In this article, we will be taking a look at 10 safe stocks to buy now according to billionaire Dan Loeb. To skip our detailed analysis of Loeb’s investment history, strategy, and 13F holdings, you can go directly to see the 5 Safe Stocks to Buy Now According to Billionaire Dan Loeb.
Billionaire Dan Loeb, the manager of Third Point, holds large positions in several renowned companies such as Microsoft Corporation (NASDAQ:MSFT), Dell Technologies Inc. (NYSE:DELL), and UnitedHealth Group Inc. (NYSE:UNH). This February, the activist investor took to a private investor call where he discussed the potential of another of his major holdings, Amazon.com, Inc. (NASDAQ:AMZN). According to the Wall Street Journal, Loeb told investors that he saw about $1 trillion in untapped value in the company, something that the market is failing to recognize. He mentioned the $1.5 trillion enterprise value of Amazon Web Services while attempting to bring investors’ attention to the stock.
According to Bloomberg, Loeb’s flagship Offshore Fund returned -11.5% in the first quarter. In May, Loeb’s Third Point announced that it had added to its position in Shell plc (NYSE:SHEL), a move that helped the hedge fund mitigate losses. The increased stake in the company also opened new avenues for Third Point, which found investment opportunities in oil and natural gas companies. In Loeb’s first-quarter 2022 investor letter, Third Point’s annualized return was recorded at 14.3%, compared to the S&P 500’s 9.3% annualized return. He also commented that the stock market was currently imbalanced, which is why Third Point has shifted its focus to more cyclical stocks. Yet he still holds large positions in a number of non-cyclical, defensive stocks in the healthcare and utility sectors as of his 13F holding for the first quarter of 2022.
Our Methodology
We have selected 1o safe stocks from Dan Loeb’s latest 13F holdings with strong P/E ratios mostly under 30, free cash flow, and positive analyst ratings. These stocks were picked up by hedge funds in the first quarter of 2022, according to Insider Monkey’s hedge fund data for that quarter when 912 hedge funds were tracked. These stocks have mostly positive ratings and upside potential, according to analysts’ price targets. The stocks are ranked based on Loeb’s stake value in each of them, from the lowest to the highest.
Safe Stocks to Buy Now According to Billionaire Dan Loeb
10. Amazon.com, Inc. (NASDAQ:AMZN)
Third Point’s Stake Value: $57,049,000
Percentage of Third Point’s 13F Portfolio: 0.7%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is a tech and retail giant engaging in the sale of consumer products and subscriptions in North America and internationally. The company is known for rapidly growing its cash flow, making it one of the best defensive plays on the market today. It has a free cash flow per share growth rate of 4.8%, standing at a 7.3% difference from the rest of the tech sector.
This July, analyst Lee Horowitz at Deutsche Bank reiterated a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) shares. The analyst also holds a $155 price target on the stock. The company is able to maintain its cash flow with its sturdy profitability as witnessed in the quarter ended March 31st. Amazon Web Services delivered healthy profit margins in that quarter, earning $6.5 billion in operating income. The company’s advertising business has also been profitable, increasing ad sales by over 25% in the past six quarters.
Amazon.com, Inc. (NASDAQ:AMZN) brought in $3 billion through record Prime Day sales which attracted applause from Wall Street this July. Analysts on Wall Street indicated that the strong performance on Prime Day was positive for Amazon.com, Inc. (NASDAQ:AMZN). Brian Nowak, an analyst at Morgan Stanley, commented that the stock is ready to accelerate in the latter half of 2022.
In the first quarter of 2022, 271 hedge funds held stakes in Amazon.com, Inc. (NASDAQ:AMZN), with a total stake value of over $48 billion. Locust Wood Capital Advisers was the largest stakeholder in the company, holding 322,433 shares worth over $34 million.
Oakmark Funds, an investment management firm, mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter of 2022 investor letter. Here’s what they said:
“Amazon (NASDAQ:AMZN) is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”
Like Microsoft Corporation (NASDAQ:MSFT), Dell Technologies Inc. (NYSE:DELL), and UnitedHealth Group Inc. (NYSE:UNH), Amazon.com, Inc. (NASDAQ:AMZN) is a top stock pick hedge funds are eyeing this year.
9. Cano Health Inc. (NYSE:CANO)
Third Point’s Stake Value: $73,025,000
Percentage of Third Point’s 13F Portfolio: 0.95%
Number of Hedge Fund Holders: 38
Cano Health Inc. (NYSE:CANO) is a healthcare company providing primary care medical services to individuals in the US and Puerto Rico. The company owns and operates medical centers enabled by CanoPanorama, which is a proprietary population health management tech-powered platform. It also operates pharmacies and provides dental services in its medical centers.
This June, John Ransom, an analyst at Raymond James, initiated coverage of Cano Health Inc. (NYSE:CANO) with an Outperform rating, alongside an $8 price target.
Ransom cited Cano Health Inc.’s (NYSE:CANO) growth strategy for his decision. He noted that the company could be expected to benefit from growth in Medicare Advantage. He expects Cano Health Inc. (NYSE:CANO) to grow revenue at a 30% CAGR between 2022 and 2024. This makes it one of the best safe stocks in Loeb’s portfolio currently.
