Billionaire Ray Dalio’s 5 Long-Term Stock Picks

In this article, we talk about 5 long-term stock picks in billionaire Ray Dalio’s portfolio. If you want to see more stocks in this selection, check out Billionaire Ray Dalio’s 10 Long-Term Stock Picks.

5. Costco Wholesale Corporation (NASDAQ:COST)

Bridgewater Associates’ Stake Value: $566.5 million

Percentage of Bridgewater Associates’ 13F Portfolio: 2.86%

Number of Hedge Fund Holders: 69

Costco Wholesale Corporation (NASDAQ:COST) is an American multinational corporation that engages in the operation of membership warehouses, leading as one of the biggest retailers in the world across several selected categories. Ray Dalio’s hedge fund holds $566.5 million worth of shares in the company as of Q3 2022. He has been raising his stakes in the company since Q2 2020.

Deutsche Bank analyst Krisztina Katai lowered her price target on Costco Wholesale Corporation (NASDAQ:COST) to $578 from $581 but maintained a Buy rating on the shares of the company on November 30. According to the analyst, investors should stick with the “winners” in retail.

On November 22, BofA analysts added Costco Wholesale Corporation (NASDAQ:COST) to the firm’s “US 1 List,” which represents a collection of the best investment ideas that are drawn from the universe of Buy-rated, U.S.-listed stocks covered by BofA Global Research fundamental equity research analysts.

As of the close of Q3 2022, 69 hedge funds tracked by Insider Monkey owned stakes in Costco Wholesale Corporation (NASDAQ:COST), up from 64 in the previous quarter. These stakes have an aggregate value of over $4.42 billion. With stakes over $1.2 billion, Fisher Asset Management owned the largest position in the company in Q3.

Cooper Investors shared its outlook on Costco Wholesale Corporation (NASDAQ:COST) in its Q3 2022 investor letter. Here’s what the firm said:

“The US economy continues to run hot – the labour market is extremely tight and a number of executives we spoke to described their challenges in retaining staff and preventing competitors from poaching talent. Industrial companies in particular continue to see record backlogs, with the easing of logistics and supply chain constraints only just starting to have an impact on deliveries and lead times.

In terms of inflationary pressures, the vast majority of our holdings have been able to leverage strong market positions and stakeholder relationships to push pricing through in 2022 such that minimal impact to earnings has occurred. Clearly this is not a lever than can be pulled indefinitely but the more experienced management teams have kept some of their powder dry. Our meeting with management at Costco in Seattle was memorable for several reasons but one was their latent ability to increase member pricing which they have not done in over 5 years (and thus likely to do in 2023)…

…To conclude we’ll return to our meeting with Costco mentioned earlier. The business quality is no secret after decades of incredible execution, but the meeting gave us renewed conviction around Value Latencies in terms of the runway for growth, the focus on enhancing customer value, Costco’s vast buying power (it purchases 30% of the world’s jumbo cashews as one example) and management’s feral focus on the business model and cost discipline.”

4. The Coca-Cola Company (NYSE:KO)

Bridgewater Associates’ Stake Value: $642.39 million

Percentage of Bridgewater Associates’ 13F Portfolio: 3.25%

Number of Hedge Fund Holders: 59

The Coca-Cola Company (NYSE:KO) is an American multinational beverage corporation that manufactures, sells, and markets other non-alcoholic beverage concentrates and syrups, and alcoholic beverages. The company is best known as the producer of Coca-Cola. The Coca-Cola Company (NYSE:KO) has been a part of Bridgewater Associates’ 13F portfolio since the fourth quarter of 2010 and accounted for 3.25% of billionaire Ray Dalio’s portfolio at the close of Q3 2022.

On October 26, UBS analyst Peter Grom raised the price target on The Coca-Cola Company (NYSE:KO) to $68 from $63 and kept a Buy rating on the shares. The analyst believes that the company’s Q3 earnings beat was “impressive” as its organic growth more than offset incremental currency headwinds. According to Grom, Coca-Cola’s risk/reward looks favorable as shares have underperformed of late, and the company has potential for stronger revenue growth to drive a sustained premium compared to its competitors.

According to the third quarter database of Insider Monkey, 59 hedge funds were bullish on The Coca-Cola Company (NYSE:KO), compared to 60 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 400 million shares worth $22.40 billion.

Carillon Tower Advisers made the following comment about The Coca-Cola Company (NYSE:KO) in its Q3 2022 investor letter:

“Shares of The Coca-Cola Company (NYSE:KO) sold off with consumer staples even as the company reported strong pricing for the second quarter. On average, product prices rose with management hinting at further momentum.”

