In this article, we discuss 12 best growth stocks to buy according to Ray Dalio. If you want to see more growth stocks in Dalio’s portfolio, click 5 Best Growth Stocks to Buy According to Ray Dalio.
Ray Dalio, after a 47-year successful investment career, stepped down from his role as the co-chief investment officer of Bridgewater Associates at the end of September, and he gave up his voting rights as well. However, he said that he would advise the present co-CIOs, Bob Prince and Greg Jensen, and the rest of the investment committee. As of the end of 2021, under Ray Dalio’s leadership, Bridgewater had returned $52.2 billion to clients since 1975, although returns in 2021 were just $5.7 billion on assets under management of $99.2 billion.
For the last few years, Ray Dalio had been repeatedly saying that “cash is trash”. However, he has now warmed up to the idea of holding US dollars and believes that it is an acceptable investment. In April 2020, he declared cash as basically worthless, given the near-zero interest rates and elevated money supply, which would lower the value of dollars. He tweeted on October 3:
“At existing interest rates and with the Fed shrinking the balance sheet, it is now about neutral – neither a very good or very bad deal. In other words, the short-term interest rate is now about right.”
Dalio predicts long-term interest rates of over 4.5%, which means rates might climb as per Dalio’s assumptions in the coming years. The $23.6 billion Bridgewater portfolio has a healthy mix of growth and value equities. Some of the best growth plays in Dalio’s fund include PayPal Holdings, Inc. (NASDAQ:PYPL), Airbnb, Inc. (NASDAQ:ABNB), and Booking Holdings Inc. (NASDAQ:BKNG).
Our Methodology
We selected the following growth equities based on high price-to-earnings ratios, which exceeded 30 as of October 6. The growth stocks were chosen from Ray Dalio’s Bridgewater Associates portfolio as of the second quarter of 2022.
We have arranged the list according to the hedge fund sentiment around the securities, which was assessed from Insider Monkey’s Q2 2022 database of about 900 elite hedge funds.
Best Growth Stocks to Buy According to Ray Dalio
12. Edwards Lifesciences Corporation (NYSE:EW)
Number of Hedge Fund Holders: 39
Edwards Lifesciences Corporation (NYSE:EW) was founded in 1958 and is headquartered in Irvine, California. The company provides products and technologies for structural heart disease, critical care, and surgical monitoring in the United States, Europe, Japan, and internationally. Ray Dalio’s Bridgewater Associates owns 995,357 shares of Edwards Lifesciences Corporation (NYSE:EW) worth about $95 million as of Q2 2022.
On September 15, the US FDA approved Edwards Lifesciences Corporation (NYSE:EW)’s PASCAL Precision transcatheter valve repair system for transcatheter edge-to-edge repair. It is used for patients suffering from degenerative mitral regurgitation.
Citi analyst Joanne Wuensch on October 5 maintained a Buy rating on Edwards Lifesciences Corporation (NYSE:EW) but lowered the price target on the shares to $107 from $118. The analyst is bullish on device utilization in a normalized environment and said “the best thing that could come out of the 3Q season is an in-line delivery, 2022 reiterations, and a level setting for 2023.”
According to Insider Monkey’s Q2 data, 39 hedge funds were long Edwards Lifesciences Corporation (NYSE:EW), compared to 45 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 7.3 million shares worth $697 million.
Like PayPal Holdings, Inc. (NASDAQ:PYPL), Airbnb, Inc. (NASDAQ:ABNB), and Booking Holdings Inc. (NASDAQ:BKNG), Edwards Lifesciences Corporation (NYSE:EW) is one of the best growth stocks in Ray Dalio’s portfolio.
Here is what Harding Loevner Global Equity Fund has to say about Edwards Lifesciences Corporation (NYSE:EW) in its Q4 2021 investor letter:
“Innovation can foster growth in Health Care fields other than drug discovery. Edwards Lifesciences makes minimally invasive devices to treat heart disease or for critical care monitoring. Its transcatheter heart valve, SAPIEN, is the most-implanted aortic heart valve in the world. Having settled a lawsuit with Abbott over alleged patent infringement, Edwards is now moving ahead with a newer product line called PASCAL to treat elderly or frail patients—for whom currently available treatments are ineffective—for mitral and tricuspid disease. PASCAL is the fruit of the company’s ongoing investment in research and development. Between PASCAL and its next-generation SAPIEN valve, the company expects to double its addressable market to approximately US$20 billion by 2028.”
11. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holders: 39
Chipotle Mexican Grill, Inc. (NYSE:CMG) is headquartered in Newport Beach, California, operating a chain of Chipotle Mexican Grill restaurants in the United States, Canada, the United Kingdom, and Europe. Ray Dalio’s hedge fund owns 90,664 shares of Chipotle Mexican Grill, Inc. (NYSE:CMG) as of Q2 2022, worth $118.5 million, representing 0.5% of the total securities. It is one of the best growth stocks to buy according to Ray Dalio.
On October 4, Deutsche Bank analyst Brian Mullan raised the price target on Chipotle Mexican Grill, Inc. (NYSE:CMG) to $1,708 from $1,503 and reiterated a Hold rating on the shares ahead of the Q3 results. The analyst believes investor expectations for Q3 same-store-sales results are in line with the present consensus estimate of 7.4%. He thinks Chipotle Mexican Grill, Inc. (NYSE:CMG) could meet a Q4 consensus same-store-sales estimate of up to 8.5%.
According to Insider Monkey’s data, 39 hedge funds were long Chipotle Mexican Grill, Inc. (NYSE:CMG) at the end of June 2022, compared to 38 funds in the prior quarter. Bill Ackman’s Pershing Square is the leading stakeholder of the company, with 1.10 million shares worth $1.4 billion.
Here is what Pershing Square Holdings specifically said about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2022 investor letter:
“Chipotle Mexican Grill, Inc. (NYSE:CMG) continued its impressive performance in 2022 driven by the ongoing recovery of in-restaurant sales, price increases to cover cost inflation, and successful menu innovation including pollo asado. During the second quarter, Chipotle continued to lead the restaurant industry in growth for both same-store sales (“SSS”) and new restaurants, with SSS growing 10% year-over-year or 30% on a three-year cumulative basis. On-premise sales grew 36% as consumers resumed pre-pandemic routines, while digital sales declined only 3%, continuing their persistence despite the growth of conventional sales. Chipotle remains on track to grow its store base by approximately 8% this year with a longer-term annual store growth aspiration of nearly 10% once current headwinds around construction, permitting, and supplies ease.
We believe Chipotle is one of the best-positioned consumer companies for the current inflationary world. Given significant inflation in food and labor costs, management has planned a menu price increase of approximately 4% for August following a similarly-sized price increase in March. The company has tremendous pricing power due to the superb quality of its food which is priced at a discount to many competitors with inferior offerings, marketing focused on food quality and freshness rather than cost, and a customer base that over-indexes to higher-income consumers, some of whom are trading down from pricier alternatives.
Chipotle’s economic model remains firmly intact, with restaurant-level margins in excess of 25% in the second quarter, up 0.8% year-over-year, and a consistent level of profitability expected for the current quarter. The company is debt-free and generates nearly all its sales in the U.S., insulating its earnings from the foreign currency headwinds facing many other large consumer companies. …” (Click here to read the full text)
10. Pinduoduo Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 41
Pinduoduo Inc. (NASDAQ:PDD), a Chinese company operating an e-commerce platform, is one of the best growth stocks to buy according to Ray Dalio. The Bridgewater portfolio held 4.8 million shares of Pinduoduo Inc. (NASDAQ:PDD) in Q2 2022, worth $297.5 million, representing 1.26% of the total securities. The stock has featured in Ray Dalio’s fund since Q2 2019.
On September 2, Barclays analyst Jiong Shao raised the price target on Pinduoduo Inc. (NASDAQ:PDD) to $66 from $45 and kept an Equal Weight rating on the shares. The company posted “surprisingly stronger than expected topline and gross margins” in Q2, the analyst told investors. However, “limited disclosures” were offered as usual, added the analyst.
