In this article, we will be taking a look at 10 safe stocks to buy now according to billionaire Dan Loeb.
Billionaire Dan Loeb, the manager of Third Point, holds large positions in several renowned companies such as Microsoft Corporation (NASDAQ:MSFT), Dell Technologies Inc. (NYSE:DELL), and UnitedHealth Group Inc. (NYSE:UNH). This February, the activist investor took to a private investor call where he discussed the potential of another of his major holdings, Amazon.com, Inc. (NASDAQ:AMZN). According to the Wall Street Journal, Loeb told investors that he saw about $1 trillion in untapped value in the company, something that the market is failing to recognize. He mentioned the $1.5 trillion enterprise value of Amazon Web Services while attempting to bring investors’ attention to the stock.
According to Bloomberg, Loeb’s flagship Offshore Fund returned -11.5% in the first quarter. In May, Loeb’s Third Point announced that it had added to its position in Shell plc (NYSE:SHEL), a move that helped the hedge fund mitigate losses. The increased stake in the company also opened new avenues for Third Point, which found investment opportunities in oil and natural gas companies. In Loeb’s first-quarter 2022 investor letter, Third Point’s annualized return was recorded at 14.3%, compared to the S&P 500’s 9.3% annualized return. He also commented that the stock market was currently imbalanced, which is why Third Point has shifted its focus to more cyclical stocks. Yet he still holds large positions in a number of non-cyclical, defensive stocks in the healthcare and utility sectors as of his 13F holding for the first quarter of 2022.
Our Methodology
We have selected 1o safe stocks from Dan Loeb’s latest 13F holdings with strong P/E ratios mostly under 30, free cash flow, and positive analyst ratings. These stocks were picked up by hedge funds in the first quarter of 2022, according to Insider Monkey’s hedge fund data for that quarter when 912 hedge funds were tracked. These stocks have mostly positive ratings and upside potential, according to analysts’ price targets. The stocks are ranked based on Loeb’s stake value in each of them, from the lowest to the highest.
Safe Stocks to Buy Now According to Billionaire Dan Loeb
10. Amazon.com, Inc. (NASDAQ:AMZN)
Third Point’s Stake Value: $57,049,000
Percentage of Third Point’s 13F Portfolio: 0.7%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is a tech and retail giant engaging in the sale of consumer products and subscriptions in North America and internationally. The company is known for rapidly growing its cash flow, making it one of the best defensive plays on the market today. It has a free cash flow per share growth rate of 4.8%, standing at a 7.3% difference from the rest of the tech sector.
This July, analyst Lee Horowitz at Deutsche Bank reiterated a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) shares. The analyst also holds a $155 price target on the stock. The company is able to maintain its cash flow with its sturdy profitability as witnessed in the quarter ended March 31st. Amazon Web Services delivered healthy profit margins in that quarter, earning $6.5 billion in operating income. The company’s advertising business has also been profitable, increasing ad sales by over 25% in the past six quarters.
Amazon.com, Inc. (NASDAQ:AMZN) brought in $3 billion through record Prime Day sales which attracted applause from Wall Street this July. Analysts on Wall Street indicated that the strong performance on Prime Day was positive for Amazon.com, Inc. (NASDAQ:AMZN). Brian Nowak, an analyst at Morgan Stanley, commented that the stock is ready to accelerate in the latter half of 2022.
In the first quarter of 2022, 271 hedge funds held stakes in Amazon.com, Inc. (NASDAQ:AMZN), with a total stake value of over $48 billion. Locust Wood Capital Advisers was the largest stakeholder in the company, holding 322,433 shares worth over $34 million.
Oakmark Funds, an investment management firm, mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter of 2022 investor letter. Here’s what they said:
“Amazon (NASDAQ:AMZN) is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”
Like Microsoft Corporation (NASDAQ:MSFT), Dell Technologies Inc. (NYSE:DELL), and UnitedHealth Group Inc. (NYSE:UNH), Amazon.com, Inc. (NASDAQ:AMZN) is a top stock pick hedge funds are eyeing this year.
