Billionaire Ken Fisher’s Fisher Asset Management released its quarterly 13F filing several weeks ago, disclosing many of its long equity positions (see the list of stocks from the 13F). The portfolio is a bit old, but we don’t think it’s a good idea to blindly copy notable investors anyway; the real value comes from using the names as a list of suggestions. We can narrow down the suggestions further by looking at the stocks’ PEG ratios- a metric which combines the standard value metric of a P/E multiple with the consensus earnings growth rate from Wall Street analysts. Of course sell-side projections aren’t always correct, so the stocks don’t necessarily have this much upside, but it can be said that they have high upside potential. Here are five stocks which have low PEG ratios and which Fisher Asset Management had at least $500 million invested in as of its most recent 13F filing:
Apple Inc. (NASDAQ:AAPL) was the most popular stock in our database of 13F filings from hedge funds and other notable investors such as Fisher; the mutual fund increased its position last quarter to about 960,000 shares (see the top ten most popular stocks). Apple Inc. (NASDAQ:AAPL) has missed earnings in its last couple quarters but we think that the stock has overreacted: the trailing P/E is 12 and even though our growth expectations aren’t as high as the Street’s (the PEG ratio is 0.5) we do think that the company should be able to increase its net income at least somewhat and so we think that Apple Inc. (NASDAQ:AAPL) is a good value.
Another high upside potential pick was Rio Tinto plc (NYSE:RIO), with Fisher reporting a position of over 11 million shares. The $105 billion market cap miner, which produces aluminum, copper, gold, and other metals and materials, trades at 8 times forward earnings estimates. With analysts apparently anticipating higher commodities prices over the next several years, the five-year PEG ratio is 0.6. Fellow billionaire Israel Englander’s Millennium Management bought shares last quarter (check out more of Englander’s stock picks). We’d hesitate to buy a stock so closely tied to macro demand, but it might be worth considering for investors who don’t like Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)’s move into oil and gas.