In this article, we discuss 10 Stocks to Buy in 2022 According to John Rogers’ Ariel Investments.
John Rogers is a popular portfolio manager and founder of Ariel Investments. According to the fund’s last reported filing for Q2 2022, the fund managed $10 billion in securities and had a top 10 company concentration of 29.7%. John Rogers majored in economics from Princeton University and subsequently worked as a stockbroker for 2.5 years, after which he launched Ariel Investments in 1983. John Rogers got recognition for his unique investment approach, which entailed investing in small-sized companies with a market cap of $50 million to $1 billion.
Ariel Investments is a peculiar fund when it comes to its investment strategy. The fund invests in relatively unknown companies which are of small to medium size and is focused on attracting small investors into the fund. The stocks in the fund’s portfolio are hand-picked by John Rogers, which he thinks are primed to outperform the market, especially in periods of downturns. John Rogers identifies companies which have a sustained earnings history and operate in sectors which are often ignored by large investors and Wall Street banks.
The current condition of the equity markets around the world is extremely volatile as the FED continues on its rate hike to fight inflation. Traders are now pricing in a 75-basis point rate hike in the next meeting of the US central bank, which will then further elevate the likelihood of a recession. This kind of volatile market environment favors bottom-up stock picking. The rotation from growth stocks to value stocks will continue as long as the health of the economy continues to deteriorate. This is why we think that John Rogers’s fund offers some unique stocks which have a good track record of earnings and are expected to provide a good return on investment even in the current bear market.
Some of the notable top picks of Ariel Investments include Microsoft Corporation (NASDAQ:MSFT), Mattel Inc (NASDAQ:MAT) and Mohawk Industries, Inc. (NYSE:MHK). But in this article we will take a look at the new stock picks of the hedge fund.
John Rogers of Ariel Investments
Our Methodology
We picked these stocks from the second quarter portfolio of Ariel Investments. During the June quarter, the fund initiated new stakes in eight of these stocks and increased its hold in the other two companies.
10 Stocks to Buy in 2022 According to John Rogers’ Ariel Investments
10. Charles River Laboratories International, Inc. (NYSE:CRL)
Ariel Investments stake value: $126 million
Number of Hedge Fund Holders: 45
Charles River Laboratories International, Inc. (NYSE:CRL) is an American pharmaceutical company which provides drug research services to the biotechnology and pharmaceutical sectors. The company was established in 1947 and therefore has a long history of being in operation. During Q2 2022, Ariel Investments increased its stake in Charles River Laboratories International, Inc. (NYSE:CRL) by 182%. The fund’s total stake in the company amounted to roughly $126 million, which represented 1.25% of its 13F portfolio.
Charles River Laboratories International, Inc. (NYSE:CRL) recently reported Q2 2022 results with revenue of $973 million, up 6.40% YoY. The company reported a normalized EPS of $2.77, beating the market consensus estimate by $0.03.
Here is what ClearBridge All Cap Growth Strategy has to say about Charles River Laboratories International, Inc. (NYSE:CRL) in its Q4 2021 investor letter:
“Health care also provides a good example of industry diversification as we look beyond our historical foundation in biotechnology and pharmaceutical companies to other promising areas like life sciences, tools and lab services. We recently added Charles River Laboratories, a leading drug discovery, non-clinical development and manufacturing organization which serves a large and growing market that is being driven by research & development/biologics manufacturing and increased outsourcing. The company is also well-positioned to benefit from rapid growth in cell and gene therapies on the heels of recent M&A activity. The business is a solid free cash flow generator and should continue to see further operating leverage on the back of top line growth.”
At the end of Q2 2022, 45 hedge funds tracked by Insider Monkey owned stakes in Charles River Laboratories International, Inc. (NYSE:CRL). Ariel Investments was the stock’s leading stakeholder as of Q2 2022.
9. Zebra Technologies Corporation (NASDAQ:ZBRA)
Ariel Investments stake value: $105 million
Number of Hedge Fund Holders: 33
Zebra Technologies Corporation (NASDAQ:ZBRA) provides enterprise-level automation and data collection services. The company’s offerings include barcode printers, workflow optimization software and mobile computers. During Q2 2022, Ariel Investments increased its stake in Zebra Technologies Corporation (NASDAQ:ZBRA) by 286%. The fund’s total stake in the company amounted to approximately $105 million, which represented 1.05% of its 13F portfolio.
Zebra Technologies Corporation (NASDAQ:ZBRA) performed well in Q2 2022 and reported revenue of $1.47 billion, up 6.4% YoY. The company posted a normalized EPS of $4.61, beating the market consensus estimates by $0.41. Moreover, the company purchased its own shares worth $300 million from the market in Q2 2022.
