10 Stocks the Best US Fund Managers Have Been Buying Recently

Two months into 2026, plenty of unanswered questions remain about tariffs, economic growth, inflation, and interest rates. It’s therefore no surprise, then, that it’s been a volatile year so far for US stocks: The Morningstar US Market Index may be up about 1% year to date through Feb. 20, but eight of the market’s 10 largest stocks are in the red (all returns in this article are measured on a US dollar basis).

Where has the “smart money” been finding investment opportunities?

To find out, we looked at the latest portfolios of some of the best fund managers. To isolate the top stock-pickers among current active fund managers, we screened on the following:

• Actively managed funds that land in US large-value, US large-blend, or US large-growth Morningstar Categories
• Funds with at least one share class earning Morningstar Medalist Ratings of Gold, Silver, or Bronze with 100% analyst coverage
• Funds that hold 50 stocks or fewer as of their most recently reported portfolios

Twenty-five separate fund portfolios passed our screen. We then compared the latest portfolios of these funds with their portfolios three months before to determine which stocks these managers have been buying.

Most of the stocks that top managers have been buying look fairly valued today, according to Morningstar, but there are a few undervalued stocks in the mix, too.

10 Stocks That the Best Fund Managers Are Buying

Here are the stocks that top managers have been investing in lately.

1. Netflix NFLX
2. Medline MDLN
3. ServiceNow NOW
4. Allstate ALL
5. AstraZeneca AZN
6. Keurig Dr Pepper KDP
7. Merck MRK
8. AppLovin APP
9. Walmart WMT
10. Intercontinental Exchange ICE

Here’s a little bit about each stock pick, along with some commentary from the Morningstar analysts who follow the companies. All data is as of Feb. 20, 2026.

Netflix

• Number of Best Managers Buying the Stock: 6
• Morningstar Rating: 3 Stars
• Economic Moat: Narrow
• Sector: Communication Services

The best fund managers’ top stock pick during the latest quarter was Netflix. Morningstar thinks this narrow-moat stock is fairly valued.

Here’s Morningstar senior analyst Matthew Dolgin’s take on Netflix’s earnings:

Netflix’s fourth-quarter revenue rose 17% year over year (excluding currency tailwinds). For the full year, revenue also increased 17.0%, and the operating margin expanded 3 percentage points, to 29.5%. Guidance for 2026 is for 11%-13% organic sales growth and 2 percentage points of margin expansion.

Why it matters: The material growth slowdown is consistent with our forecast, based on a mature US market. In our view, Netflix needs international markets to grow at a high-teens rate to maintain the midteens average annual growth, but recent results don’t support that level.

• Sales in the US and Canada increased 15% in 2025, but were buttressed by subscriber additions at the end of 2024 and a US price increase last January. We expect a much smaller contribution from new members and pricing in 2026, with a US price increase before the fourth quarter unlikely.
• Excluding currency, we estimate international sales growth was only 14% in each of the last two quarters. We suspect the vast majority of roughly 25 million new members in 2025 were in international markets.

The bottom line: We maintain our forecast, and the time value of money brings our fair value estimate to USD 79 from USD 77. With outsize growth expectations no longer priced into its stock, Netflix appears fairly valued. With a narrow moat, it remains the highest-quality of its closest peers, in our view.

Key stats: Free cash flow guidance of USD 11 billion for 2026 was also in line with our estimates, but likely disappointed the market.

• Cash content spending is expected to rise to nearly USD 20 billion in 2026, which would be a jump of about 11.5%. This is a good use of cash, in our view.
• With some costs, including the Brazilian tax issue the firm reported last quarter, getting pushed to 2026 from 2025, we don’t think cash flow and margin guidance are as disappointing as the market may have initially taken them.

Read Morningstar’s full report about Netflix.

Medline

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating: 3 Stars
• Economic Moat: Narrow
• Sector: Healthcare

One of three healthcare names on our list of stocks that the best fund managers have been buying, Medline earns a narrow economic moat rating and trades near our fair value estimate.

Morningstar analyst Keonhee Kim said this about Medline’s business when he began covering the stock in February 2026:

Medline is the largest provider of medical-surgical products and supply chain solutions in the US. With over USD 25 billion in revenue, Medline distributes more than 335,000 stock-keeping units to various points of care, including acute care, ambulatory surgery centers, physician offices, clinical labs, and emergency medical services. The firm aims to drive growth by winning new prime vendor customers via end-market expansion and Medline brand penetration. Prime vendor relationships, which account for over 60% of Medline’s total revenue, enable Medline to secure the majority of med-surg sales from a single customer. This improves working relationships between Medline and its customers by offering cost savings on the customer end and securing a long-term contract on Medline’s end. And since the firm has enjoyed a 99% retention rate on prime vendor customers since 2020, we think new contracts should lead to nice long-term tailwinds. Once a customer is won, Medline looks to increase its share of customer spending by improving its brand penetration. Prime vendor relationships mainly exist in the acute care channel, but the firm has done a nice job expanding into the nonacute space and facilities not affiliated with a hospital system. We expect Medline to continue to focus on expanding prime vendor relationships, as they help expand margins, improve order predictability, and increase switching costs.

