In this piece, we will take a look at Billionaire Prem Watsa’s 10 Stock Picks With Highest Potential.
Momentum and technology stocks have dominated the markets over the past decade. They have been the catalyst behind valuations in the overall equity markets getting out of hand. Not anymore. A full-blown correction is in play, going by major US indices pulling back by up to 10% from all-time highs. The pullback has mostly been felt in the tech space, where most counters have been trading at premium valuations for years.
The correction being experienced comes on the backdrop of billionaire investor Prem Watsa insisting that value investing has been overshadowed over the past decade. The renowned investor and CEO of Fairfax Financial Holdings insists on patience and discipline in value investing as one of the ways of generating long-term returns.
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“In the last 10 years since that 2008, 2009 crash—call it the great financial crash—value investing basically, I think, one, maybe two years we’ve had that value-oriented stocks have done well compared to momentum.”
The dominance of technology stocks led by the “magnificent seven” stocks has tested the resolve of value-focused investors in recent years. The stocks have posted double-digit percentage gains over the past two years, resulting in premium valuations at the back of the artificial intelligence-driven rally. However, the stocks have come under pressure in 2025 amid a string of headwinds, among them the growing concerns about the impact of the US trade war.
Growing concerns that the US Federal Reserve will not cut interest rates as inflation ticks high on the pitfalls of the US trade war and tariffs have also sent tech stocks tumbling the most. With the stocks pulling back, billionaire Watsa insists that now may be the best time to look for value investments, trading at highly discounted valuations with significant upside potential.
For Watsa, the Canadian “Warren Buffett”, focus should always be on value investing, focusing on strong businesses at fair prices.
“We just think value investing—where you’re buying something, a dollar for 50 cents, is the expression—good companies run by good, honest, hardworking presidents, CEOs. And you’re buying them at fair prices. We think over time that should work.”
Watsa has built a reputation for identifying and focusing on undervalued opportunities. He has also cemented his place as one of the most respected figures in global finance with a reputation for navigating crises, such as the one in play amid the US trade war. Fairfax Financial Holdings, the holding company that Watsa founded in 1985, has carved a name over its disciplined underwriting and value-oriented investment strategy. It also focuses on delivering above-average returns over time. With a portfolio value of about $1.5 billion, the holding company portfolio is highly diversified across basic materials technology financials and consumer cyclical sectors.
Our Methodology
We combed Fairfax Financial Holdings Limited SEC Q4 2024 13F filings to identify Billionaire Prem Watsa’s 10 stock picks with highest potential. We then settled on stocks with more than 30% upside potential based on analysts ratings and analyzed why the stocks stand out as solid value investments well poised to generate significant value. Finally, we ranked the stocks in ascending order based on the value of the stock’s upside potential after highlighting hedge fund sentiment on the stocks.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Billionaire Prem Watsa’s 10 Stock Picks With Highest Potential
10. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 68
Fairfax Financial Holdings’ Stake: $297.47 Million
Analysts’ Upside Potential as of April 21: 32.16%
Occidental Petroleum Corporation (NYSE:OXY) is an independent energy company that engages in acquiring, exploring, and developing oil and gas properties. It also operates a chemical manufacturing subsidiary. It is one of the billionaire Prem Watsa stocks with the highest potential in the energy sector. While the stock is down by about 20% year to date, analysts on Wall Street believe it has a 32% upside potential.
On April 15, research firm Stephens reiterated an Overweight rating on Occidental Petroleum Corporation (NYSE:OXY) but cut the price target to $58 from $60. The price cut comes from the overall energy sector coming under pressure on oil prices plunging below $70 a barrel. Nevertheless, Occidental Petroleum Corporation boasts of a significant presence in the Permian Basin, which should allow it to shrug off the low oil prices.
On April 9, the company reiterated that it would deliver solid Q1 2025 results as it received higher-than-expected oil and gas prices. Occidental Petroleum Corporation (NYSE:OXY) received an average price of $71.07 per barrel, higher than the $69.73 per barrel received in the last quarter of 2024. In addition, it boasts a well-diversified core business with operations in chemical and midstream infrastructure. Amid the turmoil in the energy sector, Occidental maintains a strong dividend track record, having made payments for 52 consecutive years with a current yield of 2.66%.
