Investing
5 Stocks Wall Street 'Super Investors' Are Buying This Quarter
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Like any business, the world of investing has its share of rock stars: Renowned investors who have struck gold over the years for their clients and piled up sensational long-term results. It’s easy to be a one-hit wonder, but outstanding long-term success is an art, requiring not only discipline and tons of research and analysis, but also a sixth sense when it comes to risk and reward.
Some of the biggest gains ever achieved came when gutsy investors bought shares at the depths of the market collapse in 2008-2009. Committing capital when it looks like the world is coming to an end isn’t easy, but the old adage of buying shares when there is blood in the street often proves to be correct.
In a recent research report from Jefferies, they highlight the stocks that a group of “Super Investors” have been buying and selling recently. We screened the group for five well-known investment gurus who all have incredible long-term records for clients, and picked one stock from each that they have been buying.
The huge social media leader has continued to post gigantic numbers, and is being bought by legendary value investor Bill Miller. Facebook, Inc. (NASDAQ: FB) operates as a mobile application and website that enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers worldwide.
The company’s offerings also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for various platforms and devices, which enables people to reach others instantly, and businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.
Many feel that Facebook’s long-term forecasts are more easily attainable, especially as the company continues to grow and employ new platforms for online advertising. Facebook is growing at two times the rate of its large cap internet peers while delivering 50%+ operating margins. Top analysts see further upside ahead from user growth and the company sees upside potential to its $80 U.S. average revenue per user through better targeting as well as improvements on Instagram.
The Wall Street consensus price target for the company is $206.63. The shares closed trading on Monday at $178.74.
AliBaba Group
This red hot momentum stock is being bought by Dan Loeb who runs Third Point, a New York-based hedge fund. AliBaba Group Holding Limited (NYSE: BABA) is the largest online and mobile commerce company as measured by gross merchandise volume, and was the highest profile IPO of 2014. The stock has performed horribly since printing highs at $120 in mid November of 2014. Plain and simple, the dominance in AliBaba’s core business, the very hard barrier to entry for competition, and new growth opportunities like cross-border e-commerce, make the stock extremely attractive. With most of the damage to the China equity markets seemingly done for now, the residual effect on the company may have subsided.
The company has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber era, with e-commerce as the base for four businesses: logistics, finance, data-computing and cross-border infrastructure. Top analysts expect a whopping 24% compounded annual growth rate between now and 2018 for e-commerce in China.
The company reported huge quarterly numbers recently and the driving force for some of the outperformance included social features, customized mobile apps, cross-platform user tracking, and ad targeting for merchants. In fact, growth returned to the levels seen when the company went public.
The Wall Street consensus price target is at $207.23. The shares closed Monday at $188.
Micron Technology
Micron Technology (NASDAQ: MU) is a global leader in advanced semiconductor systems, and David Einhorn from Greenlight Capital has been buying its shares. Micron’s broad portfolio of high-performance memory technologies, including DRAM, NAND and NOR Flash, is the basis for solid state drives, modules, multichip packages and other solutions. The company’s memory chip offerings enable the world’s most innovative computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications.
Micron and Intel Corporation (NASDAQ: INTC) announced last year the availability of their 3D NAND technology, the world’s highest-density flash memory. Flash is the storage technology used inside the lightest laptops, fastest data centers, and nearly every cell phone, tablet and mobile device.
The company recently announced a massive secondary offering that is being used to retire a stunning $2.25 billion in outstanding debt. While the added shares will cause dilution, the elimination of the debt service evens up the score on the company balance sheet. The chip maker said it will redeem all $1.25 billion of its outstanding 7.5% notes due 2023, as well as $1 billion of 5.25% notes due 2023.
The Wall Street consensus price target for this white-hot company is at $52.14. Shares closed Monday at $47.64.
Capital One Financial
This top bank has used relentless advertising to make its brand well known to consumers and another legendary value investor, Bill Nygren from Oakmark Capital has been buying the stock. Capital One Financial Corp. (NYSE: COF) offers a broad array of financial products and services to consumers, small businesses and commercial clients.
Capital One is one of the nation’s ten largest banks based on deposits. It provides bank lending, treasury management and depository services, as well as credit and debit card products, auto loans and mortgage banking across the US.
The company reported solid earnings and sales that came in above Wall Street expectations. Capital One earned $1.1 billion, or $2.14 a share, in the quarter, compared with $1 billion, or $1.94 a share, in the year-ago period.
Shareholders are paid a 1.81% dividend. The Wall Street consensus price target is posted at $96.32. The shares closed Monday at $88.27.
Allergan
This company has taken a beating this year and David Tepper of Appaloosa Management has been buying the shares. Allergan PLC (NYSE: AGN) is a specialty pharmaceutical company that develops, manufactures, and markets branded pharmaceutical products. The company’s growth has been driven largely by acquisitions, supported by internal growth.
Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women’s health, urology, cardiovascular and anti-infective therapeutic categories. It also operates the world’s third-largest generics business, providing patients around the globe with increased access to affordable, high-quality medicines.
Allergan is an industry leader in research and development, with one of the broadest pipelines in the pharmaceutical industry and a leading position in the submission of generic product applications globally.
Shareholders are paid a 1.64% dividend. The Wall Street consensus price objective is set at $230.78. The shares closed Monday at $171.12.
Five top companies that some of the most well known managers in the financial industry are buying. While their past success is no guarantee of future gains, all of these investing gurus have been at it for years, and it’s a good bet they remain successful for years to come.
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