We expect long-term secular trends, including an aging population, increased healthcare utilization, and increasing prevalence of chronic conditions, to help drive Medline’s top and bottom lines. The Centers for Medicare & Medicaid Services estimates national healthcare expenditures to grow at a mid-single-digit pace over five years, and we think Medline can outpace this from market-share gains. As healthcare systems continue to consolidate and group purchasing organizations control a larger share of the purchasing volume, large players like Medline should win incremental demand thanks to existing working relationships, the ability to offer lower costs relative to smaller distributors thanks to massive scale, and a broad portfolio of items across categories.

Read Morningstar’s full report about Medline.

ServiceNow

• Number of Best Managers Buying the Stock: 5
• Morningstar Rating: 5 Stars
• Economic Moat: Wide
• Sector: Technology

ServiceNow is the first of five wide-moat stocks that top fund managers have been investing in. We think the selloff in software stocks is overdone and that ServiceNow is very undervalued today.

Here’s Morningstar senior analyst Dan Romanoff’s take on the selloff and ServiceNow’s appeal:

Software stocks have underperformed for months, with a sharp selloff on Feb. 3, which we surmise was driven by Anthropic’s release of the legal plugin for its large language model Claude and by Gartner’s stark 2026 guidance, which reflects negatively on the enterprise IT spending environment.

Why it matters: We think the software group’s recent underperformance is driven largely by fear under the broad umbrella that AI is eating software. Both the Anthropic and Gartner data points seemingly reinforce that notion.

• We acknowledge slowing revenue growth for software overall and know of no expectation for growth acceleration for the companies under our coverage. Further, we have seen earnings reports from several software companies to date, and the outlooks are generally in line with expectations.

The bottom line: We also acknowledge an additional layer of risk around AI-eating software. However, we see little evidence that the bear case is unfolding—retention rates and other software metrics appear solid. In short, we acknowledge the risks but believe the fears are overblown.

• We do not believe enterprise software customers are going to vibe code internal solutions such that the application vendor’s models are threatened en masse. There may be some pressure on seat counts, but there is no evidence to show that this is happening—and automation is not a new trend.
• Core application software that is deeply integrated within an organization and involves proprietary data is the most insulated from AI in our view. At this point, we do not believe AI is eroding software moats in general, although some vendors may be more at risk.

Big picture: Our top picks are wide-moat Microsoft (FVE of USD 600) and wide-moat ServiceNow (FVE of USD 200), although we see value across most of our coverage. We see substantial upside to both stocks, although the software landscape is not for the faint of heart at present.

Read Morningstar’s full report on ServiceNow.

Allstate

• Number of Best Managers Buying the Stock: 1
• Morningstar Rating: 2 Stars
• Economic Moat: None
• Sector: Financial Services

Allstate is the only no-moat stock that top managers are buying. The insurer’s stock looks overvalued, trading 24% above our USD 67 fair value estimate.

Morningstar senior analyst Brett Horn published the following after Allstate’s latest earnings release in early February 2026:

Allstate has taken full advantage of attractive industry conditions and topped off a great year with a strong finish.

Why it matters: The adjusted return on equity of 38% for the year is dramatically above the company’s historical average and highlights how favorable industry conditions are at the moment.

• Personal auto underwriting results continue to improve in the quarter, with the combined ratio dropping to 80.8% from 93.5% last year. This quarter was positively affected by substantial favorable reserve development. Excluding this, underwriting margins were still very attractive, but more in line with the last couple of quarters. However, with price increases falling off, we question how long this will persist.
• Homeowners insurance also continues to see underwriting improvement, with the underlying combined ratio coming in at 51.4%, compared with 59.5% last year. We think the prognosis going forward here is a bit better, as insurers continue to push price increases.

The bottom line: After reviewing our assumptions in light of recent results, we expect to increase our USD 157 fair value estimate for the no-moat company by about 5%. However, we continue to see shares as overvalued.