According to Insider Monkey’s data, 41 hedge funds were bullish on Pinduoduo Inc. (NASDAQ:PDD) at the end of Q2 2022, compared to 36 funds in the last quarter. Rajiv Jain’s GQG Partners is the leading stakeholder of the company, with 6.15 million shares worth about $381 million.
Here is what Tao Value has to say about Pinduoduo Inc. (NASDAQ:PDD) in its Q4 2021 investor letter:
“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue to grow with such a team with a strong culture.”
9. Becton, Dickinson and Company (NYSE:BDX)
Number of Hedge Fund Holders: 42
Becton, Dickinson and Company (NYSE:BDX) is a New Jersey-based company that develops, manufactures, and sells medical supplies, laboratory equipment, and diagnostic products for healthcare institutions, life science researchers, clinical laboratories, and pharmaceutical markets worldwide. Becton, Dickinson and Company (NYSE:BDX) is one of the best growth stocks in Ray Dalio’s Q2 portfolio, with the billionaire holding a $110.3 million position in the company.
On October 4, Evercore ISI analyst Vijay Kumar added Becton, Dickinson and Company (NYSE:BDX) to the firm’s “TAP Outperform” list ahead of Q3 earnings of the group. His earnings previews are influenced by the “interesting” results from Evercore’s three different surveys on Hospital CapEx/Procedures, lab activity, and U.S. TAVR trends, the analyst noted. He has an Outperform rating and a $275 price target on Becton, Dickinson and Company (NYSE:BDX) shares.
According to Insider Monkey’s data, 42 hedge funds were long Becton, Dickinson and Company (NYSE:BDX) at the end of Q2 2022, compared to 49 funds in the last quarter. David Blood and Al Gore’s Generation Investment Management is the leading stakeholder of the company, with 3.20 million shares worth $789.4 million.
Here is what ClearBridge Investments Dividend Strategy has to say about Becton, Dickinson, and Company (NYSE:BDX) in its Q4 2021 investor letter:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like medical equipment (medical device and laboratory supplier Becton Dickinson). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
8. Veeva Systems Inc. (NYSE:VEEV)
Number of Hedge Fund Holders: 45
Veeva Systems Inc. (NYSE:VEEV) was incorporated in 2007 and is headquartered in Pleasanton, California. The company provides cloud-based software for the life sciences industry in North America, Europe, the Asia Pacific, the Middle East, Africa, and Latin America. Ray Dalio’s Bridgewater Associates owns 497,587 shares of Veeva Systems Inc. (NYSE:VEEV) as of the second quarter of 2022, worth $98.5 million. Dalio boosted his stake by 29% in Veeva Systems Inc. (NYSE:VEEV) in Q2 and it is one of the best growth stocks in his portfolio.
On September 15, KeyBanc analyst Scott Schoenhaus assumed coverage of Veeva Systems Inc. (NYSE:VEEV) with an Overweight rating and a $220 price target. The analyst is positive on Veeva Systems Inc. (NYSE:VEEV)’s ability to successfully address new services with its R&D/Vault platform. The analyst added that he sees Veeva Systems Inc. (NYSE:VEEV) as well positioned to boost its top line at 15% over the next few years at stable 40% EBIT margins, which are some of the highest in all HCIT and SaaS universes.
Among the hedge funds tracked by Insider Monkey, Greg Poole’s Echo Street Capital Management is the leading stakeholder of Veeva Systems Inc. (NYSE:VEEV), with 757,605 shares worth $150 million. Overall, 45 hedge funds were bullish on the stock at the end of June 2022, up from 41 funds in the prior quarter.
