In this article, we will discuss some of the best stocks to buy according to Dave Smith, the Chief Investment Officer at investment management company Rockland Trust. If you want to explore similar stocks, you can read Long-Term Analyst: Don’t Play the “Fool’s Game” of Timing the Market and Buy These 10 Stocks.
5. Alphabet Inc. (NASDAQ:GOOG)
Rockland Trust’s Stake Value: $27,823,000
Percentage of Rockland Trust’s 13F Portfolio: 1.92%
Number of Hedge Fund Holders: 153
Alphabet Inc. (NASDAQ:GOOG) is a pioneer in disruptive technologies. Between September 2021 and June 2022, Alphabet Inc. (NASDAQ:GOOG) has reportedly invested over $1.5 billion in blockchain technology. The company has been leading funding rounds for blockchain startups including Fireblocks, Dapper Labs, Voltage, and Digital Currency Group. On August 23, Alphabet Inc. (NASDAQ:GOOG) announced a strategic collaboration with communications equipment company, Casa Systems (NASDAQ:CASA), to help develop its cloud platform. The two companies will jointly develop the Google Cloud-Casa System solutions for cloud-native 5G core, 5G SA multi-access edge computing, and enterprise mobile private network markets.
Wall Street analysts are bullish on Alphabet Inc. (NASDAQ:GOOG). On July 27, Morgan Stanley analyst Brian Nowak raised his price target on Alphabet Inc.(NASDAQ:GOOG) to $145 from $140 and maintained an Overweight rating on the shares. On August 3, Tigress Financial analyst Ivan Feinseth raised his price target on Alphabet Inc. (NASDAQ:GOOG) to $186 from $183 and reiterated a Strong Buy rating on the shares.
At the close of Q2 2022, 153 hedge funds held stakes in Alphabet Inc. (NASDAQ:GOOG) worth $22.29 billion. As of June 30, Rockland Trust’s stakes in the cloud computing giant are valued at $27.82 million. The investment covers 1.92% of Rockland Trust’s 13F portfolio.
Here is what Arch Capital had to say about Alphabet Inc. (NASDAQ:GOOG) in its second-quarter 2022 investor letter:
“In May we decided to buy Alphabet Inc. (NASDAQ:GOOG) (parent company of Google, YouTube, and Android). Our thesis was simple. Alphabet has billions of locked-in users around the globe with businesses like Search, Maps, and YouTube that should grow in-line or faster than worldwide GDP. With all the cash these businesses generate, management is able to reinvest in Google Cloud, Other Bets projects like Waymo, and return cash to shareholders via share repurchases. At an enterprise value-to-free cash flow (EV/FCF) of around 20 at the time of our purchase, we believe this sets up shareholders for low risk 15%+ returns over the next five years.”
4. UnitedHealth Group Inc. (NYSE:UNH)
Rockland Trust’s Stake Value: $32,663,000
Percentage of Rockland Trust’s 13F Portfolio: 2.25%
Number of Hedge Fund Holders: 91
On July 15, UnitedHealth Group Inc. (NYSE:UNH) announced market-beating results for the fiscal second quarter of 2022. The company reported earnings per share of $5.57 and beat EPS estimates by $0.36. The company’s revenue for the quarter amounted to $80.33 billion, up 12.63% year over year, and beat expectations by $652.11 million.
On August 10, Mizuho analyst Ann Hynes raised her price target on UnitedHealth Group Inc. (NYSE:UNH) to $600 from $550 and reiterated a Buy rating on the shares.
On August 17, UnitedHealth Group Inc. (NYSE:UNH) declared a quarterly cash dividend of $1.65 per share. The dividend is payable on September 20 to shareholders of record at the close of business on September 12. As of September 1, UnitedHealth Group Inc. (NYSE:UNH) has gained 24.75% over the past twelve months and is offering a forward dividend yield of 1.26%, which the company supports with free cash flows of $20.45 billion.
At the end of Q2 2022, 91 hedge funds held positions in UnitedHealth Group Inc. (NYSE:UNH). The total stakes of these hedge funds amounted to $10.90 billion. As of June 30, Rockland Trust’s stake in the company are valued at $32.66 million.
Here is what Wedgewood Partners had to say about UnitedHealth Group Inc. (NYSE:UNH) in its second-quarter 2022 investor letter:
“UnitedHealth Group also contributed to performance during the quarter. United’s operating income grew +3% on difficult year-ago comparisons as benefits members utilized more services compared to last year. Optum Health grew operating income +40% as more patients are enrolled in the Company’s value-based care services. The Company estimates nearly a third of all medical care is unnecessary and represents an opportunity to capture savings for both patients. Optum’s integrated platform of patient data, IT, and service providers are focused on driving out these unnecessary costs and should serve as the engine for long-term, mid-teens earnings per share growth.”
3. PepsiCo, Inc. (NYSE:PEP)
Rockland Trust’s Stake Value: $34,175,000
Percentage of Rockland Trust’s 13F Portfolio: 2.36%
Number of Hedge Fund Holders: 65
On July 21, PepsiCo, Inc. (NYSE:PEP) declared a quarterly cash dividend of $1.15 per share of the company’s common stock. The dividend is payable on September 30 to shareholders of record on September 2. As of September 1, the stock is offering a forward dividend yield of 2.66% which the company supports with free cash flows of $6.33 billion.
