In this article, we discuss 5 consumer staples stocks to buy according to billionaire Ray Dalio. If you want to see some more consumer staples picks of Ray Dalio, click 10 Consumer Staples Stocks To Buy According To Billionaire Ray Dalio.
5. McDonald’s Corporation (NYSE:MCD)
Bridgewater Associates’ Stake Value: $449,661,000
Percentage of Bridgewater Associates’ 13F Portfolio: 2.61%
Number of Hedge Fund Holders: 57
McDonald’s Corporation (NYSE:MCD) is a multinational fast food company that operates globally. Hiking its position in McDonald’s Corporation (NYSE:MCD) by 16% in Q4 2021, Bridgewater Associates owns 1.67 million shares of the company, worth approximately $450 million. The stock accounts for 2.61% of the fund’s total Q4 portfolio.
On March 14, Oppenheimer analyst Brian Bittner lowered the price target on McDonald’s Corporation (NYSE:MCD) to $280 from $290 and kept an Outperform rating on the shares. The analyst observed that McDonald’s Corporation (NYSE:MCD) stock declined 9% since Russia invaded Ukraine on February 24, and investors should take advantage of the pullback. The headwinds for EPS in 2022 are due to losses from incurring short-term costs despite operations being cut in Russia, and the analyst’s 3% lower 2023 EPS estimate assumes that Russia and Ukraine’s EPS contribution falls to zero.
According to the fourth quarter database of Insider Monkey, 57 hedge funds were long McDonald’s Corporation (NYSE:MCD), with combined stakes of $2.24 billion. Renaissance Technologies is the biggest shareholder of the company, with 1.75 million shares worth $470.4 million.
4. The Coca-Cola Company (NYSE:KO)
Bridgewater Associates’ Stake Value: $514,581,000
Percentage of Bridgewater Associates’ 13F Portfolio: 2.99%
Number of Hedge Fund Holders: 70
The Coca-Cola Company (NYSE:KO) is a multinational beverage manufacturer and distributor, offering a range of sparkling soft drinks, flavored water, energy and sports drinks, and alcoholic beverages.
Ray Dalio first invested in The Coca-Cola Company (NYSE:KO) back in Q4 2010, but sold off his stake repeatedly over the years. In Q3 2020, the billionaire purchased shares of The Coca-Cola Company (NYSE:KO), and the stake was elevated in the fourth quarter of 2021 by 4%. The hedge fund held a $514.5 million position in The Coca-Cola Company (NYSE:KO), which accounts for 2.99% of the total Q4 investments.
On February 17, The Coca-Cola Company (NYSE:KO) declared a $0.44 per share quarterly dividend, a 4.8% increase from its prior dividend of $0.42. The dividend is distributable on April 1, to shareholders of record on March 15.
Evercore ISI analyst Robert Ottenstein on March 15 lifted the price target on The Coca-Cola Company (NYSE:KO) to $70 from $63 and kept an Outperform rating on the shares, citing different drivers for multiple expansion, including an improved business model, strong product portfolio, positive long-term outlook, and share buybacks driving a double-digit return to shareholders.
Among the hedge funds tracked by Insider Monkey, 70 funds were bullish on The Coca-Cola Company (NYSE:KO) at the end of December 2021, up from 61 funds in the quarter earlier. Berkshire Hathaway is the leading shareholder of The Coca-Cola Company (NYSE:KO), owning 400 million shares worth $23.6 billion.
3. Costco Wholesale Corporation (NASDAQ:COST)
Bridgewater Associates’ Stake Value: $519,806,000
Percentage of Bridgewater Associates’ 13F Portfolio: 3.02%
Number of Hedge Fund Holders: 57
Costco Wholesale Corporation (NASDAQ:COST) is a merchandise retailer of dry groceries, appliances and electronics, health and beauty products, hardware, and sporting goods, among others.
In the third quarter of 2020, Ray Dalio acquired a stake in Costco Wholesale Corporation (NASDAQ:COST), and in Q4 2021, the billionaire added 8% to his position, holding 915,635 shares worth approximately $520 million.
Costco Wholesale Corporation (NASDAQ:COST) published its Q4 results on March 3, posting earnings per share of $2.92, topping estimates by $0.18. The quarterly revenue jumped roughly 16% year-over-year to $51.90 billion, surpassing consensus by almost $396 million. Deutsche Bank analyst Krisztina Katai raised the price target on Costco Wholesale Corporation (NASDAQ:COST) to $491 from $482 and kept a Hold rating on the shares on March 7, following the Q4 results.
A total of 57 hedge funds were bullish on Costco Wholesale Corporation (NASDAQ:COST) at the end of December 2021, up from 55 funds in the quarter earlier. Fisher Asset Management is the biggest shareholder of the company, with more than 4 million shares worth $2.3 billion.
