In this article, we discuss 10 consumer staples stocks to buy according to billionaire Ray Dalio. If you want to skip to the five largest consumer staples bets of Dalio, click 5 Consumer Staples Stocks To Buy According To Billionaire Ray Dalio.
Ray Dalio is one of the most prominent hedge fund managers in the finance world, who founded Bridgewater Associates in 1975, which is a Connecticut-based hedge fund that accommodates multiple clients including pension funds, endowments, foundations, foreign governments, and central banks.
Bridgewater Associates uses global macro trends to offer investment advisory and wealth management services, and relies on quantitative models rather than historic methods of investments. The fund uses both active and passively managed strategies to generate returns for investors.
According to securities filings for the fourth quarter of 2021, Ray Dalio’s portfolio is worth $17.20 billion, with investments focused in the consumer discretionary, consumer staples, finance, and healthcare sectors. With a top ten holdings concentration of 35.59%, Bridgewater Associates purchased 137 new stocks in Q4, bought additional shares of 299 companies, slashed stakes in 292 securities, and sold out of 89.
The most notable stocks held in the fourth quarter portfolio of Ray Dalio’s Bridgewater Associates included JD.com, Inc. (NASDAQ:JD), The Procter & Gamble Company (NYSE:PG), and Alibaba Group Holding Limited (NYSE:BABA), among others discussed at length below.
Ray Dalio of Bridgewater Associates
Our Methodology
Using the Q4 2021 portfolio of Ray Dalio for this analysis, we selected the top consumer staples stocks owned by the billionaire. We have ranked the securities according to the fund’s stake value in each holding.
Consumer Staples Stocks To Buy According To Billionaire Ray Dalio
10. Colgate-Palmolive Company (NYSE:CL)
Bridgewater Associates’ Stake Value: $162,055,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.94%
Number of Hedge Fund Holders: 48
Colgate-Palmolive Company (NYSE:CL) is a New York-based multinational company that manufactures and markets consumer staples including oral, personal hygiene, home care, and pet nutrition products.
Ray Dalio initially purchased shares of Colgate-Palmolive Company (NYSE:CL) back in Q1 2011, but the billionaire has been inconsistent with his stake over the years. He added the stock to his portfolio again in Q3 2020, and has held the position consistently since then. In the fourth quarter of 2021, Bridgewater Associates increased its stake in Colgate-Palmolive Company (NYSE:CL) by 14%, holding 1.8 million shares worth over $162 million.
On March 10, Colgate-Palmolive Company (NYSE:CL) declared a $0.47 per share quarterly dividend, a 4.4% increase from its prior dividend of $0.45. The dividend is payable on May 13, to shareholders of record on April 21. The company also announced a new share repurchase program of up to $5 billion, replacing its earlier share repurchase authorization scheme of 2018.
Credit Suisse analyst Kaumil Gajrawala on January 31 lowered the price target on Colgate-Palmolive Company (NYSE:CL) to $90 from $95 and kept an Outperform rating on the shares. According to the analyst, the slashed price target was due to weaker-than-expected Q4 results, with the topline indicative of reduced sales volume and pricing falling short of commodity inflation.
In Q4 2021, 48 hedge funds were bullish on Colgate-Palmolive Company (NYSE:CL), compared to 54 funds in the prior quarter. First Eagle Investment Management owns the leading position in the company, with 11.5 million shares worth $988.4 million.
In addition to JD.com, Inc. (NASDAQ:JD), The Procter & Gamble Company (NYSE:PG), and Alibaba Group Holding Limited (NYSE:BABA), elite funds are pouring into Colgate-Palmolive Company (NYSE:CL).
9. The Estée Lauder Companies Inc. (NYSE:EL)
Bridgewater Associates’ Stake Value: $189,749,000
Percentage of Bridgewater Associates’ 13F Portfolio: 1.10%
Number of Hedge Fund Holders: 44
The Estée Lauder Companies Inc. (NYSE:EL) was founded in 1946 and is headquartered in New York, operating as a manufacturer and distributor of skin care, makeup, fragrance, and hair care products worldwide.