9. Cano Health Inc. (NYSE:CANO)
Third Point’s Stake Value: $73,025,000
Percentage of Third Point’s 13F Portfolio: 0.95%
Number of Hedge Fund Holders: 38
Cano Health Inc. (NYSE:CANO) is a healthcare company providing primary care medical services to individuals in the US and Puerto Rico. The company owns and operates medical centers enabled by CanoPanorama, which is a proprietary population health management tech-powered platform. It also operates pharmacies and provides dental services in its medical centers.
This June, John Ransom, an analyst at Raymond James, initiated coverage of Cano Health Inc. (NYSE:CANO) with an Outperform rating, alongside an $8 price target.
Ransom cited Cano Health Inc.’s (NYSE:CANO) growth strategy for his decision. He noted that the company could be expected to benefit from growth in Medicare Advantage. He expects Cano Health Inc. (NYSE:CANO) to grow revenue at a 30% CAGR between 2022 and 2024. This makes it one of the best safe stocks in Loeb’s portfolio currently.
Out of 912 hedge funds, 38 funds were long Cano Health Inc. (NYSE:CANO) in the first quarter. In the previous quarter, 41 hedge funds were long the stock. Their total stake values were $396 million and $607 million respectively.
8. Dell Technologies Inc. (NYSE:DELL)
Third Point’s Stake Value: $101,886,000
Percentage of Third Point’s 13F Portfolio: 1.3%
Number of Hedge Fund Holders: 59
Dell Technologies Inc. (NYSE:DELL) is an information technology company that designs, develops, and sells IT solutions, products, and services across the globe. The company also offers networking products and services to business customers. It is based in Round Rock, Texas.
Simon Leopold, an analyst at Raymond James, holds an Outperform rating on Dell Technologies Inc. (NYSE:DELL) as of this July. The analyst also has a $54 price target placed on the stock.
Dell Technologies Inc. (NYSE:DELL) offers investors a chance to invest in a value tech stock that has performed well in terms of cash flow and earnings yield in times of inflation. It has a P/E ratio of under 7 and is reasonably valued, making it a good safe stock option for investors today.
Our hedge fund data for the first quarter shows 59 hedge funds long Dell Technologies Inc. (NYSE:DELL), with a total stake value of $1.9 billion. Of these funds, Lyrical Asset Management was the largest stakeholder, holding 5,238,044 shares in the company, worth about $262 million.
Dell Technologies Inc. (NYSE:DELL) is one of the most popular stocks among hedge funds today, just like Microsoft Corporation (NASDAQ:MSFT) and UnitedHealth Group Inc. (NYSE:UNH).
7. Suncor Energy Inc. (NYSE:SU)
Third Point’s Stake Value: $114,120,000
Percentage of Third Point’s 13F Portfolio: 1.5%
Number of Hedge Fund Holders: 41
Suncor Energy Inc. (NYSE:SU) is an integrated energy company. It focused on developing petroleum resource basins in the Canadian Athabasca oil sands. The company also explores, acquires, develops, produces, transports, refines, and markets crude oil in Canada and abroad.
Credit Suisse analyst Manav Gupta holds an Outperform rating on shares of Suncor Energy Inc. (NYSE:SU) as of this July.
The analyst also mentioned that Suncor Energy Inc. (NYSE:SU) could generate over $8.6 billion in pre-tax cash proceeds through its retail gas station network. Gupta believes there is a possibility that Suncor Energy Inc. (NYSE:SU) may sell its retail business and benefit its shareholders with higher returns after the sale. With the company’s financial strength, high cash flow growth, and profitable investments in renewable energy, it is a top safe stock to buy now according to billionaire Dan Loeb, who has a large stake in the company as well.
