In this article, we discuss the 5 Blue Chip Stocks to Buy According to Mario Gabelli. If you want to read our discussion on Gabelli’s investment philosophy and hedge fund performance, go directly to the 10 Blue Chip Stocks to Buy According to Mario Gabelli.
5. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Mario Gabelli’s Stake Value: $63,624,000
Percentage of Gabelli’s Portfolio: 0.57%
Stock Price as of June 15: $2,228.51
Alphabet Inc. (NASDAQ:GOOG) is a California-based tech conglomerate. The company is the third biggest technology company in terms of revenue and one of the members of the Big Five tech companies.
In a note issued to investors on June 9, Eric Sheridan at Goldman Sachs reiterated a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock with a target price of $3,000. The analyst sees Alphabet Inc. (NASDAQ:GOOG) as a defensive play in the digital advertisement industry following the rollout of Apple’s app tracking transparency (ATT) feature on April 26. Under this feature, data related to user behavior across applications and mobile websites will not be shared with advertisers, app developers, and ad performance management companies. The analyst sees Alphabet Inc. (NASDAQ:GOOG) as relatively insulated from this development.
Farrer Wealth Advisors mentioned Alphabet Inc. (NASDAQ:GOOG) in its first-quarter 2022 investor letter:
“We won’t waste much time trying to explain to our clients why Alphabet is such a phenomenal business, we believe that is quite self-evident. The better explanation is why we never bought Alphabet before. The reason was a personal bias we held based on three beliefs (which we now believe to be incorrect)
Growth in YouTube would stall as the increased ad-load would turn-off viewers (the double ad-load at the beginning of videos for example). Consumers will focus on discovery rather than search to purchase new items. For example – using Instagram/TikTok to decide what new clothes to buy instead of ‘googling’ for clothes. Other Bets: In general, we felt that capital spent on “Other Bets” has been a bit wasteful with the segment earning just around $3.1bn in revenue versus nearly $21bn in operating losses over the last five years…” (Click here to see the full text)
Overall, 160 funds held a stake in Alphabet Inc. (NASDAQ:GOOG) as of Q1 2022.
4. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 48
Mario Gabelli’s Stake Value: $62,595,000
Percentage of Gabelli’s Portfolio: 0.56%
Stock Price as of June 15: $60.80
Mondelez International, Inc. (NASDAQ:MDLZ) is a Chicago, Illinois-based snack company with a presence in over 150 countries.
On May 19, John Baumgartner at Mizuho picked Mondelez International, Inc. (NASDAQ:MDLZ) as one of the stocks that must be bought following the recent decline. The analyst thinks that Mondelez International, Inc. (NASDAQ:MDLZ) is in a strong position during these uncertain economic circumstances. Baumgartner has given the stock a Buy rating with a price target of $75. This reflects a potential upside of nearly 25% from the last closing price.
During Q1 2022, Mondelez International, Inc. (NASDAQ:MDLZ) posted a significant revenue and EPS beat due to favorable pricing, volume, and margins. The company generates 40% of its sales from developing countries and is in the best position to capitalize on GDP growth.
Of the 912 hedge funds being tracked by Insider Monkey, 48 funds held a stake in Mondelez International, Inc. (NASDAQ:MDLZ) at the end of Q1 2022.
3. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
Mario Gabelli’s Stake Value: $55,492,000
Percentage of Gabelli’s Portfolio: 0.50%
Stock Price as of June 15: $119.55
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based diversified financial services company providing solutions to corporations, governments, and institutions present across 100 countries. JPMorgan Chase & Co. (NYSE:JPM) is also a constituent of the Dow Jones Industrial Average since May 1991.
Following its investor day, Andrew Lim at Societe Generale upgraded the stock from a Hold to a Buy rating and increased the target price from $145 to $150 on May 24. The analyst stated that JPMorgan Chase & Co. (NYSE:JPM) provided a positive outlook on credit quality, investment bank trading revenues, and net interest income. Lim added that there is too much negativity priced into the stock due to fears of recession, and he anticipates significant capital generation in 2023.
