In this article, we will look at 10 best stocks under $50 according to billionaire Ray Dalio. If you want to skip reading about Ray Dalio’s investment philosophy and his hedge fund’s returns, you can go directly to 5 Best Stocks Under $50 According to Billionaire Ray Dalio.
Ray Dalio is an American billionaire investor and hedge fund manager of the world’s largest hedge fund, Bridgewater Associates. The billionaire founded Bridgewater Associates back in 1975. As of June 2022, Ray Dalio is worth $22 billion according to Forbes, and as of March 31, Ray Dalio manages over $24.8 billion in 13F securities through Bridgewater Associates.
Bridgewater Associates’ Latest Returns and Portfolio
As reported on Bridgewater Associates’ official news page, its Pure Alpha fund gained 16.3% in Q1 2022 and was up 24.8% year-to-date as of April 15, 2022. As of mid-April 2022, Ray Dalio’s Pure Alpha fund has returned 4.4%, 4.2%, and 8.5% on an annualized basis over the past 5, 10, and 15 years, respectively.
In the first quarter of 2022, Ray Dalio went long in 261 new companies and raised his hedge fund’s stakes in 546 of its previously held holdings. Bridgewater Associates also completely discarded 24 companies and reduced its stakes in 156 of its previous positions. The fund has a top 10 holdings concentration of roughly 34% and among its top 13F holdings we have prominent dividend kings such as Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
Ray Dalio of Bridgewater Associates
Our Methodology
To determine the 10 best stocks under $50 according to billionaire Ray Dalio, we reviewed Bridgewater Associates’ first-quarter 2022 investment portfolio. We had a preference for companies that the billionaire purchased additional shares in or initiated a position in during Q1 2022. We then checked for each stock’s share price and narrowed down our selection to stocks that were trading under $50, had Buy-side analyst ratings, and had positive investor sentiment. These stocks are ranked in increasing order of Bridgewater Associates’ stake in them.
Best Stocks Under $50 According to Billionaire Ray Dalio
10. Wells Fargo & Company (NYSE:WFC)
Bridgewater Associates’ Stake Value: $38,719,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.15%
Share Price as of June 27: $40.44
Number of Hedge Fund Holders: 93
Bridgewater Associates raised its stakes in Wells Fargo & Company (NYSE:WFC) by 13% in the first quarter of 2022. As of March 31, Ray Dalio’s hedge fund has $38.71 million invested in this bank stock. The investment covers 0.15% of Bridgewater Associates’ 13F portfolio.
Wells Fargo & Company (NYSE:WFC) is currently trading at less than its intrinsic value. As of June 27, Wells Fargo & Company (NYSE:WFC) has a trailing-twelve-month PE ratio of 8.36 and is trading at $40.44 a share. The stock also offers a forward dividend yield of 2.56%.
The analyst sentiment around Wells Fargo & Company (NYSE:WFC) is positive. As of this April, Barclays analyst Jason Goldberg has a $64 price target and an Overweight rating on the bank stock. On June 10, Raymond James analyst David Long reiterated an Outperform rating on Wells Fargo & Company (NYSE:WFC) after lowering his price target on the stock to $50 from $60. As of this June, Goldman Sachs’ analysts also think of Wells Fargo & Company (NYSE:WFC) as a stable option and are recommending the bank stock to stable-income investors.
Insider Monkey found 93 hedge funds bullish on Wells Fargo & Company (NYSE:WFC) at the close of Q1 2022. The total stakes of these hedge funds came in at more than $6.8 billion, up from $6.1 billion a quarter ago when 94 hedge funds held stakes in the bank.
Davis Funds mentioned several companies in its Q4 2021 investor letter, one of which was Wells Fargo & Company (NYSE:WFC). Here is what Davis Funds thinks of the stock:
“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.
Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Wells Fargo.”
9. Freeport-McMoRan Inc. (NYSE:FCX)
Bridgewater Associates’ Stake Value: $46,304,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.18%
Share Price as of June 27: $30.86
Number of Hedge Fund Holders: 68
Freeport-McMoRan Inc (NYSE:FCX) primarily explores and mines copper but also engages in the mining of other mineral properties in North America, South America, and Indonesia. In the first quarter of 2022, Bridgewater Associates raised its stakes in the mining company by 4,547%, bringing them to $46.30 million.
On June 22, Freeport-McMoran Inc. (NYSE:FCX) announced that its board of directors has declared a quarterly cash dividend of $0.15 per share, payable on August 1 to investors of record on July 15. Shortly after the company declared a dividend, Morgan Stanley analyst Carlos De Alba slashed his price target on Freeport-McMoRan Inc. (NYSE:FCX) to $30 from $39 and reiterated an Equal Weight rating on the shares.
As of June 27, Freeport-McMoran Inc. (NYSE:FCX) has a PE ratio of 8.97, a forward yield of 1.77%, and is trading at $30.86 a share.
Insider Monkey spotted 68 hedge funds long Freeport-McMoran Inc. (NYSE:FCX) at the end of Q1 2022. The total stakes of these hedge funds amounted to $4.10 billion, up from $3.77 billion a quarter ago with 66 positions.
Horizon Kinetics LLC shared its insights on Freeport-McMoran Inc. (NYSE:FCX) in its fourth-quarter 2021 investor letter, Here is what the firm said:
“Those were some ideas about copper demand. Here are some specifics about supply. Global copper mine production in the 10 years from 2005 to 2015 rose 2.45% annually. In the next 5 years, to 2020, it increased by only 0.9% annually. Even ignoring the 2020 pandemic year, for the 4 years from to 2019, the expansion rate was 1.66%. We already have the historical context for this: the commodity price collapse prior to 2015, from a position of excess capacity.