At the end of Q2 2022, 33 hedge funds tracked by Insider Monkey owned stakes in Zebra Technologies Corporation (NASDAQ:ZBRA). Ariel Investments was the stock’s leading stakeholder as of Q2 2022.
8. Sensata Technologies Holding PLC (NYSE:ST)
Ariel Investments stake value: $172,000
Number of Hedge Fund Holders: 25
Sensata Technologies Holding PLC (NYSE:ST) is a leading supplier of sensors for the automotive and aerospace sector for industrial applications. The automobile sector accounts for the majority of the company’s sales. Sensata Technologies Holding PLC (NYSE:ST) was a new addition to Ariel Investments portfolio as the fund acquired 4,155 shares of the company during Q2 2022 amounting to $172,000
Separately, investment management firm Diamond Hill Capital also mentioned Sensata Technologies Holding plc (NYSE:ST) in its first-quarter 2022 investor letter, stating:
“Our bottom contributors included Sensata Technologies. Developer of industrial sensors, Sensata Technologies is facing ongoing uncertainty in the automotive industry tied to supply chain disruptions and semiconductor chip shortages.”
At the end of Q2 2022, 25 hedge funds tracked by Insider Monkey owned stakes in Sensata Technologies Holding PLC (NYSE:ST). Select Equity Group was the stock’s leading stakeholder in Q2 as the fund owns a $409 million stake in the company.
7. Reynolds Consumer Products Inc. (NASDAQ:REYN)
Ariel Investments stake value: $110,000
Number of Hedge Fund Holders: 17
Reynolds Consumer Products Inc. (NASDAQ:REYN) manufactures and sells products for home use. The company’s products include Reynolds and Hefty, that provide ease in preparing and storing food. Reynolds Consumer Products Inc. (NASDAQ:REYN) was a new addition to Ariel Investments’ portfolio as the fund acquired 4,033 shares of the company during Q2 2022, amounting to $110 thousand.
Reynolds Consumer Products Inc. (NASDAQ:REYN) recorded strong business performance in second quarter of 2022 and reported revenue of $917 million, up 5.04% YoY. The company posted a normalized EPS of $0.26. Moreover, the company purchased its own shares worth $300 million from the market in Q2 2022.
At the end of Q2 2022, 17 hedge funds tracked by Insider Monkey owned stakes in Reynolds Consumer Products Inc. (NASDAQ:REYN). Harris Associates was the stock’s leading stakeholder in Q2, owning shares worth $24 million. The fund’s position in the stock increased by 12% from Q1 2022.
6. Prestige Consumer Healthcare Inc. (NYSE:PBH)
Ariel Investments stake value: $44 million
Number of Hedge Fund Holders: 18
Prestige Consumer Healthcare Inc. (NYSE:PBH) is a publicly traded American corporation that sells branded over-the-counter healthcare and domestic cleaning goods to drugstores and e-commerce channels. Prestige Consumer Healthcare Inc. (NYSE:PBH) was a new addition to Ariel Investments’ portfolio as the fund acquired 760,153 shares of the company during Q2 2022, amounting to $44 million. Unlike Microsoft Corporation (NASDAQ:MSFT), Mattel Inc (NASDAQ:MAT) and Mohawk Industries, Inc. (NYSE:MHK), PBH is a relatively unknown stock in John Rogers’ portfolio.
Reynolds Consumer Products Inc. (NASDAQ:REYN) reported solid result for fiscal Q1 2023 and reported revenue of $277 million, up 2.93% YoY. The company posted a normalized EPS of $1.09, beating the market consensus estimate by $0.05.
At the end of Q2 2022, 18 hedge funds tracked by Insider Monkey owned stakes in Prestige Consumer Healthcare Inc. (NYSE:PBH). Ariel Investments was the stock’s leading stakeholder as of Q2 2022.
5. Patterson Companies, Inc. (NASDAQ:PDCO)
Ariel Investments stake value: $154,000
Number of Hedge Fund Holders: 20
Patterson Companies, Inc. (NASDAQ:PDCO) is a leading medical supplies company. The company primarily serves the United States and Canada by providing dentistry and veterinary practice management tools. Patterson Companies, Inc. (NASDAQ:PDCO) was a new addition to Ariel Investments’ portfolio as the fund acquired 5,073 shares of the company during Q2 2022 amounting to $154,000.
Here is what Heartland Advisors has to say about Patterson Companies, Inc. (NASDAQ:PDCO) in its Q2 2021 investor letter:
“Patterson Companies Inc. (PDCO) is a leading distributor of dental and animal health products. Sales have been on the rise and the company reported a record $6.1 billion in revenue for the year ending in April. Shares of the business are up double digits through the first half of the year, and the holding has been a solid contributor to performance.
