In this article, we discuss 5 defensive stocks that Ken Fisher loves. If you want to read our detailed analysis of Fisher’s investment philosophy, hedge fund returns, and history, go directly to Ken Fisher Loves These 10 Defensive Stocks.
5. Eli Lilly and Company (NYSE:LLY)
Fisher Asset Management’s Stake Value: $2.15 billion
Percentage of Fisher Asset Management’s Portfolio: 1.26%
Number of Hedge Fund Holders: 53
Eli Lilly and Company (NYSE:LLY) is an Indiana-based pharmaceutical company. One of the company’s most significant achievements to date is being the first company to mass-produce the polio vaccine. As of May 13, Eli Lilly and Company (NYSE:LLY) has a dividend yield of 1.34% with an annual payout of $3.92.
After three consecutive EPS misses, Eli Lilly and Company (NYSE:LLY) outperformed the estimates by 13.72% in the first quarter of 2022. The forecast was at $2.30, while the company posted an EPS of $2.62. On the revenue side, the company had no problem surpassing the analyst estimates of $7.35 billion by $457.21 million. Eli Lilly and Company (NYSE:LLY) reported a revenue of $7.81 billion.
On June 6, Mizuho analyst Vamil Divan maintained a Buy rating on Eli Lilly and Company (NYSE:LLY)’s shares with a price target of $356. The analyst was impressed by the results from the SURMOUNT-1 trial for Mounjaro at American Diabetes Association Annual Meeting. The analyst believes that the diabetes drug Mounjaro’s sales will surpass $14 billion by 2030.
Saturna Capital mentioned Eli Lilly and Company (NYSE:LLY) in its fourth-quarter 2021 investor letter. Here is what the fund said:
“Industrials and pharmaceutical companies were among the Amana Income Fund’s strongest performers in the fourth quarter. Industrials and pharmaceutical companies were among the Amana Income Fund’s strongest performers in the fourth quarter. Drug maker Eli Lilly is represented in the 10 Largest Contributors.”
4. Costco Wholesale Corporation (NASDAQ:COST)
Fisher Asset Management’s Stake Value: $2.43 billion
Percentage of Fisher Asset Management’s Portfolio: 1.43%
Number of Hedge Fund Holders: 61
Costco Wholesale Corporation (NASDAQ:COST) is one of the world’s largest retailers, with 831 warehouses across 13 countries. The company swiftly returned from the pandemic decline and closed the fiscal year 2021 with around $5 billion in net income. Even with the four-decade high inflation, Costco Wholesale Corporation (NASDAQ:COST) saw a 91% renewal rate for its members. In 2021, the company delivered a 52% shareholder return.
As of August 2021, Costco Wholesale Corporation (NASDAQ:COST)’s revenue grew at a compound annual growth rate of 8.2% in the last ten years. It rose from $87.1 billion to $192.1 billion. Moreover, in the same period, the company’s revenue grew at a CAGR of 13.1%, and its stock returned more than 580% to its investors. Costco Wholesale Corporation (NASDAQ:COST) is a defensive bet because of its business model. Even with the inflation, people can’t move away from basic necessities such as consumer staples.
On June 2, Jefferies analyst Corey Tarlowe took over the coverage of Costco Wholesale Corporation (NASDAQ:COST) and raised the company’s price target from $560 to $580. The analyst maintained a Buy rating on the company shares.
Here is what ClearBridge Investments had to say about Costco Wholesale Corporation (NASDAQ:COST) in its fourth-quarter 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
3. The Home Depot, Inc. (NYSE:HD)
Fisher Asset Management’s Stake Value: $2.435 billion
Percentage of Fisher Asset Management’s Portfolio: 1.43%
Number of Hedge Fund Holders: 75
The Home Depot, Inc. (NYSE:HD) is America’s largest home improvement retailer, with box-format stores across North and South America. The company’s quarterly dividend of $1.90 was paid out on June 16, 2022. The Home Depot, Inc. (NYSE:HD) has a dividend yield of 2.72% and an annual payout rate of $7.6.
In the first quarter of 2022, Fisher Asset Management held the most prominent stake in The Home Depot, Inc. (NYSE:HD) among 912 hedge funds tracked by Insider Monkey. The firm owned 8.1 million company shares worth $2.43 billion, making up 1.43% of its portfolio.
