In this article, we discuss the 5 best bear market stocks to invest in. If you wish to read our detailed analysis of bear market stocks and the current market situation, go directly to 11 Best Bear Market Stocks To Invest In.
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 83
Exxon Mobil Corporation (NYSE:XOM) is a Texas-based energy firm which engages in the production, transportation and sale of crude oil, natural gas, petroleum products and other petrochemicals around the globe. The company’s impressive dividend track record, as well as high valuations in the energy sector make Exxon Mobil Corporation (NYSE:XOM) one of the best bear market stocks to own. It offers a 3.56% yield as of June 7, and has increased its payout to shareholders for 39 years in a row.
For Q1 2022, Exxon Mobil Corporation (NYSE:XOM) disclosed earnings per share of $2.07, falling below analysts’ estimates by $0.16. Quarterly revenue was posted at $90.50 billion, outperforming consensus estimates by $5.62 billion and showing an increase of 53% in contrast to the same period over last year.
83 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) at the close of the first quarter, with aggregate stakes worth $8.55 billion. This shows a positive trend from the preceding quarter where 71 hedge funds were stakeholders of the energy firm.
On June 3, JPMorgan analyst Phil Gresh gave Exxon Mobil Corporation (NYSE:XOM) an ‘Overweight’ rating and a $108 price target. He notes that the company is trading at a discount to rival Chevron “on essentially all important valuation metrics,” and that it “still has room” to post further gains. As of June 7, the company shares have gained 61.90% in the last 12 months, and 55.56% so far in 2022.
Investment firm Goehring & Rozencwajg Associates mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter. Here’s what the fund said:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
4. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is a Dividend Aristocrat stock, making it one of the best names to own during a market downturn. It has increased its dividend yield for 59 years in a row, and offers a 2.56% yield as of June 7. The company deals in the manufacture and sale of consumer products, medical devices and biopharmaceutical products.
For the first quarter, Johnson & Johnson (NYSE:JNJ) reported EPS of $2.67, outperforming estimates by $0.10. However, quarterly revenue of $23.4 billion was recorded below Street estimates by $192 million.
On May 23, SVB Leerink analyst David Risinger assumed coverage of Johnson & Johnson (NYSE:JNJ) with an ‘Outperform’ rating and a $200 price target. Risinger holds that the company should outperform owing to its ability to post consistent earnings growth and execute value-adding mergers and acquisitions.
A detailed study of the 900+ hedge funds in the database of Insider Monkey showed that 83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ) shares at the close of the first quarter, with aggregate stakes worth $7.4 billion. Its most prominent shareholder in the first quarter was Arrowstreet Capital, which increased its stake in the company by 38% to stand at 6.65 million shares priced at $1.17 billion.
Distillate Capital, an investment firm, discussed Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the fund said:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
3. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 93
Wells Fargo & Company (NYSE:WFC) ranks next on our list of the best bear market stocks to buy now. Shares of the financial services company were found in the portfolios of 93 hedge funds at the close of the first quarter, as compared to 94 hedge funds a quarter earlier. With a position worth nearly $885 million, Theleme Partners was the largest shareholder of Wells Fargo & Company (NYSE:WFC) at the end of the first quarter of 2022.
On April 14, Wells Fargo & Company (NYSE:WFC) announced its Q1 results, and disclosed earnings per share of $0.88, beating estimates by $0.07. The company’s revenue for the quarter fell $232.4 million below forecasts, coming in at $17.59 billion.
Citi analyst Keith Horowitz on April 18 maintained a ‘Buy’ rating on Wells Fargo & Company (NYSE:WFC) shares, with a price target of $56. Horowitz sees the recent share price weakness presenting a good buying opportunity, and thinks that the company’s balance sheet remains very well positioned for higher interest rates.
Investment firm Davis Funds mentioned Wells Fargo & Company (NYSE:WFC) in its Q4 2021 investor letter. The fund said:
“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 include Wells Fargo.”
2. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) is a US-based bank holding company which provides a range of financial services to clients around the world. Banks are positioned to perform well when interest rates rise high, and JPM is one of the best names to own given the current market situation.
Investors were seen loading up on JPMorgan Chase & Co. (NYSE:JPM) stock. 110 hedge funds reported bullish bets on the company shares at the end of March, as compared to 107 hedge funds a quarter earlier. Billionaire Ken Fisher’s Fisher Asset Management, with 7.76 million shares priced at $1.05 billion, was the biggest shareholder of JPMorgan Chase & Co. (NYSE:JPM) in the first quarter of 2022.
On May 24, BMO Capital analyst James Fotheringham maintained a ‘Market Perform’ rating on JPMorgan Chase & Co. (NYSE:JPM) shares and increased the price target to $156 from $150. Fotheringham sees the company as a long-term market share winner among global banks, but notes some headwinds offsetting the near-term benefits of growing credit demand and rising interest rates.
For the quarter ending March, JPMorgan Chase & Co. (NYSE:JPM) posted a revenue of $30.72 billion, beating analysts’ estimates by $318.5 million. EPS was recorded at $2.63, below estimates by $0.08.
Investment firm ClearBridge Investments mentioned a few stocks in its Q4 2021 investor letter, and JPMorgan Chase & Co. (NYSE:JPM) was one of them. Here’s what the fund said:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 159
Visa Inc. (NYSE:V) ranks first on our list of the best bear market stocks to buy. The California-based company offers payment technologies and financial services to clients around the globe. The Q1 database of Insider Monkey showed that 159 hedge funds were long Visa Inc. (NYSE:V) at the end of March, up from 142 hedge funds a quarter ago. Adam Capital held a $19.94 billion stake in Visa Inc. (NYSE:V) at the end of the first quarter, making it the largest shareholder of the company
Goldman Sachs analyst Will Nance on May 17 initiated coverage of Visa Inc. (NYSE:V) with a ‘Buy’ rating and a $282 price target, implying an upside of 43%. Nance also added the company shares to the firm’s ‘Americas Conviction List’, and sees it as a global leader with “attractive leverage to the long-term secular growth driver from payment electronification.”
Visa Inc. (NYSE:V) posted earnings per share of $1.79 for the first quarter, exceeding analysts’ estimates by $0.14. The company pulled in $7.19 billion in revenue for the quarter, which represented year-on-year growth of 25.48% and beat estimates by $366.9 million.
Investment firm Baron Funds talked about Visa Inc. (NYSE:V) in its Q1 2022 investor letter. Here is what the fund said:
“Shares of global payment network Visa, Inc. (NYSE:V) were up 2.5% on strong quarterly results with 24% revenue growth and 27% EPS growth. Payment volume grew 20% with notable strength in cross-border volumes as travel activity rebounded from depressed levels. Management raised full-year guidance to reflect high-teens revenue growth. Shares also likely benefited from a “flight to safety” during a volatile quarter for equities. We continue to own the stock due to Visa’s long runway for growth underpinned by the continued migration from cash transactions to card/digital and strong competitive advantages, operating in a duopoly with Mastercard.”
You can also take a look at 10 Best Mid-Cap Stocks To Buy Now and 10 Best Paper Stocks To Buy Now.
