In this article, we take a look at the 5 safe stocks to buy in 2022 according to Seth Klarman. If you want to check out our detailed analysis of Seth Klarman’s 13F portfolio, go straight to 10 Safe Stocks to Buy in 2022 According to Seth Klarman.
5. Veritiv Corporation (NYSE:VRTV)
Baupost Group’s Stake Value: $476 million
Percentage of Baupost Group’s Stake Value: 5.11%
Number of Hedge Fund Holders: 19
P/E Ratio: 9.9
Veritiv Corporation (NYSE:VRTV) is a consumer-staples stock. The company provides packaging and hygiene products. As of the first quarter of 2022, 19 hedge funds held a total equity of $550 million in Veritiv, with Baupost Group alone holding shares worth $476 million, making the fund the leading stakeholder in the company.
In Q3, 2021, BofA analyst, John Babcock raised his price target on Veritiv to $86, up from $72 and kept a ‘Buy’ rating on the stock.
On March 18, Veritiv announced its plan to sell its Veritiv Canada Business to Imperial Dade. The company expects to utilize net proceeds from the transaction to finance its recently announced $200 million share-buyback program as well as future growth initiatives. The deal is expected to close near the end of the second quarter.
4. Alphabet Inc. (NASDAQ:GOOG)
Baupost Group’s Stake Value: $681 million
Percentage of Baupost Group’s Stake Value: 7.32%
Number of Hedge Fund Holders: 160
P/E Ratio: 19.26
Alphabet Inc. (NASDAQ:GOOGL) is the fourth largest corporation in the world with a market cap of $1.7 trillion as of the first quarter of 2022. It is the parent company of the prominent and widely used search engine, Google.
Following the company’s first quarter results, Guggenheim analyst, Michael Morris lowered his price target on Alphabet Inc. (NASDAQ:GOOG) to $3,000 from $3,350 with a ‘Buy’ rating on the shares.
Baron Funds discussed Alphabet Inc. (NASDAQ:GOOG) in their “Baron Global Advantage Fund” investor letter of Q1, 2022. Here’s what it said:
“We have modestly reduced the size of our position in Alphabet Inc. (NASDAQ:GOOG) (from 6.5% at the end of the fourth quarter of 2021 to 5.3% as of the end of the first quarter of 2022), after the stock rallied 64% in 2021 and continued outperforming during the first quarter, declining just 3%.”
3. Intel Corporation (NASDAQ:INTC)
Baupost Group’s Stake Value: $822 million
Percentage of Baupost Group’s Stake Value: 8.84%
Number of Hedge Fund Holders: 76
P/E Ratio: 6.29
Intel Corporation (NASDAQ:INTC) is a technology company that designs, develops and supplies computer hardware. This includes microprocessors, graphics processing units and motherboards etc. As of the first quarter of 2022, Baupost Group is the leading stakeholder in the company.
Intel has a P/E Ratio of just 6.29, a very impressive figure for a technology company. Its D/E Ratio is only 0.32 and the company has a Quick Ratio of 1.73 as of the first quarter of 2022. The company also beat consensus on earnings by $0.08, with an EPS of $0.87 in its Q1 results. It also outperformed revenue estimates by $29 million. All the metrics point to the fact that Intel is one of the safest stocks on the list of safe stocks to buy in 2022 according to Seth Klarman.
Intel has a consensus of ‘Hold’ based on 25 analyst ratings as of June 14. The consensus price target, on the other hand, is $53.17, implying 40% upside. On April 8, Truist analyst William Stein lowered his price target on Intel to $49 from $53 and kept a ‘Hold’ rating on the stock as part of a broader research note on Semiconductor industry. The analyst cites “hard evidence” of an abrupt negative shift in demand signals from a wide range of compute, consumer, and communications OEMs, pointing to negative growth and lower earnings multiples for the industry.
Intel was mentioned in Q1, 2022 investor letter by O’Keefe Stevens Advisors. This is what was said:
“Intel announced they are removing stock-based compensation from non-GAAP earnings in 2022 to report results aligning with semiconductor peers. This may seem like a reasonable thing to do as comparability between peers becomes easier. On the other hand, what exactly is the point of adjusted earnings? It is not to conform to some industry norm or because the management teams need to make performance metrics. The point of adjusting earnings is to present results in a light that more closely reflects the actual underlying performance of the business. That is, backing out expenses that might be one-time in nature, such as legal or fire expenses. First off, share-based compensation is an actual expense. Decreasing my ownership stake in a company without receiving any compensation is not free. If a company paid its employees in all stock, would they add back the entire SBC? What a margin profile that would be. Second, should a company be worried about reporting results similar to other companies? Every company is unique. Management should not waste time determining what expenses should be excluded. Run the business, don’t worry about adjusting the numbers.”
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.”
1. Liberty Global plc (NASDAQ:LBTY)
Baupost Group’s Stake Value: $1.4 billion
Percentage of Baupost Group’s Stake Value: 15%
Number of Hedge Fund Holders: 41
P/E Ratio: 0.92
Liberty Global plc (NASDAQ:LBTY) is a British-Dutch-American telecommunication corporation. It has headquarters in London, Amsterdam and Denver. Baupost Group is the leading stakeholder in the company, owning equity worth $1.4 billion as of Q1, 2022.
In Q4, 2021, Pivotal Research analyst Jeffrey Wlodarczak raised his price target on Liberty Global to $43, up from $40 and kept a ‘Buy’ rating on the stock. Wlodarczak moved to a year-end 2022 target from year-end 2021 previously and anticipates almost 50% upside from present levels. He sees the sale of Liberty’s Polish cable assets as attractive and said that the stock is “inexpensive” with “lots of interesting optionality.”
Liberty Global has a Quick Ratio of 1.43 and operates with a debt that is 55% of its equity as of the first quarter of 2022, enough to cover short-term as well as long-term debt obligations.
You can also take a peek at 12 Safe Stocks to Buy for Beginner Investors and Jim Cramer Recommends Selling These 5 Stocks