What producers must do in that situation, because they have high fixed costs and debt expense, is curtail their exploration and development expenditures and reduce operating costs. They rely on existing mines, instead, and on their highest-grade ores and lowest-cost production. They might not actually reduce current production, but they aren’t replacing the reserves that are being slowly drawn down. You can see this at work at the individual company level.
Freeport-McMoRan will illustrate. It is the world’s third-largest copper producer, closely following Chile’s Codelco and Australia’s BHP Group. In 2014, even though Freeport sold more copper than the prior year, its revenues dropped by over 25%, and it went from $4.8 billion of operating earnings (a 22% margin) to a $(0.2) billion loss. The company’s capital expenditures peaked in 2014 at $3.86 billion and will be about $1.72 billion in 2021, meaning the company is spending 55% less now than it was seven years ago. In inflation-adjusted terms, it’s spending 61% less today than seven years ago…” (Click here to see the full text)
8. ZTO Express (Cayman) Inc. (NYSE:ZTO)
Bridgewater Associates’ Stake Value: $47,259,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.19%
Share Price as of June 27: $26.00
Number of Hedge Fund Holders: 26
ZTO Express (Cayman) Inc. (NYSE:ZTO) operates as an air freight and logistics company in China. At the end of Q1 2022, 26 hedge funds held stakes in ZTO Express (Cayman) Inc. (NYSE:ZTO). The total value of these stakes amounted to $1.01 billion, down from $1.09 billion in the previous quarter with 28 positions.
On May 25, ZTO Express (Cayman) Inc. (NYSE:ZTO) reported earnings for the fiscal first quarter of 2022. The company registered an EPS of $0.20 and missed estimates by $0.02. The company’s revenue grew 17.44% year over year and came in at $1.18 billion, ahead of expectations by $34.54 million.
As of this March, Citi analyst Lu Xu has a $39.60 price target and a Buy rating on ZTO Express (Cayman) Inc. (NYSE:ZTO)
In the first quarter of 2022, Ray Dalio’s hedge fund raised its stakes in ZTO Express (Cayman) Inc. (NYSE:ZTO) by 52%, bringing them to $47.25 million.
Other stocks that Ray Dalio’s Bridgewater Associates raised its stakes in include Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
7. AT&T Inc. (NYSE:T)
Bridgewater Associates’ Stake Value: $48,374,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.19%
Share Price as of June 27: $20.76
Number of Hedge Fund Holders: 74
In the first quarter of 2022, Bridgewater Associates raised its stakes in AT&T Inc. (NYSE:T) by 720%, bringing them to over $48.3 million. The investment covers 0.19% of Ray Dalio’s 13F portfolio. As of June 16, Tigress Financial analyst Ivan Feinseth has a $28 price target and a Buy rating on AT&T Inc. (NYSE:T).
On June 1, AT&T Inc. (NYSE:T) reportedly raised the cost of its wireless subscriptions by $6 for single lines and $12 for family plans. As of June 27, the company’s 5G-enabled unlimited starter plan is priced at $35 per month, with its unlimited premium plan priced at $50 per month.
As of June 27, AT&T Inc. (NYSE:T) has a PE ratio of 8.74 and is currently trading at $20.76 per share with a dividend yield of 5.56%.
Insider Monkey found 74 hedge funds bullish on AT&T Inc. (NYSE:T) at the close of Q1 2022. The total stakes of these funds were valued at $4.0 billion.
Weitz Investment Management named several companies in its Q4 2021 investor letter, one of which was AT&T Inc. (NYSE:T). Here is what the firm had to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T Inc. (NYSE:T) to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
6. Bank of America Corporation (NYSE:BAC)
Bridgewater Associates’ Stake Value: $56,466,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.22%
Share Price as of June 27: $32.21
Number of Hedge Fund Holders: 99
On June 24, Morgan Stanley analyst Betsy Graseck trimmed her price target on Bank of America Corporation (NYSE:BAC) to $47 from $49 and reiterated an Equal Weight rating on the shares. As of June 27, Bank of America Corporation (NYSE:BAC) has a trailing-twelve-month PE ratio of 9.18 and is trading at $32.21 a share.
In the first quarter of 2022, Ray Dalio’s Bridgewater Associates upped its stakes in Bank of America Corporation by 41%, bringing them to $56.46 million. The investment covers 0.22% of Ray Dalio’s 13F portfolio.
At the close of Q1 2022, 99 hedge funds held stakes in Bank of America Corporation (NYSE:BAC) worth $45.43 billion. This is compared to 84 hedge funds a quarter ago with stakes worth $47.87 billion.
Bank of America Corporation (NYSE:BAC) is one of the best stocks under $50 according to Ray Dalio’s Bridgewater Associates. Other top stock picks of billionaire Ray Dalio include Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), but they are currently trading above $50.
Here is what Aristotle Capital Management had to say about Bank of America Corporation (NYSE:BAC) in its “Global Equity Fund” first-quarter 2022 investor letter:
“We first invested in Bank of America during the second quarter of 2013. During our near decade as investors, Bank of America closed the chapter on the legacy issues from acquired Countrywide, including mortgage write-downs and substantial legal charges. In addition, it successfully turned the Merrill Lynch franchise into one of the leading U.S. brokerage and advisory firms. Thanks to what we consider to be a strong management team led by CEO Brian Moynihan, the bank went through years of simplification, improved its cost structure and efficiency ratio, and reduced risk. While we believe Bank of America remains a much-improved market leader, we decided to exit our position and use the proceeds to invest in Brookfield Asset Management.”
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Disclosure: None. 10 Best Stocks Under $50 According to Billionaire Ray Dalio is originally published on Insider Monkey.
