In this piece, we will take a look at Ken Fisher’s top 10 growth stock picks with 30%+ revenue growth.
Growth is the holy grail of investing. After all, equities attract investors because they are return driven securities, and securities that deliver growth often produce the strongest returns. Growth, in stock valuation, comes in several flavors. The most commonly analyzed metric is share price growth, which evaluates the percentage change in the share price over a time period.
Other growth valuations come through earnings growth or revenue growth. Among these, earnings is the more commonly evaluated metric as it determines the profitability of a company. These profits are key for growth stocks since the post net income ‘money’ on a firm’s income statement is either paid out in the form of dividends or reinvested in growth if it isn’t accounted for as retained earnings. The market generally prices stocks that are expected to aggressively grow in the future high compared to their earnings in the form of the P/E ratio.
The other ratio for evaluating growth stocks is the price to sales or P/S ratio. And this is where Ken Fisher enters the conversation. Fisher is one of the richest people in the world, with estimates from Forbes Magazine showing that his net worth stood at $11.2 billion as of July 2024. At the heart of Fisher’s riches is his investment fund Fisher Investments. The total value of the fund’s 13F holdings as reflected by its SEC filings for the first quarter of 2024 is $214 billion according to Insider Monkey’s research. This makes Fisher Investments one of the biggest financial firms in the world, and its investment approach as evidenced by some of the biggest stakes in the filings is characterized by investing in high growth technology companies.
Fisher started his firm in 1979 and focused on gaining an early foothold on market participants by sifting out information that was not widely available to investors. On the quantitative front, the P/S ratio was also quite critical to his approach and we’ll get to that in a bit. Over the next two decades, his firm would focus on investing in pure play US equities, global equities, and exUS or foreign equities. The firm would focus its investment products towards high net worth individuals in the 1990s, and from 2000 onwards, it would expand its presence in the UK, Canada, and Germany. Fisher Investments now has 15 offices in 16 countries and more than a hundred thousand clients worldwide as of July 2024.
Shifting gears to focus on the firm’s performance, data from the London Stock Exchange Group (LSEG) shows that data for 76 funds managed by Fisher Investments is available. Within these, the fund that invests for retirement plans has gained 19.18% year to date and 18.77% over the past year. Compared to the benchmark S&P index, the year to date performance is two percentage points higher while the 12 month performance lags the index by three percentage points. Another fund that targets US equities irrespective of capitalization is up by 24% over the past twelve months to lead the benchmark by three percentage points. In daily trailing total returns, this fund has delivered 14.39% over the past six months to lead benchmark US large cap equity returns of 11.36% by three percentage points.
Safe to say, Fisher’s strategies and secret sauce seem to be working. This then leads us to ask, what might they be? Well, in the 70s when Fisher was starting Fisher Investments, he started to focus on evaluating a firm’s market valuation relative to its revenue through the P/S ratio. This culminated in his seminal article in the American Association of Individual Investors. (AAII) in 1984. This paper highlighted Fisher’s conviction of a solid approach to sift out growth stocks, and his research showed that stocks with low price to sales ratios tended to do rather well as they were unpopular and any good news “translates directly into higher stock prices.” He compared the stocks with the lowest 25% price to sales and price to earnings ratio to demonstrate that the seven and nine stocks with the lowest price to sales ratios delivered 64.57% and 56.11% in respective returns while the nine lowest P/E stocks delivered 28.67% in returns. During the same time, the Dow posted a gain of 20.3%.
Since multiples that use growth rates are typically used to value growth stocks, particularly those that are unprofitable, they are quite sensitive to macroeconomic conditions and particularly inflation and high interest rates. Another popular revenue based growth stock valuation metric is the Enterprise Value/Revenue ratio and it is popular for valuing software as a service (SaaS) stocks. After the coronavirus pandemic hit, the Fed rapidly cut interest rates to stimulate the economy and this translated well for EV/Revenue. Before the rate cuts, the median EV/Revenue for publicly traded SaaS stocks was 11 and after the cuts, it soared and nearly doubled to sit at 20 in 2021.
