In this article we discuss the 5 best value stocks to invest in right now according to billionaire Abrams. If you want to read our detailed analysis of Abrams‘ history and hedge fund performance, go directly to the 10 Best Value Stocks to Invest In Right Now According to Billionaire Abrams.
5. TransDigm Group Incorporated (NYSE: TDG)
Stake Value: $317,068,000
Percentage of David Abrams’ 13F Portfolio: 7.13%
Number of Hedge Fund Holders: 64
TransDigm Group Incorporated (NYSE: TDG) is a U.S-based company that deals with designing, manufacturing, and selling aircraft components. It makes products for different markets globally, including products for space programs, military, business jets, and commercial aircraft. It is one of the best value stocks, according to David Abrams.
In March, the company announced that it signed a deal with OpenGate Capital for the sale of its ScioTeq and Treality businesses for Simulation visual systems. In April, the company announced that it planned to offer $750 million principal amount senior subordinated notes as part of a private offering. TransDigm Group Incorporated (NYSE: TDG) plans to use the proceeds from the offering to redeem 6.500% senior subordinated notes due in 2025 and cover some expenses and fees. Last week, the stock was rated as “Overweight” at Wells Fargo, where the price target was set at $718.
4. AMERCO (NASDAQ: UHAL)
Stake Value: $ 343,827,000
Percentage of David Abrams’ 13F Portfolio: 7.74%
Number of Hedge Fund Holders: 21
AMERCO (NASDAQ: UHAL) operates as a moving and storage operator for household and commercial goods in the US and Canada.
In March, AMERCO (NASDAQ: UHAL) announced that its subsidiary U-HAUL plans to launch a self-storage facility in Winona, Minnesota. The stock has gained 106.02% over the past one year. For Q3 2021 the company posted EPS of $2.25 and a revenue of $1.17 billion up 26.10% YoY. Like Alphabet Inc. (NASDAQ: GOOG) and Facebook, Inc. (NASDAQ: FB), AMERCO is one of the best stocks in Abrams’ portfolio. The company ranks 4th in the list of 10 best value stocks to invest in right now according to billionaire Abrams. Cliff Asness’ AQR Capital Management upped its stake by 50% in Q1 2021 in the company.
Third Avenue Management, in its Real Estate Value Fund Q1 2021 investor letter, mentioned AMERCO (NASDAQ: UHAL). Here is what the fund said:
“While the bulk of the “action” occurred at the corporate level this quarter, the Fund did engage in modest changes during the period. Most notably, the Fund trimmed back its positions in the common stock of AMERCO (the leading provider of self-moving equipment and self-storage facilities in the U.S. through its U-Haul subsidiaries). The proceeds from this activity were primarily allocated to increasing the Fund’s more recently established positions.”
3. Facebook, Inc. (NASDAQ: FB)
Stake Value: $354,921,000
Percentage of David Abrams’ 13F Portfolio: 7.99%
Number of Hedge Fund Holders: 242
Facebook, Inc. (NASDAQ: FB) has delivered strong growth ever since it went public and remains one of the best stocks to buy in David Abrams’ portfolio.
After the latest earnings report, Truist Securities adjusted its price target for the social media company from $350 to $400 based on its prevailing positive trends and favorable economic environment. JMP Securities also raised its price target from $350 to $395, courtesy of Facebook’s position in the advertising industry.
Distillate Capital, in its Q1 2021 investor letter, mentioned Facebook, Inc. (NASDAQ: FB). Here is what the fund said:
“Facebook has come in and out of the portfolio before and did so this quarter on the back of substantial improvement in projected free cash flows such that its valuation now meets the criteria for inclusion.”
2. Asbury Automotive Group, Inc. (NYSE: ABG)
Stake Value: $416,229,000
Percentage of David Abrams’ 13F Portfolio: 9.37%
Number of Hedge Fund Holders: 23
Asbury Automotive Group, Inc. (NYSE: ABG) operates as one of the largest players in the retail and service segments of the U.S automotive industry. The company announced its Q1 2021 earnings towards the end of April, revealing that its net income was $92.8 million or $4.78 per diluted share. It outperformed the $19.5 million or $1.01 per diluted share net income reported in Q1 2020.
Asbury Automotive Group, Inc. (NYSE: ABG) Q1 2021 revenue was $2.2 billion, which equates to a 36% gain from Q4 2020, and it was higher than the consensus revenue estimate by $130 million. The company’s $4.68 per share non-GAAP EPS outperformed the consensus EPS by $1.01, while the GAAP EPS of $4.78 outperformed the consensus estimate by $0.91.
1. Lithia Motors, Inc. (NYSE: LAD)
Stake Value: $917,128,000
Percentage of David Abrams’ 13F Portfolio: 20.64%
Number of Hedge Fund Holders: 39
Lithia Motors, Inc. (NYSE: LAD) is a U.S-based automotive retailer that tops the list of best value stocks to invest in right now based on David Abrams’ portfolio. The company’s recent acquisition of New Jersey-based Planet Honda is expected to contribute more than $200 million in annual revenue. In April, the automotive retailer announced that it acquired The Suburban Collection, based in Michigan, which is expected to contribute $2.4 billion in annual revenue.
Lithia Motors’ Q1 2021 net income of $156 million represents an impressive 238% gain YoY. Its revenue for the same quarterly period was $4.3 billion, representing a 55% gain from the $2.8 billion revenue reported in Q1 2020. Morgan Stanley analysts raised their price target for Lithia Motors, Inc. (NYSE: LAD) from $310 to $320. The brokerage firm assigned an “underweight” rating to the automotive retailer.
In one of its investor letters, Cartenna Capital highlighted a few stocks and Lithia Motors Inc (NYSE:LAD) is one of them. Here is what Cartenna Capital said:
“Another key winner during Q3 for the Fund was our long position in Lithia Motors Inc. (“LAD” or “Lithia”). LAD represented a compelling opportunity to own a best-in-class auto dealer at a significant discount and whose fundamental drivers including vehicle miles driven, new/used unit volumes and used pricing, were rapidly accelerating off April’s trough levels. Our thesis centered on three idiosyncratic advantages of Lithia over other auto dealers. First, Lithia’s geographic breakdown offered meaningful exposure to highly dense urban areas like the Tri-State Region (NYC) and coastal California cities, where we believed public transportation and ride sharing would lose share to private automobile transportation. Second, LAD’s rapidly growing used-car business (13.7% same-store sales in 2019) was positioned to disproportionately benefit the Company as 75% of Lithia’s used car inventory is 4+ years old. Used cars of this age are typically less commoditized, more recession resistant and generate higher margins. The third, and most compelling, idiosyncratic opportunity emerged as Lithia’s management revealed a new digital retail strategy. With this new Driveway.com platform, we immediately deemed Lithia to be the best positioned to address the entire vehicle ownership lifecycle in a digital world, take market share, and expand its multiple as new investors appreciated the omnichannel story. Further, Lithia’s new “50 and 50 Plan” outlines a path to achieve $50b1n of revenue and $50 of earnings per share by 2025 (2019: $12.9b1n revenue, $11.76 EPS). Even after a run to $227 per share in late September, LAD continues to offer a tremendous risk-reward profile.”
You can also take a peek at Billionaire Izzy Englander’s Top 10 Stock Picks and Billionaire David Abrams’ Top Stock Picks.
