Gabalex Capital Management’s Top Stock Picks for Q2

#3 Schlumberger Limited. (NYSE:SLB)

 – Shares held by Gabalex Capital (as of March 31): 300,000

 – Value of Holding (as of March 31): $22.12 million

Gabalex Capital became quite bullish on Schlumberger Limited. (NYSE:SLB) during the first quarter, doubling its stake in the company during the period. The fund’s conviction in the stock was rewarded in April, when Schlumberger Limited. (NYSE:SLB)’s stock appreciated by 9%. However, the stock has taken a hit in the last few days after rating agency Moody’s lowered its credit rating on Schlumberger Limited to Aa3 from A1 on April 29. Along with the downgrade, Moody’s also lowered its rating outlook on the company to ‘negative’ from ‘stable’, suggesting that it could reduce the rating even further going forward. Though Schlumberger’s stock has fallen by nearly 10% since Moody’s lowered its rating, it is still trading up by 4.49% year-to-date. On May 9, analysts at Goldman Sachs reiterated their ‘Buy’ rating on the stock, while upping their price target on it to $94 from $82, which represents potential upside of nearly 30%. Billionaire Ken Fisher‘s Fisher Asset Management increased its holding in Schlumberger marginally during the first quarter, by 1% to 4.27 million shares.

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#2 Home Depot Inc (NYSE:HD)

 – Shares held by Gabalex Capital (as of March 31): 225,000

 – Value of Holding (as of March 31): $30.02 million

Moving on, Gabalex Capital continued to hold the same number of shares in Home Depot Inc (NYSE:HD) at the end of March that it did at the end of 2015. The stock of the retailing giant has continued its multi-year bull run this year, appreciating by 2.17% so far in 2016. Since the company has consistently hiked its quarterly dividend payments over the last few years, Home Depot still sports a respectable annual dividend yield of over 2% despite the continuing appreciation of its stock. For the first quarter, analysts are expecting the company to report EPS of $1.34 on revenue of $22.23 billion, which would represent solid increases from the EPS of $1.16 on revenue of $20.89 billion that Home Depot reported for the same quarter of last year. Another fund that left its stake in the company unchanged during the first quarter was Gregory Thomas‘ Carbonado Capital, which owned 250,000 shares of Home Depot Inc (NYSE:HD) at the end of March.

#1 W W Grainger Inc (NYSE:GWW)

 – Shares held by Gabalex Capital (as of March 31): 150,000

 – Value of Holding (as of March 31): $35.02 million

W W Grainger Inc (NYSE:GWW) continued to remain Gabalex Capital’s largest equity holding at the end of March, with the fund making no changes to its stake in the company during the first quarter. Though W W Grainger Inc (NYSE:GWW)’s stock has rallied significantly this year, appreciating by 12.64%, it still trades below what it did when Gabalex Capital first initiated a stake in the company during the last quarter of 2013. According to analysts who track the stock, it could remain range-bound for a long time, as the company is facing numerous headwinds, which includes weakness in ordering trends across most of its target markets. Mehdi Mahmud‘s First Eagle Investment Management increased its stake in W W Grainger by 20% to 1.79 million shares during the first quarter.

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Disclosure: None