In this article, we discuss 5 stocks investors are buying amid “dire” pessimism. If you want to see more stocks in this selection, check out Investors are Buying These 10 Stocks as New Survey Shows “Dire” Pessimism.
5. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 61
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational corporation which operates big-box retail stores. Costco Wholesale Corporation (NASDAQ:COST) has consistently raised its annual dividends for the last 19 years and it is on its way to being a dividend aristocrat. On July 27, the company declared a $0.90 per share quarterly dividend, in line with previous. The dividend is payable on August 12, to shareholders of record as of July 29.
On August 4, Truist analyst Scot Ciccarelli raised the price target on Costco Wholesale Corporation (NASDAQ:COST) to $571 from $543 and kept a Buy rating on the shares after July data revealed that sales jumped 10% on a comparable basis. Costco Wholesale Corporation (NASDAQ:COST)’s “unmatched” value proposition continues to support higher sales trends, and in an increasingly tough economic backdrop, the company’s “extremely competitive” pricing will allow it to gain market share as consumers seek out value, the analyst told investors in a bullish thesis.
According to Insider Monkey’s data, 61 hedge funds reported owning stakes in Costco Wholesale Corporation (NASDAQ:COST) at the end of Q1 2022, up from 57 funds in the prior quarter. Ken Fisher’s Fisher Asset Management held the largest position in the company, with 4.2 million shares worth $2.4 billion.
Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
4. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 66
Devon Energy Corporation (NYSE:DVN) is an Oklahoma-based hydrocarbon exploration company. On August 1, Devon Energy Corporation (NYSE:DVN) posted a Q2 non-GAAP EPS of $2.59, beating estimates by $0.22. The revenue of $5.63 billion climbed 132.6% year over year and exceeded Wall Street consensus by $880 million. The company lifted its FY2022 production forecast by 3% to a range of 600,000 to 610,000 Boe per day. Similarly, it adjusted its upstream capital guidance to a range of $2.2 billion to $2.4 billion, compared to the earlier guidance of approximately $2.1 billion.
On August 1, Devon Energy Corporation (NYSE:DVN) declared a $1.55 per share quarterly dividend, a 22% increase from its prior dividend of $1.27. The dividend is payable on September 30, to shareholders of record on September 12. This dividend includes a fixed plus variable component.
Piper Sandler analyst Mark Lear on July 22 reaffirmed an Overweight rating on Devon Energy Corporation (NYSE:DVN) and lowered the price target on the shares to $94 from $97. The analyst observed that recession fears and cost inflation have caused volatility in the energy group, but with the sector “de-rating faster than the pullback in crude,” the setup is “broadly favorable” for exploration and production companies heading into Q2 earnings.
Among the hedge funds tracked by Insider Monkey, Rajiv Jain’s GQG Partners held the biggest stake in Devon Energy Corporation (NYSE:DVN) as of Q1 2022, comprising 15 million shares worth $888.5 million. Overall, 66 hedge funds were long Devon Energy Corporation (NYSE:DVN) at the end of March 2022.
3. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 72
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer goods corporation. The Procter & Gamble Company (NYSE:PG) has always been a reliable choice even amid economic volatility, given the defensive nature of its products and its reliable dividend history. The Procter & Gamble Company (NYSE:PG) has raised its dividend for 66 consecutive years. The company announced a $0.9133 per share quarterly dividend on July 12, payable on August 15 to shareholders of record as of July 22.
Barclays analyst Lauren Lieberman assigned an Overweight rating to The Procter & Gamble Company (NYSE:PG) and lowered the price target on the stock to $154 from $157 after the FQ4 results. The analyst thinks share price outperformance will need to be supported by evidence that The Procter & Gamble Company (NYSE:PG)’s business model is more defensive in this economic cycle.
According to Insider Monkey’s data, 72 hedge funds were bullish on The Procter & Gamble Company (NYSE:PG) at the end of March 2022, up from 67 funds in the prior quarter. Ray Dalio’s Bridgewater Associates is a prominent stakeholder of the company, with 6.8 million shares valued at over $1 billion.
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 76
AbbVie Inc. (NYSE:ABBV) is an American biopharmaceutical company. As healthcare remains one of the sectors that investors pour into despite economic uncertainty, AbbVie Inc. (NYSE:ABBV) is a prominent stock to consider. The company also has a solid history of increasing dividends annually, and it features on the S&P 500 Dividend Aristocrats list. AbbVie Inc. (NYSE:ABBV) declared on June 23 a $1.41 per share quarterly dividend, in line with previous. The dividend is payable on August 15, to shareholders of record as of July 15. On August 8, AbbVie Inc. (NYSE:ABBV) delivered a dividend yield of 4.02%.
JPMorgan analyst Chris Schott sees the post-earnings selloff in AbbVie Inc. (NYSE:ABBV) as an opportunity to strengthen positions. The analyst views AbbVie Inc. (NYSE:ABBV)’s focus shifting from Humira erosion to its primary longer-term growth drivers over the coming 6 to 9 months. The soft earnings mainly reflect a lack of additional clarity on Humira’s erosion curve in 2023 and 2024, the analyst told investors. However, AbbVie Inc. (NYSE:ABBV) remains one of his favorite names in the sector, and he maintained an Overweight rating and a $180 price target on the stock.
According to Insider Monkey’s data, 76 hedge funds were bullish on AbbVie Inc. (NYSE:ABBV) at the conclusion of Q1 2022, compared to 82 funds in the last quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the leading stakeholder of the company, with 4.65 million shares worth more than $754 million.
Here is what Carillon Clarivest Capital Appreciation Fund has to say about AbbVie Inc. (NYSE:ABBV) in its Q1 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. AbbVie (NYSE:ABBV) is a research-based biopharmaceutical company. Shares gained after the company reported earnings that missed revenue but beat earnings-per-share estimates. Discussion around the report was mixed but skewed positive.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 103
UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational managed healthcare and insurance company. On July 15, UnitedHealth Group Incorporated (NYSE:UNH) lifted its FY22 EPS outlook after the Q2 results which exceeded analysts’ estimates. The company raised its 2022 GAAP EPS guidance to $20.45 to $20.95, compared to the earlier expectations of earnings per share of $20.30 to $20.80.
On July 25, Argus analyst David Toung raised the price target on UnitedHealth Group Incorporated (NYSE:UNH) to $650 from $580 and maintained a Buy rating on the shares following its Q2 results and guidance raise. The company offers robust growth drivers in both its managed care and Optum businesses, and the combination of top-line growth and margin expansion is supporting its market-leading ROI, the analyst told investors.
According to Insider Monkey’s data, 103 hedge funds were bullish on UnitedHealth Group Incorporated (NYSE:UNH) at the end of Q1 2022, up from 96 funds in the prior quarter. Boykin Curry’s Eagle Capital Management held the leading position in the company, comprising 2.90 million shares worth about $1.5 billion.
Here is what Wedgewood Partners has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2022 investor letter:
“UnitedHealth Group also contributed to performance during the quarter. United’s operating income grew +3% on difficult year-ago comparisons as benefits members utilized more services compared to last year. Optum Health grew operating income +40% as more patients are enrolled in the Company’s value-based care services. The Company estimates nearly a third of all medical care is unnecessary and represents an opportunity to capture savings for both patients. Optum’s integrated platform of patient data, IT, and service providers are focused on driving out these unnecessary costs and should serve as the engine for long-term, mid-teens earnings per share growth.”
You can also take a look at The 10 Best Value ETFs to Invest In and 12 Best FMCG Stocks to Buy Now.