Suncor Energy Inc. (NYSE:SU) had 41 hedge funds holding stakes in its stock in the first quarter of 2022, with a total stake value of about $2.1 billion. In the previous quarter, 33 hedge funds were long the stock, with a total stake value of $1.3 billion.
ClearBridge Investments, an investment management firm, mentioned Suncor Energy Inc. (NYSE:SU) in its first quarter of 2022 investor letter. Here’s what they said:
“Also within the structural bucket, we added to our commodity exposure with the purchase of Suncor Energy (NYSE:SU). Suncor, a past holding, is a Canadian integrated oil company where we capitalized on attractive valuation due to a COVID-19-induced slowdown. We expect recovery in oil demand and strong pricing will result in faster than expected free cash flow growth and financial deleveraging.
The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out.”
6۔ Microsoft Corporation (NASDAQ:MSFT)
Third Point’s Stake Value: $154,155,000
Percentage of Third Point’s 13F Portfolio: 2%
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) is a leading tech giant that develops, licenses, and supports software, services, devices, and solutions across the globe. The company runs a range of popular software products like Microsoft Office, Exchange, Microsoft Teams, and Skype. It also has its own brand of electronic products such as laptops, gaming consoles, and more.
Mizuho’s Gregg Moskowitz holds a Buy rating on Microsoft Corporation (NASDAQ:MSFT) shares as of this July. The analyst also has a $340 price target on the stock. The Azure platform owned by the company is one of my factors increasing its cash flow, bringing in a 46% year-over-year revenue increase in company earnings in the third quarter. The company has a P/E ratio of 27.2. With its strong profitability and free cash flow, Microsoft Corporation (NASDAQ:MSFT) is one of the best safe tech stocks on the market today.
The company’s EPS in the fiscal third quarter of 2022 was $2.2, beating estimates by $0.02. Microsoft Corporation’s (NASDAQ:MSFT) revenue for the quarter was $49.4 billion, also beating estimates by $312.7 million. The company is also a reliable dividend-payer, with a dividend history spanning 18 years and a 5-year dividend CAGR of 9.6%, which adds to its defensiveness.
There were 259 hedge funds holding stakes in Microsoft Corporation (NASDAQ:MSFT) in the first quarter. Their total stake value was $65.6 billion. Locust Wood Capital Advisers was the largest stakeholder in the company, holding 235,713 shares worth $60.5 million.
Like Dell Technologies Inc. (NYSE:DELL) and UnitedHealth Group Inc. (NYSE:UNH), Microsoft Corporation (NASDAQ:MSFT) is one of the most attractive stocks in Dan Loeb’s portfolio this year.
5. DuPont de Nemours, Inc. (NYSE:DD)
Third Point’s Stake Value: $247,229,000
Percentage of Third Point’s 13F Portfolio: 3.2%
Number of Hedge Fund Holders: 50
DuPont de Nemours, Inc. (NYSE:DD) is a specialty chemicals company providing tech-based materials and solutions in the US, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. The company operates through its Electronics & Industrial, Mobility & Materials, and Water & Protection segments.
UBS analyst Joshua Spector holds a Buy rating on shares of DuPont de Nemours, Inc. (NYSE:DD) as of this July. Spector also has an $87 price target placed on the stock.
This July, analyst Michael Leithead at Barclays commented that he does not expect to see weakening stock performance in the chemicals sector. He reiterated an Equal Weight rating on DuPont de Nemours, Inc. (NYSE:DD) shares and mentioned that earnings in the second quarter should be solid. The stock is hence among the best defensive plays in the chemicals sector.
Out of 912 hedge funds, 50 hedge funds were long DuPont de Nemours, Inc. (NYSE:DD) in the first quarter of 2022. Their total stake value was $1.5 billion.
4. UnitedHealth Group Inc. (NYSE:UNH)
Third Point’s Stake Value: $308,532,000
Percentage of Third Point’s 13F Portfolio: 4.01%
Number of Hedge Fund Holders: 103
UnitedHealth Group Inc. (NYSE:UNH) is a diversified healthcare company operating in the US. The company offers consumer-oriented health benefit plans and services, alongside healthcare coverage and well-being services among more.
