In this article, we will take a look at the 10 Quality Stocks to Buy with Shares Down Over 30% YTD. To skip our analysis of the iShares MSCI USA Quality Factor ETF, its performance, and weighting of the components, you can go directly to see the 5 Quality Stocks to Buy with Shares Down Over 30% YTD.
The iShares MSCI USA Quality Factor ETF seeks to track the investment results of MSCI USA Quality Factor Index, an index composed of 125 large and midcap US equities. The Index is designed to measure the equity performance of quality growth stocks by identifying stocks with high return on equity, stable y-o-y earnings growth, and low financial leverage.
As of June 30, 2022, the ETF had an annualized total return of 10.25% over the course of last 5 years, and 11.22% since inception in 2013.
As of September 22, 2022, the portfolio was heavily concentrated with stocks from the Information Technology sector, accounting for a cumulative 26.46% weightage, followed by Health Care at 15.06%, and Consumer Discretionary at 11.18%. Top three constituents of the ETF were S&P Global Inc. (NYSE:SPGI), Johnson & Johnson (NYSE:JNJ), and Apple Inc. (NASDAQ:AAPL), with weights of 4.20%, 3.95%, and 3.93%, respectively.
Global markets have been going through a rough patch with fears of a potential recession due to inflation and aggressive monetary policies implemented by central banks. On September 21, the US central bank raised interest rates by three-quarters of a percentage point for the third consecutive time and signaled further increases in the future.
The increase in interest rates has led to a significant drop in share prices across the US market. As with the market, many stocks of blue chips and blue chips in the iShares MSCI USA Quality Factor ETF have also fallen substantially.
With the Federal Reserve expected to continue to raise rates, the markets could fall further if economic data fails to meet expectations. Even quality blue chip stocks could fall further. Nevertheless, there could be an opportunity for long term investors who invest in quality blue chip stocks especially given the lower valuations.
Photo by Adam Nowakowski on Unsplash
Methodology
For our list, we defined quality stocks as any stocks listed in the iShares MSCI USA Quality Factor ETF. Of those, we took 10 stocks that were down 30% year to date or more as of September 22, and we ranked them based on the number of hedge funds in our database that held shares in the same stock at the end of Q2 2022.
10 Quality Stocks to Buy with Shares Down Over 30% YTD
10. Accenture Plc (NYSE:ACN)
Percentage of iShares MSCI USA Quality Factor ETF Holdings: 1.27%
Year to Date Performance as of September 22: -36.72%
Number of Hedge Fund Holders: 61
Based in Dublin, Ireland, Accenture Plc (NYSE:ACN) is a global professional services company with leadership positions in providing digital, cloud and security. Accenture Plc (NYSE:ACN) employs more than 700,000 people and serves clients across more than 40 industries in more than 120 countries.
Due to the market decline in the S&P 500, shares of Accenture Plc (NYSE:ACN) have fallen more than 36% year to date as of September 22.
On September 23, RBC Capital analyst Daniel Perlin lowered the price target on Accenture Plc (NYSE:ACN) shares to $335 from $357 but maintained an ‘Outperform’ rating for its shares. The analyst is “positive on the stock longer term given the continued demand for digital transformation, Accenture’s unique position to deliver at scale, and its continued shareholder-friendly return of capital.”
As of Q2 2022, 61 out of the 895 hedge funds tracked by Insider Monkey were long Accenture Plc (NYSE:ACN) shares, for a total value of $3.2 billion. Nikolai Tangen’s Ako Capital is the largest shareholder with ownership of 2.3 million shares valued at $636 million.
Alongside Adobe Inc. (NASDAQ:ADBE), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:META), Accenture Plc (NYSE:ACN) is a quality stock that’s down over 30% year to date as of September 22 that’s also held by many hedge funds in our database as of Q2 2022.
9. Cisco Systems, Inc. (NASDAQ:CSCO)
Percentage of iShares MSCI USA Quality Factor ETF Holdings: 1.23%
Year to Date Performance as of September 22: -35.06%
Number of Hedge Fund Holders: 63
San Jose, California-based Cisco Systems, Inc. (NASDAQ:CSCO) is a leading technology company focused on hardware and software products related to Internet Protocol (IP)-based networking technologies. Its core developments span areas of routing and switching, as well as home networking, IP telephony, optical networking, security, storage area networking, and wireless technology. Shares of Cisco Systems, Inc. (NASDAQ:CSCO) are down more than 35% year to date as of September 22 due to the decline in the NASDAQ.
