In this article, we discuss the 5 value stocks to buy in 2022 according to Ken Fisher. If you want to check out our detailed analysis of value stocks in Ken Fisher’s portfolio, go instead to 10 Value Stocks to Buy in 2022 According to Ken Fisher.
5. Chevron Corporation (NYSE:CVX)
Fisher Asset Management’s Stake Value: $1 billion
Number of Hedge Fund Holders: 53
P/E Ratio: 15.68
Chevron Corporation (NYSE:CVX) is a major American energy company headquartered in San Ramon, California. It’s another energy stock to make it to the list of value stocks to buy in 2022 according to Ken Fisher because of its fundamentals. It has a P/E ratio of 15.68, which is well below the industry average. On top of that, the company relies on only 20% debt relative to equity to run its operations, establishing its status as a value stock in Ken Fisher’s portfolio.
The company has a presence in over 180 countries through its franchise business model. Chevron Corporation (NYSE:CVX) is involved in the full spectrum energy business from hydrocarbon exploration to production, refinement, transport and marketing.
On May 19, Citi analyst Alastair Syme increased the price target on Chevron Corporation (NYSE:CVX) to $170 from $160 and kept a ‘Neutral’ rating on the shares after the first quarter results.
Fisher Asset Management’s $1 billion stake in the company makes it the second biggest holder in the first quarter of 2022, after Berkshire Hathaway, the hedge fund managed by the famous value investor Warren Buffett, which has a stake of $25 billion in Chevron Corporation (NYSE:CVX) which makes up over 7% of Berkshire Hathaway’s portfolio.
On top of that, ClearBridge Investments discussed Chevron Corporation (NYSE:CVX) in their 2022’s first-quarter investor letter. Here is what they said:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holding Chevron (NYSE:CVX) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
4. The Goldman Sachs Group, Inc. (NYSE:GS)
Fisher Asset Management’s Stake Value: $1 billion
Number of Hedge Fund Holders: 75
P/E Ratio: 5.6
The Goldman Sachs Group, Inc. (NYSE:GS) is one of the largest financial corporations in the United States. The company provides services like asset management, financial management, transaction banking, financial research and access to markets. Fisher Asset Management’s equity in the company is a close second to Eagle Capital Management’s stake in Goldman Sachs worth $1.1 billion. The Goldman Sachs Group has a P/E of 5.6, reinforcing its position in value stocks to buy in 2022 according to Ken Fisher.
75 hedge funds were bullish on the stock in the last quarter of 2021. In the same quarter, an investor letter from Ariel Investments discussed The Goldman Sachs Group. This is what they said:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. The Goldman Sachs Group, Inc. (NYSE:GS) jumped +47.59% for the year and +1.73% in the quarter.”
On May 9, Bloomberg reported that Goldman Sachs is not working with most of the special purpose acquisition corporations it took public any longer due to its reservations around the new liability guidelines.
3. Rio Tinto Group (NYSE:RIO)
Fisher Asset Management’s Stake Value: $1 billion
Number of Hedge Fund Holders: 22
P/E Ratio: 6
Rio Tinto Group (NYSE:RIO) is an Anglo-Australian global mining company headquartered in London, United Kingdom. It is the third largest mining company in the world behind BHP. The company is one of the world leaders in the production of several commodities like iron ore, uranium and copper among others. Rio Tinto primarily works in mineral mining but its refining business is also quite significant. Fisher Asset Management is the leading stakeholder in the company as of the first quarter of 2022. The stock has a dividend yield of 9% as of May 26.
On April 20, Citi analyst Ephrem Ravi raised the price target of Rio Tinto to $88, up from $74 and upgraded the rating to ‘Buy’ from ‘Neutral’. Ravi said that although Rio Tinto’s March quarter production was softer than what was anticipated, 2022 guidance on both production as well as costs has been maintained. He has raised iron ore price forecasts while upgrading his 2022 and 2023 earnings forecasts “substantially” as a result.
2. BHP Group Limited (NYSE:BHP)
Fisher Asset Management’s Stake Value: $1.30 billion
Number of Hedge Fund Holders: 25
P/E Ratio: 11.6
BHP Group Limited (NYSE:BHP) is an Australia based mining company. It is also the second largest mining corporation in the world. It is involved in mining iron-ore, copper, nickel and petroleum products among others. The stock makes up 0.77% of Fisher Asset Management’s portfolio with a stake worth $1.3 billion in the first quarter of 2022. It was also the leading stakeholder in the company in the same quarter.
The mining company was mentioned in Harding Loevner‘s Q1, 2021 letter. This is what it had to say:
“Our purchase of Australian mining company BHP is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low-cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
Citi analyst Ephrem Ravi raised the price target for BHP Group Limited (NYSE:BHP) to ‘Buy’ from Neutral with a price target of $4,038, up from $3,470. Ravi told investors in a research note that BHP Group’s cash flows are “up strongly” on Citi’s revised iron-ore price deck and its market outperformance can keep going on. He said that Citi anticipates iron-ore prices to “stay higher for longer” and that BHP’s cash flow is hard to ignore.
With a debt to equity ratio of 0.37 in the last quarter of 2021, BHP Group has strong finances going forward. The company has a dividend yield of 11.25% as of May 26. The company’s recent dividend payout was $3 per share on March 28, 2022, down by 25% in the dividend payout of September, 2021.
1. TotalEnergies SE (NYSE:TTE)
Fisher Asset Management’s Stake Value: $1.31 billion
Number of Hedge Fund Holders: 17
P/E Ratio: 7.9
TotalEnergies SE (NYSE:TTE), or simply Total, is a French multinational energy company headquartered in Courbevoie, France. It is one of the seven major energy companies in the world with global presence. Fisher Asset Management’s stake in the company exceeds a billion USD at $1.3 billion that is 0.77% of the fund’s portfolio. The mammoth investment made Fisher Asset Management the leading holder in the company.
TotalEnergies SE (NYSE:TTE) had a Price to Sales ratio of 0.69 in the first quarter of 2022, suggesting that the market cap is 69% relative to its revenue generating capacity, underlying TTE as a value stock. Its P/E ratio is also less than the average for the industry, a lower than average P/E within the sector is one of the surest signs of a value stock.
On May 13, Berenberg analyst Henry Tarr raised TotalEnergies SE (NYSE:TTE) to ‘Buy’ from ‘Hold’ rating and put a price target of $61 per share, up from $60. The analyst noted that the company’s increase in share buybacks for the first part of 2022 appears sustainable. Tarr expects TotalEnergies SE (NYSE:TTE) to deliver an “attractive” free-cash-flow yield of 17%, turning it into one of the highest dividend yields in the energy sector.
You can also take a peek at 5 Best Buy-the-Dip Tech Stocks According to Billionaire Ken Fisher and 5 Biotech Stocks to Buy Today According to Ken Fisher