Here is what Artisan Partners specifically said about Veeva Systems Inc. (NYSE:VEEV) in its Q2 2022 investor letter:
“Veeva Systems Inc. (NYSE:VEEV) is one of the highest quality franchises in our portfolio. The company has the dominant CRM platform for pharmaceutical sales and marketing organizations, and it is replicating that success with the rollout of numerous other modules focused on pharmaceutical customers’ manufacturing, quality, safety and clinical operations. Growth has temporarily slowed over the past year as the company laps difficult YoY comparisons caused by the rapid adoption of their virtual sales call solution during the pandemic. Several large deals also encountered unexpected delays in late 2021. Despite these short-term headwinds, we remain confident in Veeva’s future growth prospects and high-quality business model (~40% free cash flow margins supported by largely recurring subscription revenues). Meanwhile, we believe the defensive nature of its end market (health care) and strategic importance of cloud IT driven transformations could help buffer the company against a weaker global economy. As shares declined in Q2 along with other software stocks, we added to our position.”
7. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 46
The Estée Lauder Companies Inc. (NYSE:EL) is a New York-based manufacturer and marketer of skin care, makeup, fragrance, and hair care products worldwide. Ray Dalio’s Bridgewater Associates owns 612,560 shares of The Estée Lauder Companies Inc. (NYSE:EL) as of June 2022, worth $156 million and representing 0.66% of the 13F portfolio. The Estée Lauder Companies Inc. (NYSE:EL) is one of the best growth stocks to buy according to Ray Dalio.
On September 20, Goldman Sachs analyst Jason English upgraded The Estée Lauder Companies Inc. (NYSE:EL) to Buy from Neutral with a price target of $303, up from $298. China’s zero-Covid policy still impacts the company’s business, but after the derating in the stock, these headwinds are now “adequately reflected” in the valuation, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, Terry Smith’s Fundsmith LLP is the leading position holder in The Estée Lauder Companies Inc. (NYSE:EL), with approximately 6 million shares worth $1.5 billion. Overall, 46 hedge funds were bullish on the stock at the end of June 2022.
Here is what Harding Loevner Global Equity Fund has to say about The Estée Lauder Companies Inc. (NYSE:EL) in its Q3 2021 investor letter:
“We sold cosmetic producer Estée Lauder, which we bought last March. At the time, the market reflected a dire outlook for retail demand, especially tourist-related; however, we found its Chinese business attractive and admired its agility across social media and other digital channels. As the stock has appreciated, the resulting valuation now leaves no room for error, such as a potential shift of Chinese consumers’ tastes away from US brands.”
6. Stryker Corporation (NYSE:SYK)
Number of Hedge Fund Holders: 46
Stryker Corporation (NYSE:SYK) is a Michigan-based medical technology company, operating through two segments – MedSurg and Neurotechnology, and Orthopaedics and Spine. On August 3, Stryker Corporation (NYSE:SYK) declared a $0.695 per share quarterly dividend. The dividend is payable on October 31, to shareholders of record as of September 30. Ray Dalio owns 629,041 shares of Stryker Corporation (NYSE:SYK) as of Q2 2022, worth over $125 million and representing 0.53% of the total 13F portfolio.
On October 5, Citi analyst Joanne Wuensch maintained a Buy recommendation on Stryker Corporation (NYSE:SYK) but lowered the price target on the shares to $246 from $255, noting that hospital staffing remains a headwind but it is at least stable, and there are pockets of improved pricing.
According to Insider Monkey’s Q2 data, 46 hedge funds were long Stryker Corporation (NYSE:SYK), compared to 41 funds in the last quarter. Arrowstreet Capital is the leading stakeholder of the company, with more than 1 million shares worth $206 million.
In addition to PayPal Holdings, Inc. (NASDAQ:PYPL), Airbnb, Inc. (NASDAQ:ABNB), and Booking Holdings Inc. (NASDAQ:BKNG), Stryker Corporation (NYSE:SYK) is one of the best growth stocks in the Bridgewater portfolio.
Here is what Nelson Capital Management has to say about Stryker Corporation (NYSE:SYK) in its Q2 2021 investor letter:
“We bought a position in Stryker (tkr: SYK), a medical device company that acts as a one-stop shop for hospitals and ambulatory surgery centers. Stryker is positioned to outperform due to higher anticipated demand for elective procedures.”
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Disclosure: None. 12 Best Growth Stocks to Buy According to Ray Dalio is originally published on Insider Monkey.