Similarly, the interest rate hikes of 2022 and high inflation that led to tight business budgets didn’t fare well for EV/Revenue. Since high interest rates also make it difficult for firms to finance their business operations, and high inflation leads to rising costs, SaaS firms face twice the impact in the form of lower revenue. This is also translated into their EV/Revenue multiples, as for the last 18 months, the median multiple was 7 which is at a multi year low. The lower multiples are accompanied by dropping growth rates, as while the pre pandemic median revenue growth rate of SaaS companies was 30% and accelerated to 33% during the pandemic, it has since dropped and is hovering around 17%.
So, as growth slows down and multiples struggle, it might be wise to see what the guru of growth Ken Fisher is doing. We’ve done so today so read more below.
Our Methodology
To make our list of Ken Fisher’s top revenue growth stocks, we scanned Fisher Investments’ Q1 2024 SEC filings and ranked the top 160 holdings by their three year annualized revenue growth. Out of these, the top ten Ken Fisher stocks with the highest revenue growth were chosen.
We also mentioned the number of hedge funds that had bought these stocks during the same filing period. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Trip.com Group Limited (NASDAQ:TCOM)
Number of Hedge Fund Investors in Q1 2024: 49
3 Yr Revenue Growth: 34.44%
Fisher Investments’ Q1 2024 Stake: $134 million
Trip.com Group Limited (NASDAQ:TCOM) is a Singapore based travel services provider that enables users to plan and manage their trips. The firm’s revenue has grown sizeable over the past couple of years as it recovers from the impact of the coronavirus pandemic. Trip.com Group Limited (NASDAQ:TCOM)’s first quarter revenue grew by 24% annually to sit at CNY11.9 billion, and its earnings grew by 27.8% to sit at CNY6.62. Trip.com Group Limited (NASDAQ:TCOM)’s primary market is China, and the firm has been streamlining its business model as of late to offer a one stop shop for travel experiences. On this front, it announced a partnership with Proticket earlier this year to allow it to gain access to a wide array of travel industry firms. Additionally, Trip.com Group Limited (NASDAQ:TCOM) is also seeking to further penetrate the Chinese market by targeting second and third tier cities for a wide consumer base. This expansion comes at a time when these cities are seeing improved infrastructure such as hotels and roads.
Since it’s a software focused business, Trip.com Group Limited (NASDAQ:TCOM) has to keep a careful eye on margins to ensure cost control. Any weakness on this front can translate into the share price, and here’s what management had to say for margins during its Q1 2024 earnings call:
“Yes, we have achieved a healthy margin level for our domestic business, thanks to the large scale and scalability that we achieved. And the outbound business normally have a slightly higher margin, thanks to the average higher selling price. And at the same time, related to the cost, including the service cost, the product development cost, as well as sales and marketing costs are quite similar to the — compared with the domestic business. So therefore, outbound travel normally is the higher-margin business for us. With regard to the Trip.com business, as I said before, we closely — although the Trip.com business has [indiscernible] in the investment period, however, we closely monitor the contribution margin of the Trip.com business.
And recently, our Trip.com business as a whole has achieved at least a breakeven level in terms of the contribution margin. And in the longer-term period, we strongly believe that the Trip.com business will also become a profitable, healthy growth business in the future. So in summary, we expect our margins to align with — will be aligned with the typical seasonal patterns, reflecting the strong business growth and disciplined cost management. And looking ahead, our margin expansion will primarily stem from operational scalability and approve the sales and marketing efficiencies. However, this may be partly offset by additional expenses associated with expanding our international operations.”
9. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Investors in Q1 2024: 62
3 Yr Revenue Growth: 35.17%
Fisher Investments’ Q1 2024 Stake: $204 million
Expedia Group, Inc. (NASDAQ:EXPE) is a US based travel services provider. It has settled into 2024 after having undergone a significant transformation since the pandemic. This has seen Expedia Group, Inc. (NASDAQ:EXPE) consolidate its hotel and rental vacation brands under the Expedia roof, bring a stunning seven loyalty programs under the One Key banner, eliminate dependency on 76 different marketing firms which often saw Expedia Group, Inc. (NASDAQ:EXPE)’s different businesses compete with each other, and eliminate several of its brands as well as 12% of its workforce. Put together, these changes should put Expedia Group, Inc. (NASDAQ:EXPE) on track to capture the growth in global online travel, particularly since it is only one of two players in the global market. However, one key area in which Expedia Group, Inc. (NASDAQ:EXPE) lags and which has worried investors is its margin. The firm’s trailing twelve month operating margin is 11.5%, which is a whopping 16 percentage points lower than its closest rival Booking.com’s 27.7%. This difference is also apparent in its valuation, with Expedia Group, Inc. (NASDAQ:EXPE)’s forward P/E ratio of 11.4 nearly half that of Booking’s 22.2. However, it also provides the shares with some room to grow if the firm’s turnaround plan bears fruit.
