
In Q2 2024, travelers booked 287 million room nights across the company’s platforms, increasing 7.27% year-over-year improvement in revenue, while repeat travelers are growing quickly. Alternative accommodation listings rose 11% from last year, boosting bookings. The Genius program boosts direct bookings, with nearly 30% of travelers in higher tiers. Merchant bookings grew to 58% of total bookings, while flight bookings increased 28% year-over-year.
Total revenues of $5.86 billion were generated in Q2, a 7.27%% increase year-over-year. For the full year, management expects gross bookings growth to exceed 6%, below previous forecasts due to lower flight prices, but revenue growth is projected over 7%, higher than before.
Innovations such as GenAI-assisted trip planners and enhanced mobile applications have streamlined the booking process and enriched user experiences. The company is well-positioned for growth as more and more tourists want to plan trips online. It is held by 96 hedge funds. The biggest stake is valued at $1,605,652,190 by Fisher Asset Management.
Wedgewood Partners stated the following regarding Booking Holdings Inc. (NASDAQ:BKNG) in its Q2 2024 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) contributed to performance as travel spending across the U.S. and Europe remains quite healthy, whereas the Company took share in alternative accommodations, and looks set to expand margins after a few years of reinvestment. The Company has also been aggressively reducing its share count at reasonably attractive valuation multiples. Booking should be able to compound earnings at an attractive, double-digit rate for the next few years given these various initiatives.”
Overall BKNG ranks 9th on our list of the best Fortune 500 stocks to buy. While we acknowledge the potential of BKNG as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BKNG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.