• Allstate saw year-over-year policies-in-force growth of 2% in both homeowners and personal auto, with the trend in personal auto improving. While we are pleased to see some growth amid favorable underwriting conditions, we continue to see long-term market share as an issue for Allstate.
• We appreciate current industry tailwinds, but we think the market is extrapolating this favorable period too far into the future, resulting in industry valuations that are stretched from a long-term perspective. We believe weaker pricing will be the primary catalyst for a return to more normalized returns and see signs that this is beginning to occur in certain lines.

Read Morningstar’s full report on Allstate.

AstraZeneca

• Number of Best Managers Buying the Stock: 1
• Morningstar Rating: 2 Stars
• Economic Moat: Wide
• Sector: Healthcare

Like the other healthcare names on the list of top stock picks of the best managers, AstraZeneca is performing well in 2026. The stock looks overvalued relative to our USD 184 fair value estimate.

Here’s Morningstar senior analyst Jay Lee’s take on AstraZeneca after earnings in February 2026:

In the fourth quarter, AstraZeneca generated 2% year-on-year core revenue growth, a 5% core operating profit decline, and a 2% core earnings per share decline at constant currency. 2026 guidance is for mid- to high-single-digit revenue growth and a low-double-digit core EPS decline.

Why it matters: These results are in line with our expectations. Although core operating profit margin for the quarter declined 2 percentage points, this was mostly due to USD 235 million of one-time royalty buyouts for Saphnelo (lupus) and rilvegostomig (oncology).

• We expect continued growth in oncology and the respiratory and immunology franchise, which posted 16% and 10% growth in 2025. However, we expect a slowdown in the cardiorenal and metabolic franchise due to generics competition, especially for Farxiga and Brilinta.
• Management highlighted a busy year of clinical trial readouts and a number of oncology and obesity assets that have advanced to phase 3 trials, prompting us to revisit our model to include more assets in our pipeline assumptions.

The bottom line: We’ve raised our fair value estimate for wide-moat AstraZeneca to GBX 13,500/USD 184 per share from GBX 12,400/USD 162 to account for the pipeline progression. The shares have rallied about 8% since the earnings release and are hovering between 2- and 3-star territory.

• We forecast USD 71 billion of revenue in 2030, which is USD 6 billion higher than our previous estimate. Although we are still behind management’s goal of USD 80 billion by 2030, the pipeline progress brings us meaningfully closer to its target.

Coming up: In the second half of this year, we expect US regulatory decisions for baxdrostat for uncontrolled hypertension, camizestrant for HR-positive advanced breast cancer patients who develop ESR1 mutations, and gefurulimab for generalized myasthenia gravis (immunology).

Read Morningstar’s full report on AstraZeneca.

Keurig Dr Pepper

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating: 3 Stars
• Economic Moat: Narrow
• Sector: Consumer Defensive

Keurig Dr Pepper is the first of two consumer defensive names among the stocks that top managers are buying. This stock of this narrow-moat company trades near our USD 32 fair value estimate and therefore looks fairly valued today.

The company has launched its tender offer to acquire JDE Peet’s. Morningstar analyst Dan Su had this to say about the proposed merger and subsequent split.

On Aug. 25, 2025, Keurig Dr Pepper proposed to buy JDE Peet’s in an USD 18 billion all-cash offer and following the scheduled deal closure in 2026, plan to split into two US-listed entities focusing on global coffee and North American soft drinks, respectively.

We expect the acquisition to place Keurig Dr Pepper as the second-largest firm in the USD 400 billion global coffee market (11% share, behind wide-moat Nestle’s 23%), adding top brands and access to growth outside the US. However, we believe more effective innovation and better marketing are needed to lift its coffee outlook amid competition and cost inflation. Given challenges for KDP and JDE Peet’s to boost demand in the past three years (volume and mix averaging down 2.0 % and 1.5% per year, respectively), coupled with integration complexity, we don’t expect volumes to grow materially in the next few years after the merger. Moreover, while we don’t anticipate much regulatory objection to the merger given the complementary nature of the two firms in geographic and category exposure, we think the lack of overlap may limit cost synergies, rendering the USD 400 million runrate saving target for coffee (4% of costs) ambitious, in our view.

Our view is more constructive on the refreshment beverage arm, which should remain unchanged after the merger. We believe brand affinity built around distinct taste, recipe reformulation, and innovation to meet evolving consumer preferences should enable the firm to maintain a lead in its specialty categories. This should afford continued pricing power even amid secular headwinds driven by consumer health concerns. Additionally, the firm has prudently stepped-up investments in emerging brands and distribution partnerships in growth areas such as premium water, energy and sports drinks, and canned coffee, which should allow the firm to expand its appeal and activate and engage users at more consumption occasions. Although the lack of international distribution rights for key brands, including Dr Pepper, caps its growth trajectory outside North America, we think the ready-to-drink beverage unit can still deliver mid-single-digit sales growth annually over the medium term.

