The best Reddit stocks seem to have scattered to the winds.
It’s been over two years since the meme stock frenzy engulfed the stock market. It never ceases to amaze me how r/WallStreetBets, took an afterthought of a stock like GameStop and made it one of the best Reddit stocks of the year.
Despite their popularity, even the best Reddit stocks have gotten a bad rap. Many in the investing punditry believe the platform is essentially a powder keg for users who continue pushing low-quality stocks.
However, you’ll find some of the best Reddit stocks boasting robust underlying businesses. A recent survey showed that more than 50% of the institutional investors polled use Reddit to make investment decisions.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) is probably one of the most powerful tech stocks commanding a market capitalization of over $1.2 trillion, which is more than the gross domestic product of roughly 92% of the countries in the world.
While it’s rare to think of it as one of the best Reddit stocks, Alphabet stock has hit a rough patch lately, with bad news overshadowing its usual shine in the tech world.
Some of the biggest institutional investors have been selling GOOG stock in droves, following concerns over rising inflationary pressures weighing down its advertising business and the success of its rival Microsoft’s viral chatbot, ChatGPT.
Though these concerns are valid, the firm’s long-term positioning remains firmly intact. Google commands nearly 93% of the search engine market worldwide, while YouTube is now among the world’s top two most visited social sites.
Google Cloud has been quickly garnering market share, commanding 10% of the global cloud market. With the stock trading at multi-year lows, it’s probably the right time to scoop up shares of this popular Reddit stock.
Walt Disney (DIS)
Entertainment giant Walt Disney (NYSE:DIS) has taken its shareholders on a wild ride in the past few years, shedding over 12% of its value in the past three years.
The stock has been down over 28.5% in the past year, with the stock market losing confidence in its growth strategy. The good news is that its popular former CEO, Bob Iger, is back at the helm and will move quickly to control costs and invest in areas to generate strong shareholder gains.
Under his leadership, DIS stock generated market-beating returns of over 600% from 2005 to 2019.
Disney’s brands are seeing robust increases in revenues across its core businesses, which should help offset losses from its streaming divisions. Iger is targeting $5.5 billion in savings this year to stop the bleeding from streaming and other non-performing businesses. Also, the management has big plans for ESPN, which looks to make it a hub for all sports streaming.
AirBnB (NASDAQ:ABNB) has been a major disruptor in the travel sector, reshaping the home-sharing marketplace since 2008. Since then, its business has grown rapidly, growing its top line by more than 20% in the past five years.
It wrapped up 2022 with aplomb, processing $63.2 billion in gross booking value, up 30% from 2021, facilitating roughly 400 million nights through its platform.
It had 6.6 million global active listings, over 900,000 more since the start of the year, excluding China. Overall, its sales shot up 40% to $8.4 billion, while its net income rose to $1.9 billion in 2022, an improvement of over 630% from 2021.
As we advance, I expect the company to continue gaining market share from key markets, such as short- and long-term rentals. Improving expense management should continue to lead to healthy margin expansion. EBITA growth is at an incredible 217% on a year-over-year basis for the firm, a tremendous feat in the current economic environment.
Visa (NYSE:V) is one of the leading payment processing giants among the few stocks trading in the green last year. It shed over a quarter of its value from July 2021 to September 2022, and V stock has rallied more than 14% since then.
Unlike many enterprises in the sector, Visa benefitted from higher inflation levels over the past year. Naturally, higher inflation rates lead to higher transaction values, leading to greater revenues and margins for Visa.
This is evidenced in its year-over-year revenue and EBITDA growth of 18.5% and 19.3%, significantly higher than its 5-year averages. It has maintained its mind-boggling margins of roughly 98%, which should keep high profits rolling in even as inflation cools down.
Chinese tech stocks have been ticking upward since the beginning of the year as the economy effectively recovers from the crippling effects of COVID-19.
Also, the sector is breathing a sigh of relief as it moves from the crosshairs of the Chinese authorities. One of the top beneficiaries of this reversal is Alibaba (NYSE:BABA), which has had a torrid outing in the stock market over the past few years.
From October last year, the stock is up by double-digit margins, reaching a peak of $120 per share, in line with its 52-week high price of $125.8.
The firm recently reported its fourth-quarter results, which blew past analyst estimates in its most recent quarter. Its cloud revenues were up 3% in the fourth quarter, despite macro headwinds facing the global economy. Perhaps the quarter’s highlight was a massive increase in its free cash flow figure to $11.8 billion.
Another positive for the stock is the nod of approval from Michael Burry, who loaded up on the stock in the fourth quarter. Despite being pessimistic about the tech and crypto sectors in the past year, the maverick investor is bullish on BABA’s prospects.
Oracle (NYSE:ORCL) is another top tech giant known for enterprise software products and services.
It’s been an excellent dividend stock over the years, growing its payouts by eight consecutive years, yielding over 1.4%. With a payout ratio of just 26%, it has massive potential to continue growing its payouts.
However, that seems unlikely, considering how it’s pumping billions into growing its cloud business. In the past quarter alone, it spent a whopping $2.4 billion to strengthen its cloud capabilities. These efforts have already started bearing fruit and will continue to grow its growth runway ahead.
In its second quarter of fiscal 2023, it posted 25% growth in its top-line results, including a major bump in its sales base from its acquisition of health-tech business Cerner. Even if we exclude the effects of Cerner, a relatively strong 9% growth rate remains. This is mainly because of its cloud business’s robust performance.
Sales from its cloud services, licensing support, and Cerner shot up by 20% during the quarter to a whopping $8.6 billion. Expanding its cloud offerings should help boost company margins past the lofty numbers it is already generating.
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI) has been a fintech business among the top AI stocks over the past few years.
It operates a product-based approach offering a wide variety of customer services, ranging from mortgages, student loan refinancing, and even wealth management. It has effectively leveraged its AI-based technology to create a robust underwriting model offering lower rates and greater client savings potential.
It wrapped up last year, generating a spectacular $30 million positive GAAP net income with a remarkable 11% margin. Also, its membership base grew 21% from last year to 5.2 million.
With the solid growth in high-quality deposits in recent quarters, it expects its 2023 revenues to fall in the $1.93 billion to $2 billion range, ahead of consensus estimates.
On the date of publication, Muslim 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.
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