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Fund Managers Are Going Big on These Infrastructure Stocks

At a time when inflation around the world is at its multi-year high, smart behemoth investors are looking to invest in businesses that are inflation-proof and can withstand inflationary pressures, without seeing an impact on their profitability. In this article, we will talk about three such companies — Enphase Energy, Inc. (ENPH), American Tower Corporation (AMT), and Western Digital Corp. (WDC) — that are in the good books of fund managers.

According to The Wall Street Journal, big investment companies like KKR & Co. Inc. (KKR) are looking to invest in infrastructure and utility stocks, especially with exposure in solar, power plants, telecom towers, data centers, and clean energy.

Against this backdrop, let’s take a look at the aforementioned stocks in the infrastructure and utility space, which top hedge fund managers are finding appealing.

Enphase Energy (NASDAQ: ENPH)  

Based in California, Enphase Energy, Inc. is an energy technology company that provides energy management technology and home energy solutions for the solar photovoltaic industry worldwide. 

With the current market capitalization of $40 billion, the solar company has gained 80% in the past year, handsomely beating the benchmark indices. It is now trading at its all-time high of $293 levels.

It is, therefore, not surprising that smart hedge fund and investment managers are bulking up on ENPH shares.

TipRanks’ Hedge Fund Trading Activity tool shows that the confidence in ENPH is currently Very Positive, as some of the top hedge funds that were active in the last quarter increased their cumulative holdings by 1.1 million shares. 

Turning to Wall Street, the analyst consensus is also optimistic about Enphase Energy, with a Strong Buy rating based on 12 Buys and three Holds. Enphase Energy’s average price target of $276.80 indicates downside potential of 5.6%. 

American Tower (NYSE: AMT)

Headquartered in Boston, American Tower Corporation is one of the largest global real estate investment trusts (REIT). It is a leading independent owner and operator of wireless and broadcast communications infrastructure in several countries.

American Tower has a market capitalization of $130 billion. Its stock has gained 22% in the past six months. 

In July, the company posted upbeat Q2 results and rewarded investors with attractive dividend growth. 

With a bullish stance on the company’s future, American Tower’s CEO Tom Bartlett said, “We’re focused on leveraging our global scale to drive sustainable organic growth, adding attractive assets through disciplined capital allocation and delivering incremental stockholder value, all while playing a positive role in the communities we serve.” 

Hedge funds, too, are bullish on AMT stock. TipRanks data indicates hedge funds increased holdings in American Tower by 2.5 million shares in the last quarter, indicating a Very Positive hedge fund confidence signal

Further, AMT scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.  

Western Digital (NASDAQ: WDC)

Western Digital Corp. engages in the development, manufacture, market, and sale of data storage devices and solutions globally. It operates through the following product categories: client devices, data center devices and solutions, and client solutions. 

With its current market capitalization of $15 billion, the stock has lost 13% in the past year. 

In early August, Western Digital reported mixed fiscal Q4 results, beating earnings but missing revenue expectations. 

Despite its mixed results, Western Digital CEO David Goeckeler remains optimistic. He said, “The combination of our innovation engine and the multiple channels to deliver our products to the market puts Western Digital in a great position to capitalize on the large and growing opportunities in storage ahead even in the midst of macro dynamics weighing on near-term demand.” 

Meanwhile, Hedge Funds are making the most of the stock price decline. According to TipRanks’ Hedge Fund Trading Activity tool, confidence in WDC is currently Very Positive. The cumulative change in holdings across all top hedge funds that were active in the last quarter was an increase of 733,300 shares. 

However, the rest of the Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 12 Buys and seven Holds. Western Digital’s average price forecast of $60 implies 24.48% upside potential.

Final Thoughts

Infrastructure stocks come with their own set of pros and cons. While they are inflation-proof and promise regular income, they do not provide returns like growth stocks. However, given the current macro backdrop, they seem to be winning the trust of hedge fund managers.

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