9. Garrett Motion Inc. (NASDAQ:GTX)
Number of Hedge Fund Holders: 32
Fairfax Financial Holdings’ Stake: $2.75 Million
Analysts’ Upside Potential as of April 21: 35.21%
Garrett Motion Inc. (NASDAQ:GTX) is an auto parts company that designs, manufactures, and sells turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers and distributors. It also offers cutting-edge technology for mobility and industrial space.
BWS Financial has already reiterated a Strong Buy rating on the stock with a $12 price tag. The bullish stance comes on the heels of the automotive technology provider announcing plans to return 75% or more of its adjusted free cash flow to shareholders through stock buybacks and dividends. The actions affirm the strength of the balance sheet and confidence in generating long-term free cash flow.
Garrett Motion Inc. (NASDAQ:GTX) delivered full-year 2024 results. While revenue was down 11% year-over-year to $3.4 billion, adjusted EBITDA improved by 90 basis points to 17.2%. The company also generated $358 million in adjusted free cash flow, a testament to solid operating performance. Amid a challenging market environment, Garrett Motion Inc. (NASDAQ:GTX) is increasingly capitalizing on the growing demand for zero-emission technologies. It has already inked a strategic partnership with SinoTruk to enhance the development of commercial electric vehicles. The two are working on developing a next-generation electric powertrain with a focus on the robust Chinese commercial vehicle market.
8. KKR & Co. Inc. (NYSE:KKR)
Number of Hedge Fund Holders: 83
Fairfax Financial Holdings’ Stake: $3.48 Million
Analysts’ Upside Potential as of April 21: 35.92%
KKR & Co. Inc. (NYSE:KKR) is a global investment firm that manages assets across various asset classes, including private equity, credit, infrastructure, real estate, and capital markets. It also generates returns by making strategic investments and providing capital solutions. It is one of billionaire Prem Watsa’s top holdings in financial services owing to its aggressive acquisition strategy.
KKR & Co. Inc. (NYSE:KKR) plans to strengthen its prospects in the financial services sector with the acquisition of OSTTRA for $3.1 billion. The acquisition should offer post-trade offerings across interest rates, FX, credit, and equity asset classes, away from central exchanges. It has already agreed to acquire Frankfurt-listed IT services provider Datagroup in a deal valued at $508.32 million.
In addition, KKR & Co. Inc. (NYSE:KKR) is among global asset managers bidding for a district cooling business owned by Abu Dhabi’s Multiply Group. PAL Cooling Holding (PCH) is a unit that specializes in delivering chilled water via insulated pipes to cool offices and industrial and residential buildings. The aggressive acquisition drive comes on the heels of KKR delivering impressive Q4 2024 results that beat analysts’ expectations with adjusted earnings per share of $1.32 and revenue of $3.3 billion. On April 15, HSBC analyst Vikram Gandhi upgraded KKR & Co. Inc. (NYSE:KKR) from Hold to Buy, lowering the price target to $119 from $170 due to a revised valuation approach. Gandhi saw improved risk-reward after a share price decline and removed the premium previously assigned to KKR due to economic uncertainty and moderated growth projections.
7. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 91
Fairfax Financial Holdings’ Stake: $17.20 Million
Analysts’ Upside Potential as of April 21: 40.20%
Merck & Co., Inc. (NYSE:MRK) is a healthcare company that develops and markets a wide range of products and solutions, including pharmaceuticals, scientific tools and technologies. While the company has been under pressure due to a persistent decline in its Human Papillomavirus (HPV) 9 vaccine batch approvals in China, analysts at UBS insist the stock is a Buy with an average price target of $105.
While HPV approvals were down by 57% in the fourth quarter of 2024, they significantly increased in March. The increase came amid a challenging environment in China and a ferocious trade war between Beijing and Washington. Merck & Co., Inc. (NYSE:MRK) delivered solid Q4 2024 results with adjusted EPS of $1.72, $0.04 above consensus estimates and $15.62 billion revenue above the estimate of $15.52 billion and up 7% year-over-year.
