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Billionaire Ray Dalio places a bet on 3 “strong buy” shares
When billionaire financier Ray Dalio makes a move, Wall Street pays attention. Dalio, who started working on the New York Stock Exchange trading in commodity futures, founded the world’s largest hedge fund, Bridgewater Associates, in 1975. With the company managing about $ 140 billion in global investments and himself Dalio’s net worth reaching $ 17 billion, he earned legendary status on Wall Street. Summing up his success, Dalio has three tips for investors. First, diversify. Keeping a wide range of stocks in different sectors is the safest way to invest well. Second, don’t think that rising markets will grow forever. This is Dalio’s variation on an old saw that past performance does not guarantee future returns. Dalio will tell you that all the previous strong returns really guarantee the current high prices. And finally, Dalio tells investors: “Do the opposite of what your instincts are.” Or, to put it another way, do not follow the herd, as this type of thinking often leads to suboptimal results. Seeking inspiration from investment in Dalio, we used the TipRanks database to find out if three stocks that the billionaire recently added to the fund represent attractive moves. According to the platform, the community of analysts believes so, with all choices gaining “Strong buy” consensus ratings. Linde PLC (LIN) The first new position is at Linde, the largest producer of industrial gas in the world, either in terms of revenue or market share. Linde produces a variety of gases for industrial use and is the dominant supplier of argon, nitrogen, oxygen and hydrogen, along with niche gases like carbon dioxide to the soft drink industry. The company also produces gas storage and transfer equipment, welding equipment and refrigerants. In short, Linde incorporates the saying “diversify” by Dalio. Linde’s industry leadership and essential products helped the company recover from the corona crisis. The company’s revenue fell in 1H20, but grew in the second half, reaching pre-corona levels in 3Q and exceeding those levels in 4Q. In a sign of confidence, the company kept its dividends stable during the ‘corona year’, at 96 cents per common share – and in its recent statement in the first quarter, Linde increased the payment to $ 1.06 per share. This is annualized to $ 4.24 and yields 1.7%. The key point here is not the modest yield, but the company’s confidence in the security of its positions, allowing it to maintain a stable dividend at a time when many peers are cutting profit sharing. It is no wonder, then, that an investor like Dalio would be interested in a company like Linde. The billionaire’s fund snapped up 20,149 shares during the fourth quarter, worth $ 5.05 million at current prices. Assessing Linde for BMO, analyst John McNulty expresses his confidence in Linde’s current performance. “LIN continues to execute its growth strategy to drive solid double-digit profit growth, notably without the need for further macro improvement. In our view, management’s 11-13% orientation to 2021 remains conservative, driven for their upcoming projects, ongoing prices, efficiency gains and solid repurchases with their strong balance sheet and cash flows, and FCF’s solid position provides them with plenty of dry powder for mergers and acquisitions, decapitalization, etc. We believe that LIN is positioned to continue to surprise investors and outperform overall performance even in a cyclical market. The largest global industrial gas company, “said McNulty. In line with his optimistic comments, McNulty evaluates LIN as a purchase, and its target price of $ 320 implies a ~ 28% increase for next year. (To view McNulty’s track record, click here) Wall Street analysts broadly agree on the quality of Linde’s shares, as shown by Buy’s 15 reviews that exceed 3 Holds. This gives the stock its strong buy analyst consensus rating. The shares are quoted at $ 250.88, and their average target price of $ 295.73 suggests that they have ~ 18% growth ahead. (See LIN stock analysis at TipRanks) BlackRock (BLK) The next one is the largest asset manager in the world. BlackRock has more than $ 8.67 trillion in assets under management. The company is one of the dominant index funds in the US financial landscape and had revenue of $ 16.2 billion last year, with net income of $ 4.9 billion. BlackRock’s recent fourth quarter report shows its strength as far as the numbers can go. EPS stood at $ 10.02 per share, a 12% sequential gain and a 20% gain year on year. Quarterly revenues of $ 4.8 billion increased 17% year-on-year. The net revenue for the whole year grew 11% compared to 2019. BlackRock achieved all this even with the corona crisis leveling the economy in 1H20. In the first quarter of this year, BlackRock declared its regular quarterly dividend and increased the payment by 13% to $ 4.13 per common share. With an annualized payment of $ 16.52, this gives a return of 2.3%. The company has maintained a reliable dividend for the past 12 years. Not wanting to miss an attractive opportunity, Dalio’s fund pulled the trigger with 19,917 shares, giving him a new position in the BLK. The value of this new addition? More than $ 14 million. Covering the BLK for Deutsche Bank, analyst Brian Bedell writes: “We see 4Q results as very good, with strong long-term net inflows in its products, which we hope to continue despite a $ 1 single outflow of pension funds. 