Apple Inc. (AAPL): AQR Capital’s Top Pick

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AT&T Inc. (NYSE:T) was the fourth largest 13F holding for AQR during 3Q 2012 and is also one of the top dividend plays around. AQR upped its stake in the wireless company by 27% during the quarter. Compared to major competitor Verizon, AT&T trades on the high end at a 1.5x P/S, compared to Verizon’s 1x sales multiple. The big downside for AT&T is its continued battle for spectrum, especially since its bid to purchase T-Mobile fell apart.

We do remain cautious about the long-term prospects of AT&T, with respect to service and coverage in its wireless segment. Positives for the wireless provider is that during 4Q 2012, it managed to sell a record 10 million smartphones, thanks in large part to Apple Inc. (NASDAQ:AAPL)’s iPhone 5. With over $40 billion in trailing twelve month free cash flow, the wireless company should not have a problem funding its 5% dividend yield in the interim. Billionaire Ray Dalio of Bridgewater Associates is one of AT&T’s top-name investors (see Ray Dalio’s top picks).

Wal-Mart Stores, Inc. (NYSE:WMT), the retail giant, finally broke into AQR’s top five holdings after the firm upped its stake by 18% during 3Q 2012. Wal-Mart and one of its top competitors, Target, trade relatively in line on a P/E and P/S basis, and both pay a 2.3% dividend yield. Wal-Mart’s longer-term growth should come by way greater international expansion and solid same-store sales growth. Same-store sales growth is expected to be up 2.3% in FY2013, thanks to a weak economy and the retailer’s low-priced products. Warren Buffett is the top fund owner of those we track with over 46 million shares (check out Warren Buffett’s new picks).

To recap: AQR is one of the many firms making big bets on Apple Inc. (NASDAQ:AAPL), but also has a couple key investments in the oil and gas industry. Other notable picks of AQR’s include a high dividend play in AT&T, and a bet on the world’s largest retailer.

Read more related coverage here:

Wal-Mart Is One of Warren Buffett’s Favorite Service Stocks

Vodafone Group: An Overlooked Telecom Giant

5 Dividend Stocks Growing Dividends Faster Than The S&P 500 Index

Disclosure: I have no positions in any of the stocks mentioned in this article

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