In this piece, we will take a look at the five best bear market stocks to buy now. For more stocks, head on over to the 12 Best Bear Market Stocks to Buy Now.
5. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 64
Costco Wholesale Corporation (NASDAQ:COST) operates membership warehouses all over the globe in a host of countries such as the U.S., the U.K, China, Iceland, and Taiwan. The company is headquartered in Issaquah, Washington.
Costco Wholesale Corporation (NASDAQ:COST)’s shares have generated 14% annual returns over the past 17 years, making it one of the strongest performing stocks in the market. Since 2015, the firm has grown its revenue by an average of 10%, and even during the peak of the coronavirus pandemic, its revenues still grew by 8%, indicating that the firm is somewhat resilient to economic downturns.
Costco Wholesale Corporation’s (NASDAQ:COST) sales in September jumped 8.5% annually, alongside net sales growing by a stronger 10%. Baird kept a $575 share price target for the company in September 2022, stating that traffic at its stores increased despite inflationary headwinds. Costco Wholesale Corporation (NASDAQ:COST) pays a 90 cent dividend for a 0.77% yield, and 64 out of the 895 hedge funds part of Insider Monkey’s Q2 2022 hedge fund survey had invested in the firm.
Costco Wholesale Corporation (NASDAQ:COST)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 4.3 million shares that are worth $2 billion.
4. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) is a supermarket and supercenter operator that is headquartered in Bentonville, Arkansas, the United States. The firm has stores all over the globe and it operates close to 11,000 outlets.
Walmart Inc. (NYSE:WMT) is the world’s largest grocery store company and the fact that close to 56% of its sales are for grocery hedges the firm against a recession. Additionally, the firm is also relatively resilient to rising fuel prices, as its stores are in regions in the U.S. where gas and diesel prices are below the national average.
Walmart Inc. (NYSE:WMT) pays a 56 cent dividend for a 1.74% yield. Insider Monkey took a look at 895 hedge fund holdings for this year’s second quarter and discovered that 67 had held a stake in the company.
Rajiv Jain’s GQG Partners is Walmart Inc. (NYSE:WMT)’s largest investor. It owns 9.8 million shares that are worth $1.1 billion.
3. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
The Procter & Gamble Company (NYSE:PG) is a consumer packaged goods provider that is one of the oldest companies in the world as it was set up in 1837 and is headquartered in Cincinnati, Ohio.
The Procter & Gamble Company (NYSE:PG) has managed to ride the inflationary wave this year, as its sales grew by 5% by the end of its previous fiscal year and core earnings per share grew at 3%. At the same time, the firm also has a fortress balance sheet, with its $21 billion in operating income, in the same range as its net debt built in the latest fiscal year. By the end of its current fiscal year, the firm expects a high-end of 5% growth.
The Procter & Gamble Company (NYSE:PG) pays 91 cent dividend for a 2.94% yield. For the second quarter of 2022 holdings, 71 out of the 895 hedge funds polled by Insider Monkey had held the company’s shares.
Out of these, Ray Dalio’s Bridgewater Associates is The Procter & Gamble Company (NYSE:PG)’s largest investor. It owns 6.7 million shares that are worth $970 million.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Bank of America Corporation (NYSE:BAC) is one of the oldest banks in the world. It was founded in 1784, right at the time of the American revolution, and it provides services to tens of millions of customers all over the globe.
Bank of America Corporation (NYSE:BAC) has been slowly but surely de-risking its loan portfolio over the years. It has reduced credit card loans by 50%, home equity loans by 80%, and construction and development loans by 70%. These three are the riskiest assets for a bank to own in an economic downturn, and given that one appears to be just on the horizon, Bank of America Corporation (NYSE:BAC) just might have acted in time.
Bank of America Corporation (NYSE:BAC)’s shares have also provided the strongest return among its peers, gaining 386% over the past ten years, and its non-performing assets and loans percentage are also the second-lowest among its peers. Bank of America Corporation (NYSE:BAC) also pays a 22 cent dividend for a 2.86% yield.
Insider Monkey’s 895 hedge fund survey for Q2 2022 revealed that 99 had held a stake in Bank of America Corporation (NYSE:BAC).
Bank of America Corporation (NYSE:BAC)’s largest investor in our database is Warren Buffett’s Berkshire Hathaway which owns 1 billion shares that are worth $31 billion.
Artisan Partners mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
We made only one new purchase during the quarter, initiating a position in Bank of America (BAC). As one of America’s largest banks, Bank of America Corporation (NYSE:BAC) is second only to JPMorgan Chase (JPM) in size and is probably its closest peer. Both are well-run banks, but compared to JPM, since the GFC, BAC has retired more shares, grown EPS faster and currently has more capital and a lower dividend payout. We are attracted to BAC’s strong capital base, high capital generation capacity, large loan loss reserve, low (~50%) loan/deposit ratio, short duration investment securities book, and low dividend payout that provides financial flexibility. BAC has a less volatile earnings stream than JPM with lower capital market sensitive exposures. Additionally, BAC is rigorously stress tested by the Fed every year in quantitative and qualitative fashion. Warren Buffett’s Berkshire Hathaway, which we hold in the portfolio, owns 12% of BAC. He petitioned the Fed to own more than 10%, so he clearly likes it. Bank stocks were strong gainers in 2021 on the prospects of higher rates boosting net interest margins, but the stocks pulled back in the first half of 2022 on economic concerns. We believe BAC has massive scale advantages, should benefit from increasing interest rates, particularly in the 2-year part of the yield curve, and should grow over time with the economy. The economic environment is highly uncertain, but current consensus includes the provision for losses more than doubling and capital markets activity slowing. Against that backdrop, our purchase price equated to about 8.5X our estimates of “mid-cycle” earnings. With leading businesses, a double-digit ROE, a prudent capital return strategy and a strong balance sheet, we believe this entry point offered a solid long-term value.”
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-B) is a holding company that has invested in a wide variety of businesses such as property, utilities, railroad, insurance, and banking. It is headquartered in Omaha, Nebraska.
The wide variety of different businesses owned by Berkshire Hathaway Inc. (NYSE:BRK-B) have one central theme: they are inflation resistant and can increase their prices without losing customers. This is also a key tenet of Warren Buffett’s investment philosophy.
A key fact about Berkshire Hathaway Inc. (NYSE:BRK-B) that gets lost in coverage is that it has invested heavily in Berkshire Hathaway Energy. This firm has committed a massive $18 billion towards revamping its electricity grid to be more environmentally friendly. Finally, Berkshire Hathaway Inc. (NYSE:BRK-B) has also held its ground against both the S&P 500 and the NASDAQ 100 index, by posting a 10% share price drop this year, compared to the NASDAQ and S&P’s 33% and 24% year to date drops.
109 out of the 895 hedge funds in Insider Monkey’s database had invested in Berkshire Hathaway Inc. (NYSE:BRK-B) as this year’s second quarter ended.
Out of these, Michael Larson’s Bill & Melinda Gates Foundation Trust is Berkshire Hathaway Inc. (NYSE:BRK-B)’s largest investor. It owns 34 million shares that are worth $9 billion.
Diamond Hill Capital mentioned the company in its Q1 2022 investor letter. Here is what the fund said:
“Diversified holding company Berkshire Hathaway reported strong earnings during the quarter and benefited from continued share repurchases below intrinsic value. The company also announced significant deployments of excess cash during the quarter, including the acquisition of Alleghany and a large increase in its stake in Occidental Petroleum.”
Disclosure: None. You can also take a look at 10 Best Cyclical Stocks for Inflation and 10 Best Nuclear Energy Stocks To Buy.
