We recently compiled a list of 8 Most Active US Stocks To Buy Now. In this article, we will look at where Tesla Inc. (NASDAQ:TSLA) ranks among the most active US stocks to buy now.
Market Will Likely Remain Resilient
Amid economic uncertainty and upcoming elections, analysts are adopting a cautious stance due to market volatility driven by mixed investor sentiments. It’s being noted that while the Fed’s easing cycle could yield positive market outcomes in the coming months, immediate stock performance remains uncertain as many investors prefer to wait until after the elections to commit capital.
Vance Howard, CEO of Howard Capital Management, is of a similar view, as he is predicting a significant rate cut in early 2025 due to declining inflation. He emphasized that markets typically rise following initial rate cuts and advised investors to remain optimistic despite current market fluctuations. Howard recommended focusing on resilient sectors like utilities, real estate, and technology, while also considering financials as likely beneficiaries of future rate cuts as we approach 2025. We actually covered his opinion in more detail in our 8 Best Inexpensive Stocks To Invest In Now article, here’s an excerpt from it:
“Howard pointed out that historically, after the first rate cut, markets tend to rise, with a perfect record of being higher 7 out of 7 times following such cuts. He also noted that if the S&P 500 has already gained 10% in the first half of the year, there is an 83% chance of continued upward movement in the second half. Therefore, he advised investors to remain optimistic and not be overly distracted by current market noise.”
Liz Young Thomas, SoFi head of investment strategy, joined ‘Squawk Box’ at CNBC on September 30 and shared her insights regarding the market’s trajectory as it approaches an easing cycle. She acknowledged that while there has been a significant run-up leading to this cycle, much of the substantial gains may have already been realized.
However, she noted that this does not necessarily mean the market will slow down immediately. Historically, after the first rate cut, markets tend to remain flat or slightly up in the following 30 to 60 days. 3 months post-cut, the market evaluates whether these cuts were necessary due to cooling economic conditions or if they were merely opportunistic adjustments.
Young highlighted several positive factors contributing to the current market rally. Despite a slight pullback in technology stocks, she observed that many other stocks are performing well, with 80% of the S&P 500 trading above their 200-day moving averages. This indicates a strong internal market dynamic. Additionally, optimism surrounding potential stimulus measures from China adds further support to market sentiment.
When discussing valuation concerns, Young agreed that while US market multiples are relatively high, hovering around 21 to 22, this is not unprecedented when compared to historical standards. She pointed out that current valuations are above both the 5-year and 10-year averages but not at overbought levels. Young referenced Warren Buffett’s long-term investment philosophy, emphasizing that he does not focus on timing market multiples but rather on fundamental growth.
Young expressed a desire for the market to shift towards trading based on fundamentals rather than multiple expansions. She noted that while earnings stability is crucial, there are signs of strength in sectors outside of technology, particularly in industrial stocks. However, financials have shown mixed signals.
As for identifying sectors with potential for faster earnings growth, Young emphasized the importance of thorough research and analysis rather than relying solely on top-down market movements. She identified healthcare, especially biotech and pharmaceuticals, as a promising area for growth. Healthcare tends to perform well in environments characterized by a steepening yield curve, which has been observed recently.
Moreover, she cautioned against assuming certainty in market outcomes. With prevailing confidence in a soft landing scenario from both the market and the Fed, she advised investors to remain vigilant and consider protective strategies. She suggested exploring opportunities across the Treasury curve, particularly in shorter-duration bonds, as a hedge against potential faster-than-expected rate cuts by the Fed.
Young’s insights propose that by focusing on sectors with strong fundamentals and remaining adaptable to changing conditions, investors can position themselves for potential gains while being mindful of risks associated with high valuations and economic uncertainties. With that said, we’re here with a list of the 8 most active US stocks to buy now.
Methodology
We sifted through Yahoo Finance’s list of the most active US stocks that are experiencing high trading volumes. We looked at the top 15 US stocks to find the ones that were the most popular among elite hedge funds. We then narrowed down our list to the 10 stocks with high trading volumes and those that were the most popular among hedge funds. The stocks are ranked in ascending order of their trading volumes, as of September 30.
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).
Tesla Inc. (NASDAQ:TSLA)
Volume: 70.988 million
Average Volume (3-Month): 96.743 million
Number of Hedge Fund Holders: 85
Tesla Inc. (NASDAQ:TSLA) is an automotive and clean energy company known for its innovative and high-performance vehicles. It primarily focuses on electric cars, but it also produces solar panels and energy storage systems. It is a pioneer in the EV industry and has significantly contributed to the shift towards sustainable transportation. In 2023, 100% of its revenue was generated from sustainable products and services
The company’s FSD v12 vehicle, powered entirely by AI, has accumulated 300 billion miles of real-world driving experience. Beyond self-driving and AI training chips, its humanoid robot, Tesla Bot, has garnered significant attention for its potential applications.
Its home charging solution, Wall Connector, complements its extensive Supercharger network. By opening its Supercharger network to other EV companies and introducing the North American Charging Standard (NACS), Tesla Inc. (NASDAQ:TSLA) is maximizing the utilization of its charging infrastructure and solidifying its position in the EV ecosystem.
Revenue improved 2.3% year-over-year in Q2 2024. Automotive revenue increased 14% sequentially. Energy storage revenue doubled to reach $3 billion. Despite a slowdown in global EV sales, the company produced and delivered over 410,000 and 444,000 units, respectively, contributing 84% to total revenue. The company aims to ramp up production to 3 million vehicles by 2025.
The company’s expansion into the robotaxi market offers an exciting investment opportunity. The unveiling event is on October 10. As the world transitions to sustainable energy and EVs, its focus on innovation and technology positions it well to capitalize on the latest trends.
ClearBridge Small Cap Value Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“The strength in the stock market adds significantly to that enormous transfer of wealth, which one could argue is good for shareholders. But is it causal? That is, did the stock market do well because CEOs got large stock grants? Are the CEOs just the lucky recipients of a windfall when the market goes up and their employees perform well? Or do they require huge grants to do their jobs that no one else could possibly do as effectively?
Tesla, Inc. (NASDAQ:TSLA), and most of its shareholders, certainly think the latter is true. In 2018, Tesla’s board of directors crafted a pay package for CEO Elon Musk that would award him 12 tranches of 10-year, fixed-price options on 1% of company stock for every $50 billion in market cap the stock added. In total, the options would be for 304 million shares of the company at $23.34 a share. He would receive no other compensation, until or unless the board decided otherwise. Shareholders approved that pay package, and the stock added all that market cap and more, giving Musk the right to buy 10% of the company for $50 billion less than it was worth, adding to his existing 13% stake. Minority shareholders sued, and a court sided with them and expunged the package in January 2024. “The process leading to the approval of Musk’s compensation plan was deeply flawed,” ruled Judge Kathaleen McCormik of the Delaware Court of Chancery as part of a 200-page decision. It seemed like a long-awaited check on excessive compensation to one individual for the achievements of an entire company….” (Click here to read the full article)
Overall TSLA ranks 5th on our list of most active US stocks to buy now. While we acknowledge the growth potential of TSLA, 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 TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.