Here’s what Ariel Investments has to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter:
“In our view, inflation will not just be a 2021 phenomenon. Inflationary expectations are only now working themselves into the labor market with historically low unemployment, resurgent labor unions, and higher wages. These labor cost pressures are only starting to show up in the Consumer Price Index. The most recent Producer Price Index showed a +9% year over year increase, the highest since it was created in 2010. Higher input prices generally lead to rising consumer prices.
“In our view, inflation will not just be a 2021 phenomenon.”
Consumer balance sheets are in excellent shape with lower unemployment and banked stimulus checks. A recent analysis from JP Morgan Chase (JPM) showed average checking accounts have 50% higher balances than pre-Covid. The U.S. money supply as measured by M2 (a calculation that includes cash, checking accounts, and “near cash” such as money market securities) is up +38% versus year-end 2019. Higher consumer cash holdings and higher money supply mean more spending and demand for goods. Some emphasize supply issues to explain current inflation. Going forward, we see very strong demand as well, too much money chasing too few goods.”
At the end of Q1 2022, 110 funds held a stake in JPMorgan Chase & Co. (NYSE:JPM).
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Mario Gabelli’s Stake Value: $48,969,000
Percentage of Gabelli’s Portfolio: 0.44%
Stock Price as of June 15: $33.17
Bank of America Corporation (NYSE:BAC) is another diversified financial services company on our list. Warren Buffett’s Berkshire Hathaway Inc is the biggest shareholder in the Charlotte, North Carolina-based firm, with an ownership of 11.45%
Despite the increase in interest rate, Bank of America Corporation (NYSE:BAC) is trading at a conservative forward multiple of 10x. The conservatism is because investors are factoring in the possibility of a recession ahead. However, the generous dividend outlay and the aggressive share buyback would result in an expansion of multiples, which would provide potential upside to investors.
Chris Kotowski at Oppenheimer had given Bank of America Corporation (NYSE:BAC) a target price of $50 with an Outperform rating on May 3. The analyst pointed toward the loan growth and rising interest rate as positive catalysts. Furthermore, Kotowski added that if the economy enters into a recession, the banks are most prepared for such an outcome.
Bank of America Corporation (NYSE:BAC) was mentioned by Aristotle Capital Management in its Q1 2022 investor letter. Here’s what the asset management firm said about the company:
“We first invested in Bank of America during the second quarter of 2013. During our near decade as investors, Bank of America closed the chapter on the legacy issues from acquired Countrywide, including mortgage write-downs and substantial legal charges. In addition, it successfully turned the Merrill Lynch franchise into one of the leading U.S. brokerage and advisory firms. Thanks to what we consider to be a strong management team led by CEO Brian Moynihan, the bank went through years of simplification, improved its cost structure and efficiency ratio, and reduced risk. While we believe Bank of America remains a much-improved market leader, we decided to exit our position and use the proceeds to invest in Brookfield Asset Management.”
As of Q1 2022, 99 funds held a stake in Bank of America Corporation (NYSE:BAC).
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Mario Gabelli’s Stake Value: $46,602,000
Percentage of Gabelli’s Portfolio: 0.42%
Stock Price as of June 15: $252.99
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based tech giant with exposure in various industries ranging from cloud computing, consumer electronics, gaming consoles, personal computer, and software.
The company’s cloud computing platform, Azure, has taken center stage in recent quarters as it contributed $19.1 billion of $49.4 billion in quarterly sales during Q3 FY2022. The revenue from Azure and other cloud-related services increased by 46% YoY. Raimo Lenschow at Barclays thinks that Microsoft Corporation (NASDAQ:MSFT) is a “growth engine” with annual revenues of $200 billion and is experiencing broad-based growth across various segments.
Baron Funds, an asset management firm, mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter. Here’s what the firm said:
“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”
As of Q1 2022, 259 funds held a stake in Microsoft Corporation (NASDAQ:MSFT).
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