Expedia Group, Inc. (NASDAQ:EXPE)’s management commented on costs during its Q1 2024 earnings call where it shared:
“To that end, in February, we announced cost actions that will impact approximately 1,500 employees through this year. We expect that these actions will unlock substantial savings on an annualized basis across capitalized labor, cost of sales and overhead costs. And as a result of all of these factors, we delivered strong first quarter EBITDA of $255 million, which was up 38% year-over-year, with an EBITDA margin of 8.8%, expanding over 190 basis points year-over-year. This was higher than expected given the higher revenue we delivered and the leverage to the P&L that provides, along with lower cost of sales, both of which more than offset our marketing investments to drive future growth. It is also important to note that EBITDA also benefited from a decision we made to invest more in pricing actions as opposed to additional direct marketing.”
8. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Investors in Q1 2024: 52
3 Yr Revenue Growth: 42.14%
Fisher Investments’ Q1 2024 Stake: $611 million
Las Vegas Sands Corp. (NYSE:LVS) is an American casino company that operates properties primarily in the Chinese territory of Macao and the country of Singapore. Given the weak Chinese economy and the restrictions following the pandemic, it struggled to perform which led to a modest revenue of $2.9 billion in 2020. However, this has changed now, and in 2023, Las Vegas Sands Corp. (NYSE:LVS) earned a whopping $10.3 billion in revenue after Macao re opened in early 2023. This kicked off a sharp trend of operating income growth for the firm, as its EBITDA during Q1, Q2, Q3, and Q4 2023 sat at $400 million, $540 million, $630 million, and $654 million, respectively. Like Trip.com, Las Vegas Sands Corp. (NYSE:LVS) can also benefit from lower travel restrictions within Asia that allow consumers to flock to its facilities in Singapore and Macao. In particular, the Chinese government’s new strategy to allow on arrival visas can enable it to capture a growing number of travelers, Las Vegas Sands Corp. (NYSE:LVS) is also expanding its Macao portfolio through the Londoner, and while it expects the renovations to be complete next year, any slowdown on the regulatory or capital front could spell trouble for the shares. This is especially true since the renovation affects its cost structure.
On this front, here’s what Las Vegas Sands Corp. (NYSE:LVS)’s management had to say during the Q1 2024 earnings call:
“The ongoing capital investment programs at The Londoner and at the Cotai Arena had an impact on our results this quarter. The Cotai Arena was closed for renovation in January this year. After the significant reinvestment and renovation, the arena is expected to reopen in November. In terms of the second phase of the Londoner, we have now commenced the room renovation on the first Sheraton.
We plan the completion of the first tower by year-end and of the second tower by Golden Week in May of 2025. The renovation of the casino on the Sheraton side of London will commence in May of this year with the reopening scheduled for December of 2024. While there will be ongoing disruption from these capital projects, as these products come online between the end of ’24 and the first half of ’25, our competitive position will be stronger than ever. The scale, quality and diversity of product will be better than we have ever offered before. They will be unmatched in the market.”
7. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Investors in Q1 2024: 62
3 Yr Revenue Growth: 44.04%
Fisher Investments’ Q1 2024 Stake: $958 million
ConocoPhillips (NYSE:COP) is an American oil and gas exploration and production firm headquartered in Houston, Texas. When compared to big ticket oil names like Chevron or Exxon, ConocoPhillips (NYSE:COP)’s valuation depends a lot more on its inventory and the lifetime of its drilling projects. This is because a large portion of its oil production is from US shale, and it also means that any changes to the lifetime estimates of its projects can affect the share price negatively or positively. ConocoPhillips (NYSE:COP) is also making big moves as it plans to acquire Marathon Petroleum (another shale producer) for a whopping $22.5 billion price tag. While the deal is yet to receive FTC clearance if approved, it would make ConocoPhillips (NYSE:COP) America’s largest independent oil and gas producer. However, it might not provide the firm with a lot of production boost, since Marathon’s production focuses on the mature regions of Eagle Ford and Bakken in the US. However, the deal will help beef up ConocoPhillips (NYSE:COP)’s income statement, and add 3% to its EPS in 2025 and 2026 along with contributing $500 million in synergies.
