If you're wondering which S&P 500 stocks the best mutual funds are buying — you might be surprised by how selective the list is.
Just five stocks — including Nvidia, Alphabet, Tesla, Meta Platforms and Eli Lilly — lured more than $2 billion in combined new investments from the best mutual funds based on this month's list of new buys.
Top funds' massive bet on this handful of stocks in the S&P 500 isn't just head-turning in terms of sheer dollar value. It's also important to note that investments in these stocks accounts for 49% — or nearly half — of all the new investment dollars committed by the funds in the month.
That's some major conviction.
Big Bets On Slipping S&P 500 Tech
Top funds seemed to take advantage of some weakness in the S&P 500 tech sector in August.
The Technology Select Sector SPDR Fund shed 1.5% in August — as the market took a breather from many of the giants that have been pushing the S&P 500 up this year.
Top funds, for instance, plowed $296 million of new money into Meta Platforms in August as the stock fell 7.1% during the month. Big investors like that the company is putting more of its attention on social media again and focusing less on virtual reality. Analysts think the company will make $13.34 a share this year — that's up more than 55% from last year.
Shares of Tesla also attracted new investment despite slipping in August. Top funds piled $310 million into the EV maker's stock, which fell more than 3% during the month. Investors are hoping this year's expected 15% drop in earnings is just a blip. Analysts are calling for the company's profit to rise nearly 43% in 2024.
Finding Opportunities With Tech Gainers, Too
It's important to note, though, that some S&P 500 tech giants gained too. And top funds were on the ready to add big positions in the winners.
AI giant Nvidia drew $542 million in new investment from top funds in the month. That makes it one of funds' top bets. And leading funds were buying the stock even though the shares gained 5.6% during the month. The stock carries a perfect Relative Strength Rating of 99 — meaning it's outperforming nearly all stocks.
Another big bet for top funds was another tech winner in the month: Alphabet. Top funds poured $673 million into the search giant's two classes of stock. The primary shares of the stock gained roughly 3% in the month. Analysts think the company's profit this year will rise more than 23%.
Smaller Tech Plays Draw Money, Too
Giant S&P 500 tech stocks tend to pull in the most money due to sheer size. But some smaller tech plays pulled new investments, too.
Semiconductor firm Broadcom, software maker Adobe and networker Cisco Systems hauled in $174 million, $123 million and $107 million, respectively, from top funds during the month.
All these tech plays saw their shares rise during the month. Cisco alone gained more than 10%. Analysts think the maker of computer networking gear will boost its profit this fiscal year by 4.3%.
Top Funds' Big Bets Outside Of S&P 500 Tech
Health care firm Eli Lilly continues to pull in new investment along with the giant techs.
Top funds put $192 million of fresh cash to work in the company's stock. Eli Lilly is turning into a leader in the drug industry thanks to its treatments for neurodegenerative diseases and weight loss. Eli Lilly is ranked No. 1 in the IBD Medical-Diversified group. Eli Lilly's shares gained more than 20% in August. The company's profit is seen rising 22% this year.
TopBuild, a provider of building materials like insulation, is another nontech stock getting attention from top funds. Investors poured $101 million into the stock in August. BLD shares gained nearly 6% in the month. For this year, analysts expect profit to rise more than 8%.
So while the S&P 500 tumbled in August, top funds still kept busy finding stocks to profit from once the bull market resumes.
Top Funds' Top Buys In August
| Company | Symbol | Amt invested (mil) | Comp Rating | EPS Rating | RS Rating | Industry group RS | SMR Rating |
|---|---|---|---|---|---|---|---|
| Nvidia | $542.1 | 99 | 93 | 99 | A- | A | |
| Alphabet | 359.09 | 97 | 90 | 91 | A+ | A | |
| Alphabet C | 314.05 | 97 | 90 | 91 | A+ | A | |
| Tesla | 310.45 | 96 | 94 | 89 | A- | A | |
| Meta Platforms | 296.99 | 99 | 87 | 97 | A+ | B | |
| Eli Lilly | 192.05 | 98 | 87 | 97 | A+ | A |
