Harris Associates’ Top Stock Picks for 2013 Include Intel

FedEx Corporation (NYSE:FDX) was another of Harris’s favorite stocks. In its most recent fiscal quarter (which ended in November), FedEx experienced an increase in sales but a 12% fall in net income versus a year earlier. The stock carries trailing and forward P/E multiples of 17 and 14, respectively, suggesting that Wall Street analysts are confident that earnings will begin increasing moderately in the next couple quarters. The Bill and Melinda Gates Foundation Trust is another major shareholder in FedEx (research more stocks that the trust is invested in).

Harris owned close to 24 million shares of JPMorgan Chase & Co. (NYSE:JPM), which made our list of the ten most popular stocks among hedge funds for the third quarter of 2012 (see the full top ten list). We think that JPMorgan Chase could well be a value prospect, even after its increase in price over the last few months, with a P/B ratio of just about 1 and a trailing P/E of 9. The bank has also been delivering strong growth on both top and bottom lines; in the fourth quarter of 2012, revenue was up 19% and net income was up 53% compared to the same period in the previous year.

TE Connectivity Ltd. (NYSE:TEL) rounded out Harris’s top five picks as the fund reported owning 25 million shares of the $17 billion market cap diversified electronics company. Value investor Edgar Wachenheim’s Greenhaven Associates had owned 3.9 million shares at the end of the third quarter (check out Greenhaven’s favorite stocks). TE Connectivity’s business has been fairly stable recently, with only a slight rise in earnings. The stock is valued at 15 times trailing earnings which seems about right for a business which is supposed to grow at a low rate.

Disclosure: I own no shares of any stocks mentioned in this article.