55 billion low-rate stocks index assets expected in 1H21 than mgmt. said it would have minimal impact on base rate revenue. In addition, total net inflows drove the annualized growth of the organic-based management fee of 13%, a quarterly record, over the long-term organic growth of the AuM of 7%. We expect the organic growth of the base rate to exceed the organic growth of AuM arriving in 2021, driven by a mix of flow aimed at products with higher rates for now ”. To this end, Bedell values BLK a Buy and its target price of $ 837 suggests that the stock has approximately 18% appreciation ahead. (To view Bedell’s history, click here) The analyst’s consensus tells a very similar story. BLK has received 6 Buy ratings in the past three months, against a single Hold – a clear sign that analysts are impressed with the company’s potential. The shares sell for $ 710.11, and the average target price of $ 832.17 gives the shares a 17% upside potential. (See BLK stock analysis at TipRanks) AbbVie, Inc. (ABBV) AbbVie is an important name in the pharmaceutical industry. The company is the manufacturer of Humira, an anti-inflammatory used to treat a wide variety of chronic diseases, including rheumatoid arthritis, Crohn’s disease and psoriasis. The company’s other immunological drugs, Skyrizi and Rinvoq, were approved by the FDA in 2019 as treatments for psoriasis and rheumatoid arthritis, respectively, and recorded combined sales of $ 2.3 billion last year. AbbVie expects these drugs to “fill the gap” in profits when Humira’s patents expire in 2023, with up to $ 15 billion in sales by 2025. Humira is currently the primary driver of AbbVie’s immunology portfolio and provides $ 19.8 billion of the portfolio’s $ 22.2 billion in annual revenue and a significant portion of the company’s total sales. For the entire year 2020, across all divisions, AbbVie saw $ 45.8 billion in revenue, with an adjusted diluted EPS of $ 10.56. In addition to its line of high-profile anti-inflammatories, AbbVie also has a long-standing ‘stable’ of medicines on the market. For example, the company has Depakote, a common anticonvulsant medication. AbbVie also maintains an active research channel, with dozens of drug candidates being studied in the disciplines of immunology, neuroscience, oncology and virology. For investors, AbbVie has a long-standing commitment to return profits to shareholders. The company has an 8-year history of maintaining a reliable – and growing – dividend. In the most recent statement, made this month for a payment due in May, AbbVie increased the dividend by 10% to $ 1.30 per common share. At $ 5.20 annualized, this yields 4.9%. Once again, we are looking at actions that incorporate some of Dalio’s advice. Pulling the trigger for ABBV in the fourth quarter, Dalio’s company bought 25,294 shares. At the current valuation, this is worth $ 2.66 million. Leerink analyst Geoffrey Porges covers ABBV and is impressed with the way the company is preparing in advance for the loss of exclusivity in the United States for its best-selling product. “Between the growth trajectory of ABBV’s ex-Humira portfolio and a broad portfolio of catalysts in early, intermediate and final stage assets, it is difficult to find a biopharmaceutical company that is better positioned, even with its impending LOE. ABBV is prepared for 2023 and has growth drivers to drive better than the industry average for revenue and profit growth in the period before (2021-2022) and after (2024-2028) 2023 ”, said Porges. Porges gives ABBV an Outperform rating (ie Purchase) and sets a price target of $ 140 which indicates room for a 33% increase in one year. (To see Porges’ history, click here) In general, there are 10 analyzes on ABBV’s shares and 9 of them are for Buy – a margin that makes the analyst’s consensus rating a Strong Buy. The stock is trading at $ 105.01 and has an average target price of $ 122.60. This suggests an increase of ~ 17% in the next 12 months. (See ABBV’s stock analysis at TipRanks) To find good ideas for stock trading with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content should be used for informational purposes only. It is very important to do your own analysis before making any investments.