3. PepsiCo, Inc. (NASDAQ:PEP)

Bridgewater Associates’ Stake Value: $656.55 million

Percentage of Bridgewater Associates’ 13F Portfolio: 3.32%

Number of Hedge Fund Holders: 72

PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food, snack, and beverage corporation that manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. With a business model that encompasses all aspects of the food and beverage market, it leads as one of the best consumer staples company in the world. Ray Dalio began investing in PepsiCo, Inc. (NASDAQ:PEP) during the fourth quarter of 2010 when his hedge fund purchased shares worth $16.4 million in the company. At the end of Q3 2022, Bridgewater Associates owned over 4 million PEP shares worth over $656.5 million, after increasing its position in the company by 6%.

Earlier this October, Barclays analyst Lauren Lieberman raised the price target on PepsiCo, Inc. (NASDAQ:PEP) to $185 from $183 and kept an Overweight rating on the shares. According to Lieberman, the company’s “beat and raise” in Q3 was “firmly characteristic” of its “flexibility that screens all the more attractive in the current operating environment.”

At the end of the third quarter of 2022, 72 hedge funds in the database of Insider Monkey held stakes worth $4.8 billion in PepsiCo, Inc. (NASDAQ:PEP), compared to 65 in the previous quarter worth $5.3 billion.

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and PepsiCo, Inc. (NASDAQ:PEP) was one of them. Here is what the fund said:

“Also in the stable and predictable cash flow camp, though with a very different business model, global food and beverage company PepsiCo (NYSE:PEP) reported very strong organic growth in the first quarter, driven by healthy price/mix, and raised revenue guidance, while holding EPS guidance. Notably, its beverage business showed expanding margins.”

2. Johnson & Johnson (NYSE:JNJ)

Bridgewater Associates’ Stake Value: $769.83 million

Percentage of Bridgewater Associates’ 13F Portfolio: 3.89%

Number of Hedge Fund Holders: 85

Johnson & Johnson (NYSE:JNJ) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. Ray Dalio’s hedge fund currently owns over 4.7 million shares in the company, worth nearly $770 million. He first added the firm to his portfolio in the first quarter of 2011.

On November 17, Credit Suisse analyst Trung Huynh initiated coverage of Johnson & Johnson (NYSE:JNJ) with a Neutral rating and $170 price target. Although the analyst sees value in the company’s consumer separation, that could drive an improved valuation for the remaining businesses, he believes that this could pressure J&J’s new dividend.

Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in Johnson & Johnson (NYSE:JNJ) with 5.92 million shares worth more than $967.3 million. Overall, 85 hedge funds tracked by Insider Monkey owned stakes in Johnson & Johnson (NYSE:JNJ), with a total value of over $5.46 billion.

In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Johnson & Johnson (NYSE:JNJ) was one of them. Here is what the fund said:

“Johnson & Johnson (NYSE:JNJ) is currently our largest position and a long-standing holding. The majority of the group’s sales come from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.

Here’s how JNJ make and spends a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics (…read more)

1. The Procter and Gamble Company (NYSE:PG)

Bridgewater Associates’ Stake Value: $835.2  million

Percentage of Bridgewater Associates’ 13F Portfolio: 4.22%

Number of Hedge Fund Holders: 69

The Procter & Gamble Company (NYSE:PG), an American multinational consumer goods company that provides beauty, health, baby, and family care products, was the largest holding of Bridgewater Associates at the end of Q3 2022. The hedge fund owned over 6.6 million PG shares, worth over $835.2 million. The Procter & Gamble Company (NYSE:PG) stock has been part of the fund’s portfolio since Q3 2020.

Jefferies analyst Kevin Grundy raised the price target on The Procter & Gamble Company (NYSE:PG) to $164 from $149 and kept a Buy rating on the shares following P&G’s “upbeat” investor day meeting on November 22. Although trade down remains a risk, The analyst believes that P&G “remains a core holding.”

At the end of the third quarter of 2022, 69 hedge funds in the database of Insider Monkey held stakes worth $4 billion in The Procter and Gamble Company (NYSE:PG), compared to 71 in the preceding quarter worth $5.5 billion. Peter Rathjens, Bruce Clarke And John Campbell’s Arrowstreet Capital was one of the company’s leading shareholders at the close of Q3, with stakes worth approximately $712.2 million.

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