On July 12, PepsiCo, Inc. (NYSE:PEP) reported earnings for the second quarter of fiscal 2022. The company generated a revenue of $20.23 billion, up 5.23% year over year, and outperformed market consensus by $715.34 million. The company reported earnings per share of $1.86 and beat EPS estimates by $0.12. As of September 1, PepsiCo, Inc. (NYSE:PEP) has returned 8.93% to investors over the past twelve months.
On August 22, Morgan Stanley analyst Dara Mohsenian noted that PepsiCo, Inc. (NYSE:PEP) has topline upside and also the ability to drive outperformance in the current environment. Mohsenian remains Overweight on PepsiCo, Inc. (NYSE:PEP).
At the end of Q2 2022, 65 hedge funds were long PepsiCo, Inc. (NYSE:PEP) and held stakes worth $5.28 billion. This is compared to 62 positions in the preceding quarter with stakes worth $4.86 billion. The hedge fund sentiment for the stock is positive.
As of June 30, Rockland Trust’s stake in PepsiCo, Inc. (NYSE:PEP) is valued at $34.17 million. The investment covers 2.36% of the fund’s 13F portfolio.
ClearBridge Investments mentioned PepsiCo, Inc. (NYSE:PEP) in its second-quarter 2022 investor letter. Here is what the firm had to say:
“Also in the stable and predictable cash flow camp, though with a very different business model, global food and beverage company PepsiCo (NYSE:PEP) reported very strong organic growth in the first quarter, driven by healthy price/mix, and raised revenue guidance, while holding EPS guidance. Notably, its beverage business showed expanding margins.”
2. Merck & Co., Inc. (NYSE:MRK)
Rockland Trust’s Stake Value: $37,909,000
Percentage of Rockland Trust’s 13F Portfolio: 2.62%
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE:MRK) operates as a leading healthcare company worldwide. Shares of the stock have soared 13.26% year to date, as of September 1. As of June 30, Rockland Trust’s stake in the company is valued at $37.90 million. The investment covers 2.62% of the fund’s investment portfolio.
On July 28, Merck & Co., Inc. (NYSE:MRK) announced earnings for the fiscal second quarter of 2022. The company reported earnings per share of $1.87 and beat estimates by $0.16. The company’s revenue for the quarter amounted to $14.59 billion, up 27.99% year over year, and beat expectations by $731.76 million.
On July 29, Barclays analyst Carter Gould raised his price target on Merck & Co., Inc. (NYSE:MRK) to $101 from $97 and maintained an Overweight rating on the shares. On August 25, Erste Group analyst Hans Engel upgraded Merck & Co., Inc. (NYSE:MRK) to Buy from Hold.
At the end of the second quarter of 2022, 79 hedge funds held stakes in Merck & Co., Inc. (NYSE:MRK) worth $6.11 billion. This is compared to 84 positions in the previous quarter with stakes worth $5.86 billion.
Here is what Smead Capital Management had to say about Merck & Co., (NYSE:MRK) in its second-quarter 2022 investor letter:
“For the quarter, our best-performing stocks included Merck & Co., Inc. (NYSE:MRK). Despite a steep sell-off in June in the oil and gas stocks, two of our oil stocks made the quarterly list. Merck’s defensive characteristics and good news on earnings/growth didn’t shock us. We argued one year ago that Merck was historically cheap relative to the indexes as compared to the last 20 years.”
1. Microsoft Corporation (NASDAQ:MSFT)
Rockland Trust’s Stake Value: $59,251,000
Percentage of Rockland Trust’s 13F Portfolio: 4.09%
Number of Hedge Fund Holders: 258
Wall Street is bullish on Microsoft Corporation (NASDAQ:MSFT). On July 27, Cowen analyst J. Derrick Wood adjusted his price target on Microsoft Corporation (NASDAQ:MSFT) to $320 from $330 and maintained an Outperform rating on the shares. On August 11, Guggenheim analyst John DiFucci initiated coverage of Microsoft Corporation (NASDAQ:MSFT) with a Neutral rating and a $292 price target. The analyst sees the software giant growing its revenue and free cash flow in a range between 10% and 19% from demand for its Azure cloud platform and enterprise software solutions, Office Commercial 365.
As of September 1, Microsoft Corporation (NASDAQ:MSFT) is offering a forward dividend yield of 0.95% and the company has free cash flows of $65.14 billion to support it.
On July 26, Microsoft Corporation (NASDAQ:MSFT) announced earnings for the fourth quarter of fiscal 2022. The company generated a revenue of $51.87 billion, up 12.38% year over year. The company reported earnings per share of $2.23. For fiscal 2022, Microsoft Corporation (NASDAQ:MSFT) generated a revenue of $198 billion, up 18% year-over-year.
At the close of Q2 2022, 258 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT) worth $56 billion. Microsoft Corporation (NASDAQ:MSFT) is among the top 5 holdings of Rockland Trust. As of June 30, Rockland Trust’s stake in Microsoft Corporation (NASDAQ:MSFT) is valued at $59.25 million, which covers 4.09% of the fund’s 13F portfolio.
Here is what Carillon Tower Advisers had to say about Microsoft Corporation (NASDAQ:MSFT) in its first-quarter 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Microsoft Corporation (NASDAQ:MSFT) reported positive results driven by personal computing strength, but analysts were especially positive on its growth outlook for its Azure cloud-computing services.”
You can also take a look at 12 Best Long-Term Dividend Stocks To Buy Now and Berkshire Hathaway Stock Portfolio: 10 Long-Term Stock Picks.