Read Morningstar’s full report on Keurig Dr Pepper.

Merck

• Number of Best Managers Buying the Stock: 4
• Morningstar Rating: 3 Stars
• Economic Moat: Wide
• Sector: Healthcare

Four of our best fund managers recently bought shares of pharmaceutical giant Merck. We think this wide-moat stock pick looks fairly valued as it trades right around our USD 111 fair value estimate.

Morningstar director Karen Andersen shared her outlook for Merck after earnings:

Merck reported 2025 results, including 1% revenue growth and 17% non-GAAP EPS growth. For 2026, management has guided to a revenue range of roughly 1%-3% growth and non-GAAP EPS of USD 5.00-USD 5.15 (lower due to charges related to the Cidara acquisition).

Why it matters: Merck grew through a difficult 2025, despite significant commercial headwinds for Gardasil in China and Japan, which drove a nearly 40% decline in global sales of the HPV vaccine. Growth guidance from this lower base was slightly lower than our expectations.

• Despite the more than USD 3.3 billion headwind from declining Gardasil sales, Merck’s positive growth for the year was largely based on roughly USD 2.2 billion from continued growth in cancer drug Keytruda.
• Well ahead of a 2029 US Keytruda patent cliff, we had expected mid-single-digit growth in 2026. That said, the real driver of Merck’s valuation will be news from the firm’s large late-stage pipeline over the next two years.

The bottom line: We’re maintaining our USD 111 fair value estimate for wide-moat Merck, following 2026 guidance that was slightly disappointing. We think shares look fairly valued, and we remain bullish on several potential pipeline catalysts in 2026 that could drive growth beyond this year.

• Merck has several programs with multi-billion-dollar annual sales potential in the pipeline, and we’re most optimistic about phase 3 readouts in 2026 from tulisokibart (immunology) and intismeran (oncology).
• Recent acquisitions of Verona (COPD drug Ohtuvayre) and Cidara (flu prevention antiviral in phase 3), and in-licensing of oral cardiovascular drug candidate HRS-5346 all point to Merck’s interest in building its cardiopulmonary assets, which we think will complement a strong oncology pipeline.

Read Morningstar’s full report on Merck.

AppLovin

• Number of Best Managers Buying the Stock: 1
• Morningstar Rating: 3 Stars
• Economic Moat: Narrow
• Sector: Communication Services

Narrow-moat AppLovin is certainly the highest volatility name among the stocks that the best managers have been buying. Although we assign shares a USD 500 fair value estimate, we think the stock looks fairly valued at its current price, given its very high uncertainty.

Morningstar analyst Mark Giarelli discussed the uncertainty in the stock in a February 2026 stock analyst note:

AppLovin is trading lower after fourth-quarter advertising revenue increased by 66% year over year and the adjusted EBITDA margin reached 84%, beating management’s expectations by 7 and 1 percentage points, respectively. Management also addressed issues driving recent share price volatility.

Why it matters: The confluence of rapid growth, high margins, short-seller reports, recent competition from Meta, a new Google gaming model, and general software investor anxiety has made AppLovin a volatile ride. Acknowledging these risks, we still see strength in the fundamentals.

• Much of the earnings call focused on these risks and the sustainability of breakneck growth. Mitigating some of the overall concern is our belief that the more games in development (from Google’s Genie 3), the stronger the demand for AppLovin as an application monetization tool.
• The assertion that Meta is increasingly monetizing nonowned inventory holds water, but we don’t believe performance advertising is a zero-sum game. For example, Unity’s ad business is improving, but it does not appear to be stealing any market share from AppLovin.

The bottom line: We maintain our narrow moat rating and USD 500 fair value estimate, but emphasize our Very High Uncertainty Rating. We believe we have already baked in the effects of competition from Meta, CloudX, and Unity, but the SEC investigation remains an overhang.

• When assessing the direction and rate of change in business fundamentals (margins, free cash flow, revenue per employee, capital intensity), AppLovin stands apart. At the same time, the multiple leaves very little margin for error.

Coming up: Automated onboarding is expected to be live within the next four months. The main bottleneck to more advertising budgets flowing through AppLovin is progress with artificial intelligence-generated creative ad copy. We expect advances here, which could act as a catalyst in 2026.

Read Morningstar’s full report on Applovin.

Walmart

• Number of Best Managers Buying the Stock: 2
• Morningstar Rating: 1 Star
• Economic Moat: Wide
• Sector: Consumer Defensive

Walmart is the most overvalued name among the stock picks that top fund managers are investing in. This wide moat stock trades at a 98% premium to our $62 fair value estimate.