Kavin Caliendo, an analyst at UBS, raised his price target on UnitedHealth Group Inc. (NYSE:UNH) shares this July from $545 to $570. The analyst also reiterated his Neutral rating on the stock.
On July 15th, UnitedHealth Group Inc. (NYSE:UNH) raised its EPS outlook for the fiscal year of 2022 in light of its stellar second-quarter earnings results. The company had an EPS of $5.6, beating estimates by $0.4, while its revenue was $80.3 billion, also beating estimates by $652.1 million. The EPS outlook has been increased to $21.4 to $21.9, while the consensus EPS estimate for 2022 is $21.7. As UnitedHealth Group Inc. (NYSE:UNH) is a healthcare stock that not only benefits from positive analyst ratings, financial performance, and a reputation of stability in times of recession, it is among the best safe stocks in Dan Loeb’s portfolio.
Our hedge fund data for the first quarter shows 103 funds long UnitedHealth Group Inc. (NYSE:UNH), with a total stake value of $12.8 billion. In the previous quarter, 96 hedge funds were long the stock, with a total stake value of $13.7 billion.
Baron Funds, an asset management firm, mentioned UnitedHealth Group Inc. (NYSE:UNH) in its first quarter of 2022 investor letter. Here’s what they said:
“UnitedHealth Group Incorporated is a leading diversified health and well- being company whose divisions include insurance arm United Healthcare and Optum, which offers care delivery and other services. Shares increased on a fourth quarter beat and a reaffirmation of what is likely conservative guidance for 2022. We believe UnitedHealth leads the health care industry in innovation and execution, as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
3۔ S&P Global Inc. (NYSE:SPGI)
Third Point’s Stake Value: $393,773,000
Percentage of Third Point’s 13F Portfolio: 5.1%
Number of Hedge Fund Holders: 97
S&P Global Inc. (NYSE:SPGI) is a financials company that provides credit ratings, benchmarks, analytics, and workflow solutions. The company caters primarily to the global capital, commodity, and automotive markets. It operates through six segments: S&P Global Ratings, S&P Dow Jones Indices, S&P Global Commodity Insights, S&P Global Market Intelligence, S&P Global Mobility, and S&P Global Engineering Solutions.
Raymond James’ Patrick O’Shaughnessy holds an Outperform rating on S&P Global Inc. (NYSE:SPGI) shares as of this June. The analyst also has a $417 price target on the stock.
This June, S&P Global Inc. (NYSE:SPGI) declared a $0.8 per share quarterly dividend with a forward yield of about 1.1%. The dividend is payable to shareholders on September 12th. According to Nasdaq, S&P Global Inc.’s (NYSE:SPGI) expected long-term earnings per share growth rate was 12% as of this March. Since the stock is expected to continue performing well for the next three to five years, it is among the top safe dividend stock picks in Loeb’s 13F holdings.
In the first quarter of 2022, 97 hedge funds were long S&P Global Inc. (NYSE:SPGI), with a total stake value of $9.9 billion.
Cooper Investors, an investment management firm, mentioned S&P Global Inc. (NYSE:SPGI) in its first-quarter 2022 investor letter. Here’s what they said:
“This quarter, S&P Global announced the successful completion of its acquisition of IHS Markit. The deal makes S&P a global leader across the information services industry. The Fund has been long term shareholders of S&P, building a position back in 2015 when the organisation was still named McGraw-Hill Financial. We saw the initial opportunity as it refocused the business from a publishing and financial conglomerate towards its core data and financial assets. S&P’s credit ratings, benchmarks and analytics businesses in global capital and commodity markets carry leading positions, defensible offerings, consistent growth and high margins – as true today as it was seven years ago. With the increased focus management have applied over a lengthy period we see improved revenue growth, margins and cash flows…” (Click here to see the full text)
2. Danaher Corporation (NYSE:DHR)
Third Point’s Stake Value: $730,392,000
Percentage of Third Point’s 13F Portfolio: 9.5%
Number of Hedge Fund Holders: 83
Danaher Corporation (NYSE:DHR) is a healthcare company that designs, manufactures, and markets professional, medical, industrial, and commercial products and services. The company operates internationally through its Life Sciences, Diagnostics, and Environmental & Applied Solutions segments.
