Glenn J. Thompson was chosen by Greenberg Traurig as a Fellow of the American Bar Affiliation in Enterprise Law
Billionaire Ray Dalio takes these 3 “Strong Buy” shares
Sometimes the experts tell us what we already know. Ray Dalio, the founder of Bridgewater Associates, has built a legendary reputation in the financial community by moving his company from a privately held two-bedroom apartment company to the international hedge fund giant, with over 1,500 employees and more than 138 Billions of dollars under management of total assets. But when asked how he did it, or how today’s investors can weather the ongoing pandemic crisis, his advice may sound downright normal. Dalio’s advice on investing during the pandemic is easy enough to summarize. First, he says to diversify the portfolio. Diversification means spreading the risk, which in turn will reduce your losses if one or even more investments turn south. Second, Dalio says we shouldn’t bother timing the market. Even the pros don’t usually get this right, and Dalio says that simply buying into a stock you like and holding onto it for the long term is a better strategy than trying to buy in at the right time. The stock market is a risky place to invest money, and Dalio understands it. His tactics for mitigating that risk are ancient – and arguably have brought him great success. With that in mind, we decided to use Bridgewater’s recent activities as inspiration. With three stocks that Dalios Fund added to TipRanks’ database in the third quarter, we’ve seen the analyst community on board as well, as each stock has a consensus rating of “strong buy”. Baxter International (BAX) We start with Baxter International, a healthcare company based outside of Chicago. Baxter manufactures medical devices and other products for the treatment of acute and chronic diseases, particularly blood, immune and kidney diseases. The company markets primarily to health professionals and institutions rather than the open market, and has annual sales of over $ 11 billion. The company’s sales were stable until 2020 and in line with historical values. Baxter ended 2019 with a quarter of $ 3 billion; that declined to $ 2.72 billion in the first quarter of 20, but had steadily increased to $ 2.97 billion by the third quarter of 20. The company pays out a modest dividend for investors, which at 24.5 cents per common share gives a yield of 1.3%. Dalio’s position at Baxter is new to him. His company bought 124,701 shares of the stock, an equity investment of $ 9.73 million at current prices. The 5-star analyst Danielle Antalffy from SVB Leerink writes about Baxter: “[We] BAX’s underlying fundamentals – accelerating sales growth, significant margin expansion – are believed to be unchanged. One of the key data points this quarter was patient peritoneal dialysis growth of 6% … well ahead of the mid-single-digit long-term growth prospects for kidney business that the road models. As COVID pressures mount, the visibility of long-term growth drivers should improve and we would expect stocks to move significantly higher. “Based on their bullish comments, Antalffy rates BAX shares as outperforming (ie buying) and their target price of $ 105 implies an upside of 34% for a year. (To see Antalffy’s track record, click here.) Overall, the analyst consensus rating for Baxter is a strong buy based on 12 reviews, including 11 buys for just one hold. The stock is selling for $ 78, and its average price target of $ 95 suggests it has room for upward growth of ~ 22% in 2021. (See BAX stock analysis on TipRanks) CVS Health Corporation (CVS) The next stock is another healthcare company, but where Baxter, above, markets on the professional side of that sector, CVS is aimed directly at the consumer healthcare market. Best known as the CVS pharmacy chain, this company is an integral part of the retail scene. CVS stores offer a range of home health and hygiene products, as well as basic groceries, pharmacy services, and some more specialized prescription medical devices. The company has annual sales of more than $ 130 billion for the past three years. CVS revenue declined slightly in the second quarter of the year as economic conditions deteriorated, but rebounded quickly. The sequence of quarterly earnings in 2020 of $ 66.7 billion, $ 65.3 billion, and $ 67.1 billion shows a stable revenue base that would be expected from a retailer trading in products primarily considered essential during the decommissioning policy. Earnings per share for the third quarter were $ 1.66, well above consensus expectations of $ 1.33. The dividend is 50 cents per share and has been held at this level for over three years. The payment is $ 2 for a return of 2.7%. Dalios Bridgewater bought 320,039 CVS shares in the last quarter, adding to a test position the company already held. The purchase dramatically increased total holdings to 333,804 shares, now valued at $ 24.87 million. Deutsche Bank analyst George Hill notes that CVS will be poised for a “peaceful change of power” if the current CEO, Larry Merlo, resigns next year. “While we believe Ms. Lynch is likely to consider implementing CVS ‘vertically integrated care strategy, we expect her to take a fresh look at the business and be unafraid to break new ground. We believe that the legacy of Mr. Merlo will have this. ” The courage to try to transform and make better use of the difficult retail pharmacy with the Aetna deal, “said Hill.” CVS is just beginning to realize its vision of a vertically integrated healthcare company with oversized customer exposure, “concluded the analyst. To that end, Hill rates CVS shares as a buy and gives them a price target of $ 101, which gives his confidence in 35 growth potential % in the next few months. (To see Hill’s track record, click here.) In total, CVS has 7 current buy ratings and 2 holds, giving the stock a strong buy rating based on analyst consensus, with an average target price of 83.29 USD, which is an upward movement of 11% from the current share price of USD 74.50. (See CVS stock analysis on TipRanks.) Darling Ingredients (DAR) With the last share we are switching from healthcare to the food industry. Darling Ingredients is recycling the waste products the restaurant industry and the animal processing industry – namely oils, fats and fats – and provides useful meat and bone meal, yellow fat and tallow. The company’s products are used in pet food, animal feed, bioenergy and fertilizers. Darling had a strong performance through 2020. The company’s quarterly earnings ranged from $ 848 million to $ 852 million during the Corona Crisis, while earnings in each quarter were up year over year. Third quarter results included 61 cents EPS on sales of $ 850 million. The DAR share has risen steadily since the market crash last winter and is up ~ 77% since the beginning of the year. This is another new position for Dalio and Bridgewater. During the third quarter, the fund pulled the trigger for 69,392 stocks, now valued at $ 3.46 million. 5-star analyst Sam Margolin, who covers Wolfe Research’s stock, is impressed with Darling’s combination of innovative renewable fuels and mature feed segments. “We rate DAR Outperform for its rapid growth in the Renewable Diesel segment (Diamond Green Diesel JV), which is supported by its raw material and manufacturing advantage, largely derived from its base business. The other segments of DAR are food and feed ingredients, which are relatively mature compared to fuels. While we don’t expect significant growth in Food and Feed, we note that margins across the segments have been remarkably consistent over the past few years… ”These comments support Margolin’s outperform rating (i.e. buy), and implies his price target of $ 67 as next upward growth of 34% yr. (To view Margolin’s track record, click here.) Other analysts are on the same page. With 5 buys and 1 hold in the past three months, the word is on the street that DAR is a strong buy. The share price is currently $ 49.87, and the average target price of $ 58.83 indicates double-digit growth of 18%. (See DAR stock analysis on TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.