Here’s Morningstar analyst Brett Husslein’s take on Walmart’s latest earnings report:

Walmart’s fourth-quarter results included 5.6% net sales growth and adjusted EPS of USD 0.74. The firm continues to benefit from widespread demand across income cohorts, while strength in digital and memberships helped lift gross margin by 10 basis points to 24.7%.

Why it matters: Even with consumers’ wallets stretched, Walmart continues to attract shoppers by emphasizing convenience as much as price. This is evident in its digital offerings, as e-commerce revenue grew 24% globally, driven by omnichannel pickup and delivery.

• Walmart US posted 4.6% comparable sales growth supported by price-led traffic, resilient grocery demand, and greater use of pickup and delivery. We think its store-fulfilled omnichannel model is widening engagement and value perception, particularly among higher-income households.

The bottom line: We plan to lift our USD 62 fair value estimate by a high-single-digit percentage, reflecting the time value of money and a modestly stronger medium-term profit outlook. This stems from faster scaling in retail media, which we see as improving wide-moat Walmart’s earnings mix and stability.

• Despite the improved outlook, we view shares as overvalued, with the current price implying operating margins above prior peaks of 6%, which we see as unlikely amid intense competition. We think the market is pricing in outsize gains from discretionary mix and automation initiatives.
• The firm’s high-margin digital revenue streams are rapidly altering the profit algorithm. Global advertising (up 37%) and membership fees now account for over a quarter of EBIT, which we see as enabling greater flexibility to capitalize on Walmart’s e-commerce operations and reinvest in prices.

Coming up: Management struck a conservative tone for the upcoming fiscal year, while guiding to a slower first-quarter profit cadence due to the timing of expenses and tariff impacts. Despite this, we think digital investments and price leadership should continue to win value-conscious shoppers.

Read Morningstar’s full report on Walmart.

Intercontinental Exchange

• Number of Best Managers Buying the Stock: 3
• Morningstar Rating: 4 Stars
• Economic Moat: Wide
• Sector: Financial Services

Intercontinental Exchange rounds out the list of stocks that the best fund managers have been buying. The low-uncertainty stock looks reasonably attractive as it trades 11% below our USD 174 fair value estimate.

Morningstar analyst Michael Miller had this to say about the company after it reported earnings earlier this month:

Intercontinental Exchange reported a strong end to an excellent 2025, with energy futures and data revenue showing continued momentum in the fourth quarter. Revenue increased 7.8% to $2.5 billion while diluted earnings per share rose to USD 1.49 from USD 1.21 last year.

Why it matters: Intercontinental’s shares are trading modestly higher on the report. This seems appropriate to us, as the firm saw broad strength across its various business lines and benefited from excellent cost management, which drove its operating margin to 49.4% from 46.4% last year.

• Intercontinental’s energy futures continue to be the star performer as the firm benefits from secular tailwinds toward more liquefied natural gas and regional oil futures trading. Energy futures revenue rose 15% from already strong 2024 results to USD 548 million in the fourth quarter.
• While we generally caution against extrapolating rapid growth in trading businesses, since trading volume is inherently volatile, we think the firm is benefiting from secular trends that can support high single-digit volume growth. While we expect a period of partial normalization, our projections indicate that volume will grow at a 7.5% CAGR from 2019-29.

The bottom line: We maintain our USD 170 fair value estimate for wide-moat Intercontinental Exchange. We see the shares as fairly valued at the current price after their recovery from a fall correction last year.

Key stats: Along with earnings, Intercontinental Exchange gave its guidance for 2026. The firm expects mid-single-digit recurring revenue growth from its exchange and fixed-income data services segment, as well as low- to mid-single-digit revenue growth from its mortgage technology business.

• While the firm’s exposure to transactional revenue sources does add material uncertainty to its performance from quarter to quarter, Intercontinental’s guidance is broadly in line with our own projection for 4.5% revenue growth in 2026.

Read Morningstar’s full report on Intercontinental Exchange.

How Do We Determine Which Stocks the Best Managers Are Buying?

To determine which stocks top managers are investing in, we compared the latest portfolios of these funds with their portfolios three months before. We then calculated a “buy score” for each stock, which is a weighted average that allows us to make apples-to-apples comparisons of the most purchased stocks. One or two managers making large purchases of a stock could lead to the same buy score as many managers purchasing small amounts of a stock.

Morningstar senior editor Margaret Giles and lead developer Lauren Solberg developed the methodologies and tools required to create this content.