ConocoPhillips (NYSE:COP)’s management commented on the crucial question of the firm’s cost control with respect to drilling laterals, sharing during the Q1 2024 earnings call that it is aiming to increase lateral length for better cost management:
“Let’s start on some of the longer laterals. I talked a little about previously on the operating efficiency on the frac spreads and drilling. Again, our teams are very focused on long lateral development, as we go forward. As a reminder for the group on the phone, if you look at our Permian inventory, 80% of the laterals are 1.5 miles or greater and we got 60% 2 miles or greater. If you look specifically at 2024, again 80% of the wells or 1.5 miles or greater and about 20% are 3-mile laterals. And we’ve got – as I mentioned before, we got some of those longer laterals coming online in the second half of this year. We see up to that 30% to 40% improvement on cost of supply when you move from a 1-mile lateral to a 3-mile lateral.
So we’re seeing those efficiency improvements out there. Maybe just staying on the drilling side, specifically in the Midland Basin, we’ve had some recent success there, where we’ve had internal record wells. We look from spud to rig release so very favorable performance over the last three months and we continue to see that on the drilling side. And the bottom line is, it does translate as we focus in on more feet per day, more stages per day more pumping hours per day. And we’ve seen that 10% to 15% improvement of pumping hours from 2022 to 2033. That all translates to improved capital efficiency and therefore lowering your cost supply. So it’s very encouraging across all fronts.”
6. Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Investors in Q1 2024: 42
3 Yr Revenue Growth: 46.07%
Fisher Investments’ Q1 2024 Stake: $415 million
Wynn Resorts, Limited (NASDAQ:WYNN) is a diversified casino company that operates properties in Las Vegas and Macao. Along with Vegas, the firm is also expanding its presence in Boston by expanding its current Boston Harbor resort and in New York by applying for a gaming license. Additionally, Wynn Resorts, Limited (NASDAQ:WYNN) also has its eyes set on the UAE, which is one of the world’s biggest tourism destinations. The firm aims to build a 1,500 room hotel and an accompanying casino, which shows that it has learned from the lessons of the coronavirus that impacted its business heavily due to restrictions in China. At the same time, even though Wynn Resorts, Limited (NASDAQ:WYNN) is expanding its global footprint, it relies heavily on China for its revenue. On this front, several headwinds including lax cost control, lower holiday spending, and strict regulations for money transfers can prove to be headwinds for the firm as they reduce the flow of funds in the region.
Commenting on the Macao expenditures, here’s what Wynn Resorts, Limited (NASDAQ:WYNN)’s management had to say during the Q1 2024 earnings call:
“We’ve talked quite a bit about OpEx and how we’ve been very disciplined in managing it and how we’ve been able to accommodate the non-gaming OpEx that we have to spend to meet our concession commitments. So we’ve been really disciplined. We had OpEx per day of $2.63 million in Q1. So it’s still well below Q1 ’19 levels, and it’s only up 3% sequentially. It was a big Q in terms of what we call tentpole events. And it’s — obviously, the OpEx increase is well below the 10% we’ve had sequentially in operating revenue. So we had — we were really pleased with the flow-through there. Going forward, we’re going to continue to be really disciplined around OpEx. We have good line of sight to the events calendar and how we’ll continue to incorporate that.
So as we have our EBITDA margin at both properties above Q1 ’19 levels and our OpEx were well controlled, we really expect revenue mix to be the key driver of margins going forward. We’re going to have some quarter-to-quarter variation as we see different events on the calendar, and we continue to roll out programming. But we feel pretty good about what we’ve managed to land with OpEx. And we see potential for some quarters to be slightly inside of that $2.63 million. And maybe in a bigger quarter, it might be slightly outside of that, but overall, we’re in a good place.”
5. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Investors in Q1 2024: 39
3 Yr Revenue Growth: 46.3%
Fisher Investments’ Q1 2024 Stake: $209 million
MGM Resorts International (NYSE:MGM) is one of the biggest casino operators in the world. It has a presence in China, Atlantic City, Detroit, and other US cities. Like other casino companies, its presence in Macau can help MGM Resorts International (NYSE:MGM) significantly due to potential pent up demand being released due to earlier restrictions. At the same time troubles in Macau because of a slow Chinese economy and other restrictions can prove to be a headwind. One key initiative that MGM Resorts International (NYSE:MGM) has focused on heavily recently is its BetMGM online betting platform. The firm is targeting 40 US states with its online betting portfolio for much deeper penetration than its brick and mortar business. Additionally, MGM Resorts International (NYSE:MGM) is also eyeing additional physical opportunities, such as expanding its presence in the UAE, New York, and Texas. While these can expand its revenue profile, they could also create new cost pressures.
MGM Resorts International (NYSE:MGM)’s management commented on its expansion plans during the Q1 2024 earnings call where it shared:
“I think at least in terms of the market, I think UAE will come to fruition. I think there’s enough indicators there, enough work has been done to recognize that either Abu Dhabi of note, or one of the other Emirates will come to life. Obviously, Wynn has got a project in the ground and is waiting for national legislation and regulatory framework. So, I think that would be the most affirmative. Thailand is interesting. Obviously, it’s fully within the government’s control and hands at this point. The dialog to date has been encouraging. We will see. The cost to do business there, the margins that could be had would be compelling, very. But again, I don’t want to get ahead of that curve. And Texas is — if there is two or three states left in the US that are meaningful, it’s one of them.
And so, there’s four big cities that have been talked about there without giving strategy, everyone’s got positioning and eyes on one of them as do we. And so we continue to follow that. But I wouldn’t look for anything immediate there either frankly, particularly in terms of brick-and-mortar.”
4. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Investors in Q1 2024: 97
3 Yr Revenue Growth: 46.49%
Fisher Investments’ Q1 2024 Stake: $1.4 billion
Booking Holdings Inc. (NASDAQ:BKNG) is yet another travel services provider on our list of Ken Fisher’s top growth stocks. Its business model means that the firm is exposed to global discretionary spending trends, and any drop in economic growth can affect its shares. However, Booking Holdings Inc. (NASDAQ:BKNG) is one of the biggest players in the industry, and it is also well known for its cost advantage over rival Expedia. Booking Holdings Inc. (NASDAQ:BKNG)’s latest operating margin is 27.7%, which is significantly higher than Expedia’s 11.5%, and allows Booking to keep a lean profile even during a downturn. The firm reported 563 million website visits in May 2024 according to SemRush, and 100 million application users in 2023. Both provide Booking Holdings Inc. (NASDAQ:BKNG) with a strong market base, and the firm has to simply retain share by offering new features. On this front, Trip Planner and Penny are AI driven features that Booking Holdings Inc. (NASDAQ:BKNG) has introduced to users.
Since its health nevertheless depends on traveler volume, here what WedgeWood Partners had to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q2 2024 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) contributed to performance as travel spending across the U.S. and Europe remains quite healthy, whereas the Company took share in alternative accommodations, and looks set to expand margins after a few years of reinvestment. The Company has also been aggressively reducing its share count at reasonably attractive valuation multiples. Booking should be able to compound earnings at an attractive, double-digit rate for the next few years given these various initiatives.”
3. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Investors in Q1 2024: 79
3 Yr Revenue Growth: 53.86%
Fisher Investments’ Q1 2024 Stake: $239 million
MercadoLibre, Inc. (NASDAQ:MELI) is a Uruguay based eCommerce company that is one of the hottest companies in the industry. While big ticket eCommerce names like Amazon and Alibaba are based primarily in the US or China, MercadoLibre, Inc. (NASDAQ:MELI) is the leading player in the growing Latin America region that is known for fast growth economies and upward population trends. The firm has utilized these trends well, and it has developed a proprietary logistics network that enables it to deliver 80% of packages within two working days. MercadoLibre, Inc. (NASDAQ:MELI) has also introduced its digital payments platform called Pago, through which it aims to take a two pronged approach by not only deepening customer loyalty but also penetrating the Latin American financial technology industry. These strengths have translated into robust profit growth, with MercadoLibre, Inc. (NASDAQ:MELI)’s first quarter net income of $344 million marking a 71% annual growth.