Out of 912 hedge funds, 38 funds were long Cano Health Inc. (NYSE:CANO) in the first quarter. In the previous quarter, 41 hedge funds were long the stock. Their total stake values were $396 million and $607 million respectively.
8. Dell Technologies Inc. (NYSE:DELL)
Third Point’s Stake Value: $101,886,000
Percentage of Third Point’s 13F Portfolio: 1.3%
Number of Hedge Fund Holders: 59
Dell Technologies Inc. (NYSE:DELL) is an information technology company that designs, develops, and sells IT solutions, products, and services across the globe. The company also offers networking products and services to business customers. It is based in Round Rock, Texas.
Simon Leopold, an analyst at Raymond James, holds an Outperform rating on Dell Technologies Inc. (NYSE:DELL) as of this July. The analyst also has a $54 price target placed on the stock.
Dell Technologies Inc. (NYSE:DELL) offers investors a chance to invest in a value tech stock that has performed well in terms of cash flow and earnings yield in times of inflation. It has a P/E ratio of under 7 and is reasonably valued, making it a good safe stock option for investors today.
Our hedge fund data for the first quarter shows 59 hedge funds long Dell Technologies Inc. (NYSE:DELL), with a total stake value of $1.9 billion. Of these funds, Lyrical Asset Management was the largest stakeholder, holding 5,238,044 shares in the company, worth about $262 million.
Dell Technologies Inc. (NYSE:DELL) is one of the most popular stocks among hedge funds today, just like Microsoft Corporation (NASDAQ:MSFT) and UnitedHealth Group Inc. (NYSE:UNH).
7. Suncor Energy Inc. (NYSE:SU)
Third Point’s Stake Value: $114,120,000
Percentage of Third Point’s 13F Portfolio: 1.5%
Number of Hedge Fund Holders: 41
Suncor Energy Inc. (NYSE:SU) is an integrated energy company. It focused on developing petroleum resource basins in the Canadian Athabasca oil sands. The company also explores, acquires, develops, produces, transports, refines, and markets crude oil in Canada and abroad.
Credit Suisse analyst Manav Gupta holds an Outperform rating on shares of Suncor Energy Inc. (NYSE:SU) as of this July.
The analyst also mentioned that Suncor Energy Inc. (NYSE:SU) could generate over $8.6 billion in pre-tax cash proceeds through its retail gas station network. Gupta believes there is a possibility that Suncor Energy Inc. (NYSE:SU) may sell its retail business and benefit its shareholders with higher returns after the sale. With the company’s financial strength, high cash flow growth, and profitable investments in renewable energy, it is a top safe stock to buy now according to billionaire Dan Loeb, who has a large stake in the company as well.
Suncor Energy Inc. (NYSE:SU) had 41 hedge funds holding stakes in its stock in the first quarter of 2022, with a total stake value of about $2.1 billion. In the previous quarter, 33 hedge funds were long the stock, with a total stake value of $1.3 billion.
ClearBridge Investments, an investment management firm, mentioned Suncor Energy Inc. (NYSE:SU) in its first quarter of 2022 investor letter. Here’s what they said:
“Also within the structural bucket, we added to our commodity exposure with the purchase of Suncor Energy (NYSE:SU). Suncor, a past holding, is a Canadian integrated oil company where we capitalized on attractive valuation due to a COVID-19-induced slowdown. We expect recovery in oil demand and strong pricing will result in faster than expected free cash flow growth and financial deleveraging.
The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out.”
6۔ Microsoft Corporation (NASDAQ:MSFT)
Third Point’s Stake Value: $154,155,000
Percentage of Third Point’s 13F Portfolio: 2%
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) is a leading tech giant that develops, licenses, and supports software, services, devices, and solutions across the globe. The company runs a range of popular software products like Microsoft Office, Exchange, Microsoft Teams, and Skype. It also has its own brand of electronic products such as laptops, gaming consoles, and more.
Mizuho’s Gregg Moskowitz holds a Buy rating on Microsoft Corporation (NASDAQ:MSFT) shares as of this July. The analyst also has a $340 price target on the stock. The Azure platform owned by the company is one of my factors increasing its cash flow, bringing in a 46% year-over-year revenue increase in company earnings in the third quarter. The company has a P/E ratio of 27.2. With its strong profitability and free cash flow, Microsoft Corporation (NASDAQ:MSFT) is one of the best safe tech stocks on the market today.
The company’s EPS in the fiscal third quarter of 2022 was $2.2, beating estimates by $0.02. Microsoft Corporation’s (NASDAQ:MSFT) revenue for the quarter was $49.4 billion, also beating estimates by $312.7 million. The company is also a reliable dividend-payer, with a dividend history spanning 18 years and a 5-year dividend CAGR of 9.6%, which adds to its defensiveness.
There were 259 hedge funds holding stakes in Microsoft Corporation (NASDAQ:MSFT) in the first quarter. Their total stake value was $65.6 billion. Locust Wood Capital Advisers was the largest stakeholder in the company, holding 235,713 shares worth $60.5 million.
Like Dell Technologies Inc. (NYSE:DELL) and UnitedHealth Group Inc. (NYSE:UNH), Microsoft Corporation (NASDAQ:MSFT) is one of the most attractive stocks in Dan Loeb’s portfolio this year.
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Disclosure: None. 10 Safe Stocks to Buy Now According to Billionaire Dan Loeb is originally published on Insider Monkey.
