5 High-Multiple Stocks Loved by Hedge Funds

We have identified five stocks that might be scary to some investors, but are loved by hedge funds. These stocks trade at P/E ratios that seems darn right ridiculous, especially when compared to their industry averages.

We found five stocks that are trading at ridiculously high price-to-earnings ratios, yet have a huge following of billionaire fund managers that continue to load up. All companies discussed here are expected to grow EPS by at least 15% over the next five years.

FISHER ASSET MANAGEMENT

Whole Foods Market Inc. (NYSE:WFM) is the first company on our list, trading at a P/E ratio of 41x. Whole Foods is considered the largest organic food retailer in North America and saw 3Q EPS that beat consensus estimates of $0.61, by posting $0.63. As well, the company continues to offer a variety of items across various departments and has shown an 8.8% increase in comparable sales in the first three quarters of 2012. Some of the best growth prospects in the grocery industry have Whole Foods expected to expand annual EPS by 17% over the next five years.

Columbus Circle Investors was the top fund invested in 2Q, owning over 1.6 million shares. Jim Simons upped his 1Q stake by 60%, while Ken Fisher took an entirely new stake in the company—see how hedge funds are trading grocers.

Another stock with high fund interest is Facebook Inc (NASDAQ:FB). The social network trades at 106x earnings and expected to grow EPS at 27% annually over the next five years. Facebook investors were beginning to question user engagement and mobile monetization capabilities, but Facebook knocked earnings out of the park for its most recent quarter, and may have possibly figured out advertising. The company is expected to grow revenue 28% in 2013 and 25% in 2014. Facebook saw two tiger cubs as the top two fund owners. Both funds owned over 1.5 million shares, as well as JAT Capital.

Visa Inc (NYSE:V) trades at a P/E of 138x and is expected to grow at an annual growth rate of 20% over the next five years. Visa is expected to grow operating revenues 13% in 2012, after a 14% increase in 2011. Driving revenues will be increase in payment volumes internationally. As well, banks are gearing more toward credit cards, versus debit cards, expanding Visa’s margins overall.

Visa had some of the top fund interest of all our high P/E stocks. Most notably was Warren Buffett, with over 2 million shares in 2Q. Other notables included Ken Griffin and Tiger Global Management, as well as Ken Fisher, who upped his stake 175,000%.

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) develops antibody therapeutics for rare and severe diseases. The company is still up over 30% year to date, but has fallen on rough times over the past week and is down 18% over the last few days. Alexion is trading at a P/E of 107x, but is expected to grow at a 5-year CAGR of 38%. Alexion’s key drug, Soliris, is expected to see sales up 40% in 2012, and 30% in 2103. Soliris is Alexion’s rare blood disorder drug. As well, gross margins are expected to be 88% for both years.

Albeit a biopharma stock, there was much 2Q fund interest. Jim Simons increased his stake 200% to over 1 million shares. As well, Arrowstreet Capital upped their stake over 1000%. Alexion remains to be a top pick of Navellier & Associates.

Amazon.com Inc. (NASDAQ:AMZN) trades at a P/E of nearly 300x and sales are expected to be up 28% in 2013, following a 31% increase in 2012. Amazon is expected to continue its onslaught of market share infringement on retailers, as well as continue expansion in the hardware business with its Kindle tablets. These various initiatives and projects are expected to grow EPS at 34% over the next five years.

Amazon saw big interest from its top three names including Ken Fisher, John Griffin and Steven Cohen. Fisher and Griffin kept their stakes stable at over 1.7 million shares, while Cohen and SAC Capital boosted their 1Q stake by 240%.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!