Hedge funds are about to pile into this stock. You can get in before them

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Today’s issue in preview:

• Hedge funds are about to pile into this stock. You can get in before them

• This industry is poised for massive growth. These stocks will benefit.

• America’s power grid needs a massive upgrade. These stocks will benefit from a surge of investment

• Learn our Top Themes to buy now

Hedge funds are about to pile into this stock. You can get in before them

Credit: Kenneth Cheung

Now that the stock is down 24% in the past year, it’s time to add Facebook parent Meta (META) to our list of “beaten up” tech leaders due for a rebound.

On July 21, I looked at beaten-up Netflix (NFLX) shares and came away thinking the stock was about to enjoy a big “relief” rally.

My bullish stance wasn’t based on what I know about Netflix’s business. It was based on what I know about what other people know about the business.

Netflix is a growing, profitable business trading for around 22 times earnings. Plus, with a market cap of $294 billion, it is an enormous company. Thus, Netflix currently has a rare set of qualities that large money managers are constantly looking for: It’s a great business trading for a reasonable price, and very importantly, it is large enough for them to buy.

This combination of qualities is rare in the stock market.

The large investors I’m talking about manage more than $20 billion each… sometimes more than $50 billion. When you manage that much money, you cannot buy small stocks like you can when you are managing “just” $1 billion.

For a winning stock position to make a meaningful impact on your fund’s results, you need it to represent at least 3% of your fund’s assets.

Most good managers would rather put 4%-8% of their fund into a stock idea they believe is truly great. Some will allocate 10%-15% of a fund to an idea.

If you’re looking to put 5% of $10 billion to work in a great idea, that means you are looking to place $500 million. If you are looking to put 5% of $30 billion to work in a great idea, that means you are looking to place $1.5 billion.

This means that, in many cases, large investment funds have to say no to a compelling stock investment because the amount of money they are looking to allocate exceeds the company’s market cap. Or, the amount of money they are looking to place would create so much buying pressure relative to the company’s market cap that it would drive the stock price way too high, preventing them from getting a good price.

Unfortunately for big investors, there simply aren’t many high-quality businesses trading at reasonable prices that also have the massive liquidity they need to invest. Think of it like trying to park an 18-wheeler in a busy neighborhood. There aren’t many spots available.

If you look at the holdings of giant and well-known investors like David Tepper, Bill Ackman, Coatue Management, and Tiger Global, you see what I mean. They are all buying and selling the same huge companies. They are all trying to be excellent at buying and selling stocks like Google (GOOG), Nvidia (NVDA), and Netflix (NFLX). Fewer than 50 companies qualify here.

This means that when a high-quality firm like Netflix sells off due to a serious but solvable problem or because it needs to work off a high valuation, you can bet that mega hedge funds looking for business quality, bargain prices, and massive liquidity will step in to buy it. They simply don’t have many options.

On Thursday, Facebook parent Meta dropped 8% after reporting earnings, revenue, and planned capital expenditure figures that disappointed Wall Street. This large decline took the stock down 24% over the past year.

Given Meta’s horrible short-term performance, it’s easy to forget that it has enormous positives working in its favor.

Meta owns Facebook, Instagram, WhatsApp, Messenger, and Threads. Together, they reach roughly 3.6 billion daily users, giving advertisers an unmatched audience.

The profits the business generates from this position should be greatly enhanced in the future by AI’s ability to deliver targeted advertising, more personalized content, and improved data analytics.

The company is growing revenue at 15%+ per year and trades for about 20 times earnings.

Sure, there is a bear case to be made for the stock, just like any stock. However, Meta has enough admirers in the money management community that the stock should see enormous buying support at its current price of around $544 per share.

So, keep an eye on Meta and its current range. It’s a high-quality, growing business trading at a very reasonable price. Big money managers rarely see the like. When they do, they buy it. And I bet four months from now, we will be hearing about how big hedge funds loaded up on the stock back in July.

How to invest in an industry poised for massive growth

Credit: gorodenkoff

“An ounce of prevention is worth a pound of cure.”

A famous proverb that can save your life through early detection and treatment of diseases and disorders.

It’s also the root idea of an investment megatrend that can make you a lot of money over the coming years.

It’s the idea powering the Healthcare Diagnostics boom.

On June 12, we detailed how the Healthcare Diagnostics theme will likely prove to be one of the most lucrative ways to invest in the Boomer health care megatrend.

The giant Baby Boomer demographic is entering the phase of life when healthcare spending skyrockets. For many boomers, a typical month involves going to see at least one doctor to have something looked at, removed, or treated. This means many healthcare businesses are experiencing huge demand now – and will for at least the next decade.

This is very bullish for the diagnostics business.

Over the past 20 years, preventive healthcare diagnostics have improved dramatically due to advances in genomics, imaging technology, and data analytics. Genetic testing has become faster and less expensive, allowing earlier identification of disease risks. High-resolution imaging and improved laboratory testing can detect conditions such as cancer, heart disease, and diabetes at much earlier stages.

Wearable devices and remote monitoring tools continuously track vital signs and health trends, enabling early intervention. Electronic health records and artificial intelligence help clinicians identify risk patterns and personalize screening recommendations.

