5 Safe Stocks to Buy in 2022 According to Seth Klarman

2. Qorvo, Inc. (NASDAQ:QRVO)

Baupost Group’s Stake Value: $824.7 million

Percentage of Baupost Group’s Stake Value: 8.86%

Number of Hedge Fund Holders: 33

P/E Ratio: 10.22

Qorvo, Inc. (NASDAQ:QRVO) is an American designer, manufacturer and supplier of Radio Frequency (RF) systems with applications in wireless and broadband communication. Baupost Group is the leading stakeholder in Qorvo, Inc. (NASDAQ:QRVO) with equity ownership of $824.7 million as of Q1, 2022. 

On May 5, Craig-Hallum analyst Anthony Stoss lowered his price target on Qorvo, Inc. (NASDAQ:QRVO) to $180, down from $225 and kept a ‘Buy’ rating on the shares. 

Stoss notes that the company reported an in-line quarter for revenue and better earnings on content gains and enduring IDP growth, marginally offset by well-known weaknesses from Chinese supply chain and pandemic lockdowns.

In terms of fundamentals and the stock’s intrinsic value, Qorvo, Inc. (NASDAQ:QRVO) is one of the safest stocks in Seth Klarman’s portfolio. It has a generally lower than average P/E Ratio of 10.22, implying relatively higher earnings compared to the stock’s trading price. 

Moreover, the company’s dependence on debt is only 45% of its own equity, suggesting safety when it comes to credit-risk amid rising rate hikes. With a Quick Ratio of 2.51, the company is well-positioned for fulfilling short-term debt obligations. 

Qorvo, Inc. (NASDAQ:QRVO) has a consensus ‘Hold’ rating based on 22 analysts as of June 14. The consensus price target is $163, marking the potential increase in value by 69%. 

Vulcan Value Partners mentioned Qorvo in their Q1, 2022 investor letter and following is what it said:

“Qorvo Inc. is one of the two major providers of radio frequency RF systems which are critical components of mobile devices including smart phones and the Internet of Things (IoT). Two transitory concerns have recently affected the company’s stock price. First, supply chain issues continue to be a constraint. Second, Apple recently announced its decision to decrease production of its iPhone SE model. Neither of these issues threatens their long-term competitive position. Qorvo’s value is stable and despite the recent pressure on the stock price, we feel its long-term prospects are promising.”