Initially opening a position in The Estée Lauder Companies Inc. (NYSE:EL) back in Q3 2012, Bridgewater Associates has been inconsistent with its stake in the company over the years. The hedge fund invested in The Estée Lauder Companies Inc. (NYSE:EL) once again in Q3 2020, buying 175,579 shares worth $38.3 million. In the fourth quarter of 2021, Dalio slashed his stake in The Estée Lauder Companies Inc. (NYSE:EL) by 28%, owning 512,559 shares, valued at approximately $190 million.
On February 3, The Estée Lauder Companies Inc. (NYSE:EL) reported that fourth quarter sales increased by 14%, with demand for makeup improving notably in Q4, but due to mask mandates, it is the only category that has not caught up to pre-pandemic sales. The Estée Lauder Companies Inc. (NYSE:EL) noted that skin care, fragrance, and hair care categories have all grown in volume as compared to pre-pandemic levels.
Oppenheimer analyst Rupesh Parikh lowered the price target on The Estée Lauder Companies Inc. (NYSE:EL) on March 17 to $300 from $350 and kept an Outperform rating on the shares. The analyst observed that shares of The Estée Lauder Companies Inc. (NYSE:EL) have fallen 15% since late February, versus a decrease of 4% in the S&P 500. He noted that the decline in The Estée Lauder Companies Inc. (NYSE:EL) was due to geopolitical tensions and recent China COVID-19 headwinds. While it seems like an attractive entry point into the stock, he cannot call a bottom as there are significant modeling risks and valuation is quite high, the analyst told investors in a research note.
Of the hedge funds tracked by Insider Monkey in Q4 2021, Fundsmith LLP is the biggest shareholder of the company, with more than 7 million shares worth $2.65 billion. Overall, 44 funds were bullish on the stock at the end of December.
Here is what Harding Loevner Global Equity Fund has to say about The Estée Lauder Companies Inc. (NYSE:EL) in its Q3 2021 investor letter:
“We sold cosmetic producer Estée Lauder, which we bought last March. At the time, the market reflected a dire outlook for retail demand, especially tourist-related; however, we found its Chinese business attractive and admired its agility across social media and other digital channels. As the stock has appreciated, the resulting valuation now leaves no room for error, such as a potential shift of Chinese consumers’ tastes away from US brands.”
8. Target Corporation (NYSE:TGT)
Bridgewater Associates’ Stake Value: $242,736,000
Percentage of Bridgewater Associates’ 13F Portfolio: 1.41%
Number of Hedge Fund Holders: 49
Target Corporation (NYSE:TGT) was incorporated in 1902 and is headquartered in Minneapolis, Minnesota, operating as a wholesale retailer in the United States. Target Corporation (NYSE:TGT) is a seller of grocery, apparel, home products, electronics, food, and household essentials.
Ray Dalio’s fund owns more than 1 million shares of Target Corporation (NYSE:TGT), worth $242.73 million, representing 1.41% of the total investments for the fourth quarter. The billionaire added 10% to his Target Corporation (NYSE:TGT) stake in Q4 2021.
Raymond James analyst Bobby Griffin on March 2 lowered the price target on Target Corporation (NYSE:TGT) to $275 from $290 and kept a Strong Buy rating on the shares. The lowered target is indicative of the compressed valuation multiples for the consumer staples sector amid inflationary pressure and other macro-driven challenges, according to the analyst, although he sees Target Corporation (NYSE:TGT) as a long-term winner in today’s retail landscape.
According to the fourth quarter database of Insider Monkey, 49 hedge funds were long Target Corporation (NYSE:TGT), with collective stakes equalling $3.9 billion. GQG Partners is the leading shareholder of Target Corporation (NYSE:TGT), with 4.90 million shares worth $1.13 billion.
Here is what Nelson Capital Management has to say about Target Corporation (NYSE:TGT) in its Q2 2021 investor letter:
“We added Target (tkr: TGT) to our consumer staples sector. Target Corporation (NYSE:TGT) offers a broad array of products in owned and known brand items at affordable prices. Its omni-channel fulfillment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
7. Starbucks Corporation (NASDAQ:SBUX)
Bridgewater Associates’ Stake Value: $299,519,000
Percentage of Bridgewater Associates’ 13F Portfolio: 1.74%
Number of Hedge Fund Holders: 53
Based in Seattle, Washington, Starbucks Corporation (NASDAQ:SBUX) is a multinational retailer of specialty coffee, operating in more than 80 countries. Starbucks Corporation (NASDAQ:SBUX) is recognized for its roasted whole beans and ground coffees, ready-to-drink beverages, and multiple food products.