Management at Patterson has done an impressive job of expanding operating margins and making strategic acquisitions that have fit with the business’ core competencies since coming aboard in 2017. However, shares set back late in the quarter, after the company reported better than expected earnings but issued guidance that was more conservative than Wall Street expectations. Due to the ongoing unwinding of pent-up demand in dental services and the strength of Patterson’s animal health line, we believe recent earnings guidance will prove to be overly cautious. We view recent softness in shares of Patterson as an overreaction and remain constructive on this industry leader that is priced at just .5X sales.”
At the end of Q2 2022, 20 hedge funds tracked by Insider Monkey owned stakes in Patterson Companies, Inc. (NASDAQ:PDCO).
4. Motorola Solutions, Inc. (NYSE:MSI)
Ariel Investments stake value: $174,000
Number of Hedge Fund Holders: 31
Motorola Solutions, Inc. (NYSE:MSI) is a global communications and analytics company. The majority of the company’s revenue is generated by sales of mobile radios. Ariel Investments bought 829 shares of the company during Q2 2022, amounting to $174,000.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about Motorola Solutions, Inc. (NYSE:MSI) in its Q4 2021 investor letter:
“The ClearBridge Large Cap Value Strategy outperformed for the year, driven in part by long-term holdings within the IT sector such as Motorola Solutions. Motorola Solutions (MSI), a leading provider of mission-critical communications products and services with more than 100,000 public safety and commercial customers in 100 countries, continues to execute at a very high level. It is leveraging its strong competitive position to expand its addressable market through targeted tuck-in acquisitions in areas such as video and command-to-control centers.”
At the end of Q2 2022, 31 hedge funds tracked by Insider Monkey owned stakes in Motorola Solutions, Inc. (NYSE:MSI).
3. The Hackett Group, Inc. (NASDAQ:HCKT)
Ariel Investments stake value: $106,000
Number of Hedge Fund Holders: 15
The Hackett Group, Inc. (NASDAQ:HCKT) is an advisory firm which provides business transformation, executive advisory and cloud implementation services to businesses. A major source of the company’s revenues is generated in the United States. John Rogers’ fund bought 5,580 shares of the company during Q2 2022.
The Hackett Group, Inc. (NASDAQ:HCKT) announced solid results for the second quarter of 2022 and reported revenue of $75.93 million, up 3.73% YoY. The company posted a normalized EPS of $0.38, beating the market consensus estimate by $0.04. The company also declared a dividend of $0.11/share, in line with the previous dividend and payable to shareholders on October 7.
At the end of Q2 2022, 15 hedge funds tracked by Insider Monkey owned stakes in HCKT.
2. Generac Holdings Inc. (NYSE:GNRC)
Ariel Investments stake value: $189,000
Number of Hedge Fund Holders: 34
Established in 1959, Generac Holdings Inc. (NYSE:GNRC) designs and manufactures power generation. The company offers standby generators and a wide range of clean energy products. Generac Holdings Inc. (NYSE:GNRC) was a new addition to Ariel Investments’ portfolio as the fund acquired 896 shares of the company during Q2 2022 amounting to $189,000.
Generac Holdings Inc. (NYSE:GNRC) reported solid result for Q2 2022 with revenue of $1.29 billion, up 40.37% YoY. The company posted a normalized EPS of $2.999, beating the market consensus estimate by $0.36.
At the end of Q2 2022, 34 hedge funds tracked by Insider Monkey owned stakes in Generac Holdings Inc. (NYSE:GNRC).
1. Dun & Bradstreet Holdings, Inc. (NYSE:DNB)
Ariel Investments stake value: $150,000
Number of Hedge Fund Holders: 25
Dun & Bradstreet Holdings, Inc. (NYSE:DNB) is a global company which provides decision data and analytics to businesses. Dun & Bradstreet Holdings, Inc. (NYSE:DNB) was a new addition to Ariel Investments’ portfolio as the fund acquired 9,984 shares of the company during Q2 2022, amounting to $150,000
Dun & Bradstreet Holdings, Inc. (NYSE:DNB) was mentioned by Weitz Investments in its Q4 2021 investor letter. Here is what it said:
“In the second half of the year, resurgent inflation and higher interest rate fears reined in investor appetite for higher-growth assets trading at premium multiples… We also note that our investment thesis has always contemplated a higher-interest-rate environment. While this rotation may reasonably bring some market “highflyers” back to Earth, we continue to watch for opportunities to add to these terrific businesses should further pressure yield attractive prices. Finally, this year’s new investment in Dun & Bradstreet has been off to a slow start. Less than one year into our ownership, we remain encouraged by the progress management has made in returning the business to organic growth, and we believe our patience will ultimately be rewarded.”
At the end of Q2 2022, 25 hedge funds tracked by Insider Monkey owned stakes in Dun & Bradstreet Holdings, Inc. (NYSE:DNB).
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Disclosure: None. 10 Stocks to Buy in 2022 According to John Rogers’ Ariel Investments is originally published on Insider Monkey.