On May 20, Citi analyst Steven Zaccone raised The Home Depot, Inc. (NYSE:HD) to $348 from $327 while keeping a Buy rating on the company shares.
Ensemble Capital recently published its first-quarter 2021 investor letter and mentioned The Home Depot, Inc. (NYSE:HD) in it. Here is what the firm said:
“Home Depot (7.7% weight in the Fund): The demand surge for remodeling and home improvement goods sparked by shelter in place orders, remote work going mainstream, and a shortage of homes on the market to buy, ran headlong into the supply chain crisis, triggering surging prices in the products Home Depot sells. But the company has been able to pass nearly all of these increased costs on to customers, with revenue growing 37% over the past two years while gross profits, or the profits the company makes on each item they sell, increased by 35%. Even this small difference appears to be due not to inflation eating away at Home Depot’s profits, but rather be a function of the huge increase in revenue the company has been generating in low margin lumber sales.”
2. Microsoft Corporation (NASDAQ:MSFT)
Fisher Asset Management’s Stake Value: $8.59 billion
Percentage of Fisher Asset Management’s Portfolio: 5.06%
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) has been a part of Fisher Asset Management’s portfolio since the first quarter of 2022. As of December 2021, the company’s leading operating system, Microsoft Windows, holds close to a 74% market share worldwide. It is one of the reasons Microsoft is one of the best stocks to play it safe. Microsoft Corporation (NASDAQ:MSFT) has a dividend yield of 1.01%, which might seem low, but it is one of the signs of stability of the company.
Fisher Asset Management is the leading stockholder of Microsoft Corporation (NASDAQ:MSFT), with 27.87 million shares in the company worth $8.59 billion. Out of all the hedge funds tracked by Insider Monkey, Microsoft Corporation (NASDAQ:MSFT) is the second favorite stock among hedge funds, with 259 of them having a combined holding worth $65.638 billion.
Polen Capital discussed Microsoft Corporation (NASDAQ:MSFT) in its “Polen Global Growth Fund” first-quarter 2022 investor letter. Here is what it said:
“Microsoft’s business is firing on all cylinders and continue to enjoy an acceleration in their respective fundamentals because of the increase in digitization around the world. Nearly every company today is searching for ways to become more digital, and both Microsoft and Accenture are positioned to provide many of the solutions these companies seek. This inflection in fundamentals was not lost on the market, and each business’s stock performed exceptionally well in 2021. In fact, they represented two of the three top absolute performers for the Global Growth Portfolio last year. As a result, their respective stocks are currently more fully priced. As such, we lowered Microsoft from our largest position within the Portfolio. We maintain high conviction in Microsoft and plan to own it for many years, but recognize the increase in its prices.”
1. Apple Inc. (NASDAQ:AAPL)
Fisher Asset Management’s Stake Value: $11.166 billion
Percentage of Fisher Asset Management’s Portfolio: 6.58%
Number of Hedge Fund Holders: 131
With a market capitalization of more than $2 trillion, Apple Inc. (NASDAQ:AAPL) is the second most valuable company in the world. With a 5-year monthly beta of 1.20, the company might seem volatile, but Apple Inc. (NASDAQ:AAPL) shows the characteristics of a defensive stock. It is primarily due to the company’s continuous profits and dividend returns. Moreover, the company can make share repurchases at will due to a strong cash position. It is the top stock in Fisher Asset Management’s portfolio, with nearly 63.95 million shares of the company worth $11.166 billion. The stock makes up 6.58% of the fund’s portfolio.
According to Apple Inc. (NASDAQ:AAPL)’s Q1 2022 earning reports, the company outmatched its EPS and revenue estimates by 6.18% and 3.50%, respectively. Apple Inc. (NASDAQ:AAPL) reported an EPS of $1.52, compared to the $1.43 consensus. The revenue estimates were beaten by $3.29 billion after generating $97.28 billion. In addition to that, the company’s gaming and music segment is gaining popularity. According to JP Morgan, the revenue from the sector is likely to rise by 36% to $8.2 billion by 2025.
Here is what ClearBridge Investments had to say about Apple Inc. (NASDAQ:AAPL) in its fourth-quarter 2021 investor letter:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft, which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
You can also take a look at 10 Stocks to Buy Now According to Steve Ketchum’s Sound Point Capital and 10 Stocks to Buy in April According to Jim Cramer.