The robust revenue growth comes from the company expanding its footprint in the speciality pharmaceutical and oncology segment, with Keytruda as a key revenue driver. Nevertheless, Merck & Co., Inc. (NYSE:MRK) disappointed the market by providing 2025 sales guidance of between $64.1 billion and $65.6 billion, well below consensus estimates of $67.4 billion. On the other hand, Merck continues to reward investors with a 4.16% dividend yield for generating passive income.
6. Colliers International Group Inc. (NASDAQ:CIGI)
Number of Hedge Fund Holders: 19
Fairfax Financial Holdings’ Stake: $3.29 Million
Analysts’ Upside Potential as of April 21: 44.03%
Colliers International Group Inc. (NASDAQ:CIGI) provides commercial real estate to corporate and institutional clients. It offers capital markets services for property sales, debt finance, mortgage investment banking, and landlord and tenant representation services. On April 10, JPMorgan lowered its stock price target to $142 from $167 but kept its Neutral stance. The price cut comes amid growing concerns of uncertainty in the real estate sector due to tariffs and recession risks.
Colliers International Group Inc. (NASDAQ:CIGI) has moved to strengthen its position as Canada’s largest commercial real estate service sector with the acquisition of Triovest. With the acquisition, it gained access to a leading commercial real estate services platform managing more than 95 million square feet of commercial real estate. In addition, the company oversees more than $15 billion in projects under development.
The acquisition comes from Colliers International Group Inc. (NASDAQ:CIGI) delivering strong Q4 2024 results that underscored underlying growth. Revenue in the quarter was up 22% year-over-year to $1.5 billion as adjusted EBITDA increased 14% to $225 million. The real estate services company is experiencing robust growth across its business segments, with the engineering division seeing a 61% increase driven by acquisitions.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 186
Fairfax Financial Holdings’ Stake: $27.99 Million
Analysts’ Upside Potential as of April 21: 49.08%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a semiconductor foundry that offers advanced manufacturing processes and a comprehensive portfolio of technologies. Consequently, it manufactures chips for other companies, including Apple, Intel, Qualcomm, and Nvidia. It is one of billionaire Prem Watsa’s top stock picks in the tech sector, offering exposure to the burgeoning artificial intelligence landscape. While the stock is down by about 24% year to date amid the broader stock market rout, the average consensus price target indicates the stock could rally by about 49%.
On April 17, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) delivered better-than-expected first-quarter 2025 results, affirming it benefits from the artificial intelligence boom. Revenue in the quarter was up 41.6% year-over-year to NT$839.25 billion as diluted earnings per share increased 60.4% to $2.12, with net income increasing 60.3% to NT$361.56 billion. Taiwan Semiconductor expects its full-year revenue to grow close to mid-20% amid the continued AI development.
Needham reiterated a Strong Buy on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) with a $225 price target buoyed by the company’s strong fundamentals despite demand and tariff concerns. Management reiterated strong business in the second quarter, attributed to strong demands for the industry-leading 3nm and 5nm technologies. Additionally, Taiwan Semiconductor has refuted claims that it’s negotiating a potential tie-up with ailing chipmaker Intel.
4. ATS Corporation (NYSE:ATS)
Number of Hedge Fund Holders: 10
Fairfax Financial Holdings’ Stake: $73.87 Million
Analysts’ Upside Potential as of April 21: 58.53%
ATS Corporation (NYSE:ATS) is a leading provider of innovative manufacturing solutions, specializing in custom-designed and installed automation systems for diverse industries. It offers custom automation, repeat automation, automation products, and contract manufacturing, serving clients in sectors like life sciences, food & beverage, transportation, and consumer goods. While the stock is down by about 23% year to date, it commands a consensus Buy rating on Wall Street.
The bullish stance comes from ATS Corporation (NYSE:ATS) recording its second-highest bookings quarter in Q3 fiscal 2025. Order bookings totalled $2.44 billion against $2.1 billion a year ago. The order backlog should provide significant revenue visibility and a solid foundation to drive customer and shareholder value.
Robust order book underscores stronger organic growth and significant contributions from acquisitions. Nevertheless, ATS Corporation (NYSE:ATS) delivered a drop in revenues in Q3 FY25 of $652 million compared to $752 million the previous year. The significant revenue drop came as the company felt the impact of reduced market demand in the North American EV market, partially offset by growth in life sciences and food beverages.
3. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders: 47
Fairfax Financial Holdings’ Stake: $1.02 Million
Analysts’ Upside Potential as of April 21: 65.70%
MGM Resorts International (NYSE:MGM) is a multinational hospitality, sports and entertainment company. It operates casino resorts that offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. On April 17, Citizens JMP analyst Jordan Bender reduced the price target for MGM Resorts International (NYSE:MGM) from $50 to $45 while maintaining an Outperform rating. The analyst noted that brick-and-mortar casino fundamentals remain stable but cited uncertainty as the reason for lowering estimates and price targets across the sector.
The hotel and casino operator reported adjusted earnings per share of $0.45 against $0.08 expected. While revenue was down 1% year-over-year to $4.35 billion, it still topped analyst forecasts. MGM China revenue was up 4% year-over-year to $1 billion, driven by significant casino revenues. On the other hand, Las Vegas strip resort revenues were down 6% to $2.2 billion.
MGM operations in China have received a significant boost, fuelled by strong mass market growth, as the bounce back from the Covid-19-triggered slow growth gathered steam. During the Chinese New Year holiday, the company recorded an 18% rise in foot traffic, suggesting that this significant market may be recovering. For MGM Resorts International (NYSE:MGM), the digital market, which includes BetMGM, offers substantial development potential and is expected to be profitable this year.
2. Cleveland-Cliffs Inc. (NYSE:CLF)
Number of Hedge Fund Holders: 49
Fairfax Financial Holdings’ Stake: $55.45 Million
Analysts’ Upside Potential as of April 21: 76.12%
Cleveland-Cliffs Inc. (NYSE:CLF) is a basic materials company that specializes in flat-rolled steel products for the automotive industry. It produces a wide range of flat-rolled steel, including carbon, stainless, electrical, plate, and long steel.
Bank of America lowered its stock price target on April 7 to $8.50 but maintained a neutral rating on the shares. The price cut comes amid growing concerns that a challenging macro environment affected by trade tariffs will drown base metal fundamentals and only benefit gold and silver, double up as a haven. Amid the concerns, Cleveland-Cliffs Inc. (NYSE:CLF) remains in a strong position amid soaring demand for its hot-rolled steel.
Lead times have increased from 3 to 7 weeks as a bounce back from weak steel demand in 2024 continues to improve. Cleveland-Cliffs Inc. (NYSE:CLF) is one of the companies well positioned to benefit from the implementation of the 25% tariffs on steel imports as a local producer. Ongoing plans to acquire United States Steel Corp assets underscore the company’s efforts to strengthen its industry position.
1. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 94
Fairfax Financial Holdings’ Stake: $6.73 Million
Analysts’ Upside Potential as of April 21: 90.81%
Micron Technology, Inc. (NASDAQ:MU) is a technology company that provides memory and storage solutions for a wide range of applications, including computing, consumer electronics, enterprise storage, and automotive. It manufactures DRAM, NAND, and NOR memory chips. It is one of billionaire Prem Watsa’s top stock picks, and analysts insist it has 86% upside potential.
On March 27, analysts at Wells Fargo reiterated a Buy rating on the stock, citing strong demand for its storage solutions amid tighter market conditions. Sharing similar insights are analysts at JPMorgan who insist Micron Technology, Inc. (NASDAQ:MU) has minimal exposure to specific product stock-keeping units affected by regulatory actions in China. The analysts reiterate the significant unsatisfied demand for artificial intelligence in China.
The remarks come as forecasts indicate Micron Technology, Inc. (NASDAQ:MU) revenues are poised to increase by 41% in 2025. Likewise, Micron Technology has announced a strategic reorganization of its business to capitalize on AI-driven growth opportunities. The company is to transition to four new business units of Cloud Memory (CMBU), focusing on hyperscale cloud customers and high-bandwidth memory; Core Data Center (CDBU), serving OEM data center customers; Mobile and Client (MCBU), handling mobile and client segments; and Automotive and Embedded (AEBU), focusing on automotive, industrial, and consumer segments.
While we acknowledge the potential of Micron Technology Inc. (NASDAQ:MU) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
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