Starbucks Corporation (NASDAQ:SBUX) has consistently featured on Dalio’s portfolio since Q3 2020, although his fund first purchased a position in the company back in Q4 2010. Securities filings for Q4 2021 revealed that Bridgewater Associates owns 2.56 million Starbucks Corporation (NASDAQ:SBUX) shares, worth $299.5 million, accounting for 1.74% of the total portfolio.
On February 1, Starbucks Corporation (NASDAQ:SBUX) declared a quarterly dividend of $0.49 per share, which was distributed on February 25, for shareholders of record on February 11.
Starbucks Corporation (NASDAQ:SBUX) on March 16 announced its share repurchase program of $20 billion for 2022, which will be returned to shareholders over the next three fiscal years. The company also plans to expand to roughly 55,000 licensed stores across 100 markets by 2030.
On March 17, JPMorgan analyst John Ivankoe upgraded Starbucks Corporation (NASDAQ:SBUX) to Overweight from Neutral with an unchanged price target of $101. The analyst believes that Starbucks Corporation (NASDAQ:SBUX) can maintain its “affordable luxury status” and that valuation can drive stock outperformance, and the shares “show very favorable risk/reward dynamics”.
A total of 53 hedge funds were bullish on Starbucks Corporation (NASDAQ:SBUX) in Q4 2021, compared to 58 funds in the last quarter. Andy Brown’s Cedar Rock Capital is a prominent shareholder of Starbucks Corporation (NASDAQ:SBUX), with 4.1 million shares worth close to $481 million.
Here is what Polen Global Growth has to say about Starbucks Corporation (NASDAQ:SBUX) in its Q4 2021 investor letter:
“We trimmed Starbucks as a source of funding and to edge our weighting down. While the company has managed well through a difficult environment, we recognize that lockdowns are categorically challenging for this business. Starbucks has a robust mobile order and pay platform fueled by a sophisticated app as well as a strong loyalty program, but this doesn’t alter the fact that the store-based retail business is important to the company. As a result, we felt a smaller weighting was appropriate.”
6. Walmart Inc. (NYSE:WMT)
Bridgewater Associates’ Stake Value: $409,741,000
Percentage of Bridgewater Associates’ 13F Portfolio: 2.38%
Number of Hedge Fund Holders: 63
Walmart Inc. (NYSE:WMT) is an Arkansas-based wholesale retailer that operates a chain of supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores. Ray Dalio owns 2.8 million Walmart Inc. (NYSE:WMT) shares as of Q4 2021, worth approximately $410 million, representing 2.38% of the total investments for the period.
On February 17, Walmart Inc. (NYSE:WMT) declared a $0.56 per share quarterly dividend, a 1.8% increase from its prior dividend of $0.55. With a forward yield of 1.68%, the dividend is payable on April 4, to shareholders of record on March 18.
Morgan Stanley analyst Simeon Gutman on February 22 lowered the price target on Walmart Inc. (NYSE:WMT) to $165 from $170 and kept an Overweight rating on the shares, stating that the Q1 baseline for Walmart Inc. (NYSE:WMT) was unclear regarding the divestment of its UK and Japan businesses.
Among the hedge funds tracked by Insider Monkey, 63 funds were bullish on Walmart Inc. (NYSE:WMT) at the end of December 2021, compared to 71 funds in the earlier quarter. Bill & Melinda Gates Foundation Trust is the leading shareholder of the company, with roughly 7 million shares worth $1 billion.
Just like JD.com, Inc. (NASDAQ:JD), The Procter & Gamble Company (NYSE:PG), and Alibaba Group Holding Limited (NYSE:BABA), Walmart Inc. (NYSE:WMT) is a significant holding in Ray Dalio’s fund.
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Disclosure: None. 10 Consumer Staples Stocks To Buy According To Billionaire Ray Dalio is originally published on Insider Monkey.