Together, these innovations are shifting healthcare from reactive illness care to predictive, preventive, and proactive disease management before serious symptoms develop. The shift from reactive treatment to early detection is still in its early stages, but the numbers already reflect its momentum.

The U.S. healthcare diagnostics market was valued at $35.7 billion in 2024 and is projected to reach nearly $60 billion by 2030, growing at an annual rate of over 9%. Globally, clinical diagnostics is on track to hit $170 billion by the end of the decade. North America commands nearly half of that market.

The diagnostics market isn’t just growing. It’s being rebuilt from the ground up around a new clinical philosophy powered by blazing technological progress: detect early, intervene early, prevent the crisis entirely. This industry’s potential to drive growth, deliver societal benefits, and produce big stock market winners is massive.

Over the past month, the market has enthusiastically confirmed the validity of this bullish position.

• Leading genomic testing and diagnostics firm Illumina (ILMN) just reached a new one-year high.

• Leading cancer testing and diagnostics firm Veracyte (VCYT) has reached a new all-time high.

• Leading consumer-facing testing giants Quest Diagnostics (DGX) and Labcorp (LH) recently reached new all-time highs.

• Cancer detection firm NeoGenomics (NEO) reached an all-time high yesterday.

Healthcare is in the middle of a historic revolution. For generations, the system was built to treat the sick. It is now being rebuilt to detect and treat disease before it makes people sick.

The companies above are providing the equipment and services at the center of what may be the most durable growth theme in healthcare investing over the next decade. Expect many more research notes and actionable ideas in Healthcare Diagnostics soon.

America’s power grid needs a massive upgrade. These stocks will benefit from a surge of investment

Credit: very good

Over the past six weeks, virtually every stock related to the “AI infrastructure” boom has suffered a large correction.

One of our highest-conviction long-term ideas – the Power Grid Upgrade theme – was not spared the whipping.

Theme leaders Quanta Services (PWR), Preformed Line Products (PLPC), Powell Industries (POWL), and nVent (NVT) took large hits. The power grid focused First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Fund (GRID) suffered a 13.5% decline.

This makes it a good time to look at the Power Grid Upgrade theme from a “trend health” perspective.

First, the bull case for the Power Grid Upgrade:

Given AI’s enormous promise, large tech firms like Google (GOOG), Microsoft (MSFT), and Amazon (AMZN) are investing trillions of dollars to build the best AI models and infrastructure. Much of this money is being spent on massive data centers.

All that AI infrastructure is poised to consume huge amounts of electricity. Goldman Sachs forecasts global data center power demand will climb 50% by 2027 and as much as 165% by the end of the decade.

This is creating a big investment opportunity.

The U.S. power grid is often called the world’s largest machine. It’s a giant network of power stations, transmission lines, substations, and underground wires. Most people barely know it’s there or how it works, but without this big machine, your lights don’t turn on, there’s no Netflix, and your iPhone doesn’t charge.

Industry experts say the power grid is aging and creaking under the strain of increased electricity demand. The American Society of Civil Engineers (ASCE) gave the energy sector a D+ in its 2025 Infrastructure Report Card, citing concerns about rising energy demand, aging infrastructure, and a lack of transmission capacity.

Soaring electricity demand… a grid badly in need of an upgrade… AI supremacy on the line… trillion of dollars of economic output on the line…

This is a recipe for a bull market in companies that build, repair, and upgrade our power grid. Investment plans for 51 investor-owned utilities total an estimated $1.4 trillion over the next five years, according to PowerLines, an advocacy group. We are talking about large, relentless flows of money into this industry.

Over the past three years, this Power Grid Upgrade theme has generated over a dozen big stock market winners like Quanta Services (up 227%), Prysmian (PRYMY, up 261%) and Powell Industries (up 954%).

With this in mind, let’s see what the recent selloff looks like in the context of the long-term trend.

Below is a four-year chart of GRID.

As you can see, GRID broke out to new highs in early 2024. Since then, it has enjoyed a bull market series of “higher highs and higher lows” which took it from $105 per share to $197 per share in May.

Since reaching that high, GRID has corrected into the $175 area. This correction has been painful for investors, but it has occurred well within the confines of the long-term uptrend.

Big tech is spending trillions of dollars on the AI infrastructure buildout. AI supremacy versus China is on the line. Plus, the Made in America megatrend I’ve been pounding the table on will require huge amounts of reliable electric power.

Given the tremendous amount of money and geopolitical power at stake here, the Power Grid Upgrade theme is going to see huge money flows over the next five years. With this bullish backdrop in mind, I believe top Power Grid Upgrade stocks will be higher two years from now than where they are now. The recent selloff will prove to be a natural, healthy correction in a long-term bull market.

Market Notes

• Our Agent Supernova recommendation of Cloudflare (NET) continues to be a winner. The stock advanced 2.5% this morning, reaching a new all-time high.

• Gaming platform Roblox (RBLX) declined 26% this morning to reach a new one-year low after it issued a disappointing earnings report.

• Data storage and software giant Snowflake (SNOW) reached a new all-time high today.

• Oil shipping firm International Seaways (INSW) reached a new high today due to rising demand as a result of the Iran War.

• Premium hotel operator DiamondRock Hospitality (DRH) reached a new all-time high today.

Regards,

Brian Hunt
Editor, Money & Megatrends

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