Analyst Deane Dray at RBC Capital holds an Outperform rating on Danaher Corporation (NYSE:DHR) shares as of this July. The analyst also raised his price target on the stock to $317 in the same month. Dray commented that Danaher Corporation (NYSE:DHR) hosts a market-leading, mostly defensive portfolio. It is among Loeb’s safest stock picks this year.
There were 83 hedge funds long Danaher Corporation (NYSE:DHR) in the first quarter, compared to 87 hedge funds long the stock in the previous quarter. Their total stake values were $6.2 billion and $7.4 billion respectively.
1. PG&E Corporation (NYSE:PCG)
Third Point’s Stake Value: $827,442,000
Percentage of Third Point’s 13F Portfolio: 10.8%
Number of Hedge Fund Holders: 51
PG&E Corporation (NYSE:PCG) is an electric utility company operating through its subsidiary, the Pacific Gas and Electric Company. It sells and delivers electricity and natural gas to customers in the US.
Barclays analyst Eric Beaumont holds an Overweight rating on PG&E Corporation (NYSE:PCG) shares as of this July, alongside a price target of $16. Utility stocks like PG&E Corporation (NYSE:PCG) are often picked up by investors looking for defensive stock options, and the stock is currently Third Point’s second-largest position.
PG&E Corporation (NYSE:PCG) has a revenue growth percentage of 15.1% year-over-year, and free cash flow growth of 79.8% in 2021. Its P/E ratio as of this July is 9.7.
PG&E Corporation (NYSE:PCG) had 51 hedge funds holding stakes in its stock in the first quarter of 2022. Their total stake value was $3.2 billion.
Third Point Management, an investment management firm, mentioned PG&E Corporation (NYSE:PCG) in its first quarter of 2022 investor letter. Here’s what they said:
“We continue to see immense value and potential in our position in Pacific Gas & Electric, which emerged from bankruptcy just two years ago. PG&E’s new CEO, Patti Poppe, has transformed the organization, creating a new leadership and safety culture around a talented, committed, and dynamic executive team that is rethinking the way the Company addresses the energy needs of Northern Californians. California is at the forefront of the new energy transition with aggressive renewable procurement goals and high electric vehicle adoption, yet the state faces escalating climate change risks due to extreme drought conditions and wildfires. These conditions present unique challenges to utilities operating in the state. Patti and her team have brought new and creative solutions to these challenges with her focus on a lean operating system and an ambitious undergrounding plan.
In April, PG&E Corporation reported a straightforward and uneventful set of a results, delivering on its promises to customers and investors. As investors, we celebrate that simplicity. At current prices, the Company trades at under 12x 2022 consensus earnings compared to the utility index average of 21x and below its closest California peer, Edison International, at 15x. While there is an overhang from shares to be monetized by the PG&E Fire Victim Trust, PG&E will benefit from the reinstatement of a cash dividend in 2023 and if, as hoped, it is included in the S&P 500 index. Over the next year, we think PG&E will Page 7 continue to re-rate towards industry averages while also growing earnings at an industry-leading 10% per year. In this type of market environment, the financial equation of consistent earnings growth and multiple re-rating makes for a wonderfully boring story and a solid anchor for our portfolio as Third Point’s largest position.”
You can also take a look at 10 Best Bank Stocks To Buy Now and 10 States with the Most Expensive Health Insurance.
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Disclosure: None. 10 Safe Stocks to Buy Now According to Billionaire Dan Loeb is originally published on Insider Monkey.