In August, Cisco Systems, Inc. (NASDAQ:CSCO) released the financial results for the quarter ended July 30, 2022. Its revenue remained flat y-o-y at $13.1 billion, while its net income shrunk by 6% y-o-y to $2.8 billion, for the three months. It reported a normalized EPS of $0.83 for the quarter, beating the consensus by $0.01. The company also declared a regular cash dividend of $0.38 per share.
On August 31, KGI Securities analyst Jackson Chiang upgraded Cisco Systems, Inc. (NASDAQ:CSCO) to ‘Outperform’ from ‘Neutral’ with a price target of $53 for its shares.
As of Q2 2022, 63 hedge funds out of the 895 hedge funds tracked by Insider Monkey held shares of Cisco Systems, Inc. (NASDAQ:CSCO), valued at $1.9 billion. Its largest shareholder was Citadel Investment Group with ownership of 7.8 million shares valued at $334 million.
8. Intel Corporation (NASDAQ:INTC)
Percentage of iShares MSCI USA Quality Factor ETF Holdings: 0.76%
Year to Date Performance as of September 22: -45.50%
Number of Hedge Fund Holders: 65
Santa Clara, California-based Intel Corporation (NASDAQ:INTC) is a leading technology company best known for developing the microprocessors found in most of the personal computers used worldwide. It offers products for autonomous driving, 5G network, client connectivity, cloud computing, IoT, client computing, and AI and Analytics.
Due to competition and lower earnings, shares of Intel Corporation (NASDAQ:INTC) have fallen by over 45% year to date as of September 22.
Earlier this year in July, Intel Corporation (NASDAQ:INTC) released the financial results for the quarter ended July 2, 2022. Its net revenue declined by 22% y-o-y to $15.3 billion, while it reported a net loss of $454 million, for the three months. It reported a normalized EPS of $0.29, missing the consensus by $0.41. In September, its board of directors declared a quarterly dividend of $0.365 per share.
As of Q2 2022, 65 of the 895 hedge funds tracked by Insider Monkey owned shares of Intel Corporation (NASDAQ:INTC), valued at $2.5 billion. Its largest shareholder was Generation Investment Management with ownership of 14.8 million shares valued at $553 million.
7. QUALCOMM, Incorporated (NASDAQ:QCOM)
Percentage of iShares MSCI USA Quality Factor ETF Holdings: 1.30%
Year to Date Performance as of September 22: -32.37%
Number of Hedge Fund Holders: 71
San Diego, California-based QUALCOMM, Incorporated (NASDAQ:QCOM) is a leading wireless technology innovator and the driving force behind the development, launch and expansion of 5G technology. Its portfolio includes products for processors, modems, platforms, RF systems, and connectivity, among others.
Due to the weaker market, shares of QUALCOMM, Incorporated (NASDAQ:QCOM) have fallen over 32% year to date as of September 22. With the decline, shares of the stock trade for a forward P/E of under 10. Analysts have an average target price of $186.01 per share.
As of Q2 2022, 71 of the 895 hedge funds tracked by Insider Monkey were long QUALCOMM, Incorporated (NASDAQ:QCOM), holding shares worth $2.8 billion. Its largest hedge fund shareholder is Ken Griffin’s Citadel Investment Group.
6. NIKE, Inc. (NYSE:NKE)
Percentage of iShares MSCI USA Quality Factor ETF Holdings: 3.55%
Year to Date Performance as of September 22: -40.87%
Number of Hedge Fund Holders: 72
NIKE, Inc. (NYSE:NKE), based in Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment, and accessories for a wide variety of sports and fitness activities.
Shares of NIKE, Inc. (NYSE:NKE) are down more than 40% year to date as of September 22 due to the weaker S&P 500. In September, UBS analyst Jay Sole affirmed his bullish sentiment for NIKE, Inc. (NYSE:NKE) shares despite the possibility of macro issues impacting the stock in the near term. The analyst maintains a target price of $156 for NIKE, Inc. (NYSE:NKE) shares with a ‘Buy’ rating.
As of Q2 2022, 72 of the 895 hedge funds tracked by Insider Monkey owned shares of NIKE, Inc. (NYSE:NKE), valued at $3.3 billion. Ken Fisher’s Fisher Asset Management is its largest shareholder with ownership of 8.5 million shares valued at $873 million.
Like NIKE, Inc. (NYSE:NKE), Adobe Inc. (NASDAQ:ADBE), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:META) are quality stocks that are down over 30% year to date as of September 22 that are widely held by many hedge funds in our database as of Q2 2022.
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Disclosure: None. 10 Quality Stocks to Buy with Shares Down Over 30% YTD is originally published on Insider Monkey.
