In this article, we discuss 5 stocks that rebound after recessions. If you want to read about some more stocks that rebound after recessions, go directly to 10 Stocks that Rebound After Recessions.
5. EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Fund Holders: 49
EOG Resources, Inc. (NYSE:EOG) is a Texas-based oil and gas firm. Energy stocks have gained rapidly in the past few months as supply challenges as well as rising tensions in Europe push prices to new highs. In early May, crude oil topped $110 per barrel, sending the shares of oil firms like EOG soaring. On May 5, the company declared a quarterly dividend of $0.75 per share, in line with previous. The forward yield was 2.43%. The board of directors of the company also declared a special dividend of $1.80 per share on the common stock. Since industrial demand rises after recession, energy stocks are set to achieve even higher momentum.
On May 10, Raymond James analyst John Freeman maintained a Strong Buy rating on EOG Resources, Inc. (NYSE:EOG) stock with a price target of $170, noting that the “yield potential, net cash position, and recent stock underperformance underpins the upgrade”.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in EOG Resources, Inc. (NYSE:EOG), with 8.6 million shares worth more than $1 billion.
In its Q1 2022 investor letter, Oakmark Funds highlighted a few stocks and EOG Resources, Inc. (NYSE:EOG) was one of them. Here is what the fund said:
“EOG Resources, Inc. (NYSE:EOG) (+36%), was among our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
4. Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders: 52
Marriott International, Inc. (NASDAQ:MAR) owns and runs hotels and resorts. On May 4, the company posted earnings for the first quarter of 2022, reporting earnings per share of $1.25, beating estimates by $0.33. Revenue over the period was $4.2 billion, up close to 81% compared to the revenue over the same period last year. During the first three months of 2022, the firm added 11,800 rooms globally. These included 5,300 rooms in international markets and more than 2,500 conversion rooms. The development pipeline totals almost 2,900 properties.
On May 4, Stifel analyst Simon Yarmak maintained a Hold rating on Marriott International, Inc. (NASDAQ:MAR) stock and raised the price target to $180 from $175, noting that the firm had a better line of sight into North American markets and recently reinstated dividends as well.
At the end of the first quarter of 2022, 52 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Marriott International, Inc. (NASDAQ:MAR), up from 43 in the previous quarter worth $2.8 billion.
In its Q1 2022 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Marriott International, Inc. (NASDAQ:MAR) was one of them. Here is what the fund said:
“Marriott International, Inc. (NASDAQ:MAR) is the world’s largest hotel company followed closely by Hilton (HLT) and Intercontinental Hotels Group plc (IHG). The company owns a portfolio of brands from the low end (Courtyard, SpringHill Suites, Aloft), through the mid-tier (Marriott, Sheraton, Westin, Renaissance Hotels), to the luxury high end (JW Marriott, Ritz-Carlton, St. Regis). In total the company had 7,642 properties with over 1.4 million rooms as of the end of Q1 2021. The majority (85%) of Marriott’s revenue comes from hotels in the United States, with the rest almost evenly split between Asia Pacific and Europe. Like it’s smaller peer, Hilton, the company today is almost exclusively a manager and franchisor of hotels, not a hotel owner. Marriott International, Inc. (NASDAQ:MAR) owns 66 hotels, manages 2,083 and franchises 5,493. Like all franchise-based businesses Marriott requires very little capital to grow as it utilizes the investment capital of its hotel-owners/partners to expand. Marriott currently faces a difficult operating environment due to the Covid-19 pandemic and uncertainty about the future of business travel. However, the company is an excellent operator with a somewhat leveraged capital structure (the company acquired Starwood Properties in late 2016) – if pent-up demand for travel materializes post-Covid, as we expect it will, Marriott International, Inc. (NASDAQ:MAR) will quickly go from losing money to raking in profits.”
3. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 54
Caterpillar Inc. (NYSE:CAT) markets construction and mining equipment. On May 17, the stock climbed by more than 2% after the company approved a new share buyback program worth $15 billion that will be effective from August. Based on the prices as of May 17, the buyback program could total over 72 million shares, or 13.6% of the outstanding shares on March 31. The company expects an increase in demand for mining machines in the coming years to extract raw materials used in the manufacture of electric vehicles.
On May 20, Tigress Financial analyst Ivan Feinseth maintained a Buy rating on Caterpillar Inc. (NYSE:CAT) stock and raised the price target to $282 from $278, noting that the firm was seeing “strong end-market demand and is well-positioned to benefit from ongoing capital equipment spending”.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in Caterpillar Inc. (NYSE:CAT), with 7.2 million shares worth more than $1.6 billion.
In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Caterpillar Inc. (NYSE:CAT) was one of them. Here is what the fund said:
“Having followed the company closely for north of a decade, Caterpillar Inc. (NYSE:CAT) is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”
2. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 60
Walmart Inc. (NYSE:WMT) operates as a retail firm. On May 24, the firm announced that it would be expanding an agreement with supply chain tech company Symbotic to advance a set of tech-related initiatives at the regional warehouses of the company. The new plans include drone delivery setups and artificial-intelligence powered warehouses, in addition to other robotics and software automation in general. The deal is part of a larger plan by the company to modernize the supply chain network.
On May 18, BMO Capital analyst Kelly Bania kept an Outperform rating on Walmart Inc. (NYSE:WMT) stock and lowered the price target to $165 from $170, noting the stock was impacted by “omicron-related staffing and supply chain/fuel challenges”.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Walmart Inc. (NYSE:WMT), with 15.4 million shares worth more than $2.2 billion.
1. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 113
The Walt Disney Company (NYSE:DIS) operates as an entertainment company. The company recently forecast that most subscribers to the digital Disney+ service are likely to choose the subscription plan that comes with advertisements as opposed to paying extra for no ads. The firm expects around two-thirds of Disney+ subscribers to be on the discounted ad-supported plan in time. The company claims that the advertisement load on the ad plan will be four minutes of ads per an hour of content.
On May 12, RBC Capital analyst Kutgun Maral kept an Outperform rating on The Walt Disney Company (NYSE:DIS) stock and lowered the price target to $176 from $210, noting that “ongoing macro pressures and recessionary fears will likely continue to weigh on sentiment” despite strong momentum in the parks business.
At the end of the first quarter of 2022, 113 hedge funds in the database of Insider Monkey held stakes worth $5.1 billion in The Walt Disney Company (NYSE:DIS), up from 111 the preceding quarter worth $6.9 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and The Walt Disney Company (NYSE:DIS) was one of them. Here is what the fund said:
“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. The Walt Disney Company (NYSE:DIS) announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. The Walt Disney Company (NYSE:DIS) has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”
You can also take a peek at 13 Best Hemp Stocks to Buy Now and Billionaire Dan Loeb’s Top 10 Stock Picks.