Here is what Ensemble Capital has to say about Costco Wholesale Corporation (NASDAQ:COST) in its Q1 2021 investor letter:
“We saw these dynamics at play in the Fund. Some of the worst-performing stocks this quarter were among our best performers in Q1 2020. Another example was the market’s reaction to Costco Wholesale (1.5% weight in the Fund) during the quarter. From December 31, 2020 to March 8th, Costco shares declined 17% and dropped below their pre-pandemic high. The common rationale offered by sell-side analysts was that Costco would face difficult one-year “comps” (i.e. same-store sales, which compare sales from stores open for at least a year). Because so many consumers rushed to Costco ahead of shelter-in-place and subsequent quarantines, it will be harder for Costco to meaningfully beat those results when compared year-over-year. That may indeed be true, but we struggle to understand how Costco could be “less valuable” than it was a year earlier when it concurrently increased its membership base by over 7%, or 3.9 million members. With membership renewal rates around 90%, the vast majority of the new customers Costco brought in last year will be around for years to come.
Analysts also complained about Costco raising its already industry-leading minimum wage to $16/hour, with an average “effective” pay of $23-$24/hour when you include overtime and bonuses. Costco paying its employees “too much” has been a common gripe of Wall Street analysts for at least two decades. While the extra pay does indeed impact short-term profit margins, it also serves to make Costco more durable, as its flywheel (i.e. a virtuous value cycle) starts with happy employees. A 20-year chart of Costco stock price is evidence that this strategy works and we’re confident that it will continue to work.”
2. PepsiCo, Inc. (NASDAQ:PEP)
Bridgewater Associates’ Stake Value: $530,141,000
Percentage of Bridgewater Associates’ 13F Portfolio: 3.08%
Number of Hedge Fund Holders: 60
PepsiCo, Inc. (NASDAQ:PEP) is an American multinational beverage manufacturer and distributor that has featured on Ray Dalio’s portfolio since Q3 2020. As of the end of the December quarter of 2021, Ray Dalio’s fund owns over 3 million PepsiCo, Inc. (NASDAQ:PEP) shares, worth $530.1 million. The stock accounts for 3.08% of the fund’s total Q4 holdings.
On March 8, PepsiCo, Inc. (NASDAQ:PEP) became another consumer staples manufacturer that is looking for options for its Russian division. The company is possibly looking at writing off the value of the unit, but it is a complex matter since the operations in Russia are too large to be closed down entirely, and the region is the third largest contributor to PepsiCo, Inc. (NASDAQ:PEP)’s revenue. However, PepsiCo, Inc. (NASDAQ:PEP) will have to divest its Russian business if the war does not come to an end and institutional investors pressure the company to follow the footsteps of McDonald’s and Coca Cola.
Wells Fargo analyst Chris Carey lowered the price target on PepsiCo, Inc. (NASDAQ:PEP) to $170 from $175 and kept an Equal Weight rating on the shares on March 9. PepsiCo, Inc. (NASDAQ:PEP)’s asset portfolio is top-quality, but the analyst believes that consensus and guidance feels high, even after accounting for higher pricing and savings versus PepsiCo, Inc. (NASDAQ:PEP)’s guidance for the future.
Fundsmith LLP is the largest shareholder of PepsiCo, Inc. (NASDAQ:PEP), with 10.4 million shares worth $1.80 billion. Overall, 60 hedge funds were bullish on PepsiCo, Inc. (NASDAQ:PEP) at the end of December 2021.
Here is what Saturna Capital Amana Funds has to say about PepsiCo, Inc. (NASDAQ:PEP) in its Q4 2021 investor letter:
“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. We sold our positions in Pepsi. We believe Pepsi to be a well-run firm, but its products are not in keeping with an ESG mandate. Additionally, it has entered a joint venture to produce and distribute alcoholic beverages, making it ineligible for the portfolio.”
1. The Procter & Gamble Company (NYSE:PG)
Bridgewater Associates’ Stake Value: $848,840,000
Percentage of Bridgewater Associates’ 13F Portfolio: 4.93%
Number of Hedge Fund Holders: 67
The Procter & Gamble Company (NYSE:PG) is a manufacturer of branded consumer packaged goods, operating in the beauty, grooming, healthcare, fabric and home care, and family care segments. In Q4 2021, Ray Dalio increased his The Procter & Gamble Company (NYSE:PG) stake by 11%, holding more than 5 million shares worth $848.8 million.
On March 8, The Procter & Gamble Company (NYSE:PG) announced the suspension of all new capital investments in Russia and “significantly reducing” its portfolio to focus on basic hygiene, health, and personal care items. Institutional shareholders have advised the company to pause its operations in Russia entirely amid sanctions.
Deutsche Bank analyst Steve Powers on March 16 lowered the price target on The Procter & Gamble Company (NYSE:PG) to $173 from $179 and kept a Buy rating on the shares. The analyst noted that the management was confident, but he also cited near-term volatility and recently emerging headwinds, which led to the slashed price target.
In Q4 2021, 67 hedge funds reported owning stakes in The Procter & Gamble Company (NYSE:PG), valued at $66 billion, compared to 69 funds in the earlier quarter, holding stakes in The Procter & Gamble Company (NYSE:PG) worth $64 billion. GQG Partners is the leading shareholder of the company, with 7.5 million shares worth $1.2 billion.
You can also take a look at 10 Dividend Stocks Redditors Buy for Early Retirement and 10 Dividend Stocks Warren Buffett is Backing in 2022.