Lakehouse Capital mentioned MercadoLibre, Inc. (NASDAQ:MELI) in its May 2024 investor letter. Here is what the firm said:
“The Fund’s largest position, Buenos Aires based e-commerce leader MercadoLibre, Inc. (NASDAQ:MELI), reported a robust result that once again came in ahead of analyst expectations. Net revenue grew 30% year-on-year in U.S. dollar terms to US$4.0 billion while operating margins came in at 12.0%, providing a healthy balance of growth and profitability. Its marketplace business proved resilient, with strength in Brazil and Mexico more than enough to offset weakness in Argentina, which contacted by roughly a third due to weak macroeconomic conditions exacerbated by the 50%-plus devaluation of the Argentine Peso in December 2023. Whilst the economic situation in Argentia remains severe, we are comfortable with the risk as not only has management proved very adept at handling the challenges to date, but post the devaluation, the risk is meaningfully reduced as Argentina now only contributes 13% of the company’s total operating income. Overall, gross merchandise value still grew at 20% year-on-year to $11.4 billion and we continue to see significant opportunities ahead given the relatively nascent penetration of e-commerce in the region.”
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors in Q1 2024: 186
3 Yr Revenue Growth: 54%
Fisher Investments’ Q1 2024 Stake: $8.2 billion
NVIDIA Corporation (NASDAQ:NVDA) is Wall Street’s AI darling, and the love is also shown here in this list as it is Ken Fisher’s second biggest growth stock pick. The firm’s rise to fame is built on its strong competitive advantage through its GPU products and CUDA software. Combined, these two are among the best performing products in the world, and given industry expectations for AI related upgrades, they offer NVIDIA Corporation (NASDAQ:NVDA) a wide moat over peers. At the same time, these are also its biggest risks since businesses like to have a diverse supply chain, and rising geopolitical tensions between the US and China have led to, and might lead to more, significant export embargoes. The former was evident in July 2024 when a media report claimed that OpenAI and Sam Altman were eager to develop their own products to reduce dependence on NVIDIA, with Taiwan’s TSMC also purportedly showing willingness to allocate chip capacity for them.
Baron Funds mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2024 investor letter. Here is what the firm said:
“We are early on the adoption S-curve – most companies are still in the proof of concept stage while very few are ready for production today. Hurdles in implementing AI include data prep, model adaptation and fine-tuning, and embedding of AI into existing workflows. There is a lot of innovation taking place to reducing these hurdles – from tools and infrastructure that help companies build and run AI models more easily, to third-party AI models exposed via Application Programming Interfaces (APIs) that enable companies to use them without building their own models from scratch. NVIDIA’s ecosystem across developers, system integrators, cloud providers and independent software vendors, and internal software innovation are lowering these hurdles as well. For example, one of the most interesting announcements at the GTC conference were NVIDIA Inference Microservices – or NIMs, which are APIs to easily access open-source models (NVIDIA already has dozens of models available) without the need to worry about model optimizations, security, patching, or sending data to third parties. NIMs could ease AI adoption for enterprises while also driving incremental monetization for NVIDIA, priced at $4,500/GPU or at $1/GPU hour if used on the cloud, and increase the stickiness of NVIDIA’s platform.”
1. Cleveland-Cliffs Inc. (NYSE:CLF)
Number of Hedge Fund Investors in Q1 2024: 38
3 Yr Revenue Growth: 60.16%
Fisher Investments’ Q1 2024 Stake: $139 million
Cleveland-Cliffs Inc. (NYSE:CLF) is a sizeable American steel company headquartered in Cleveland, Ohio. This means that it is significantly exposed to the state of the industrial sector of the US economy. The exposure means that the current economic environment, as characterized by high interest rates and inflation, coupled with a slowdown in the commercial real estate sector can lead to headwinds for Cleveland-Cliffs Inc. (NYSE:CLF)’s shares. At the same time, President Biden’s Inflation Reduction Act, the Bipartisan Infrastructure Act, and the CHIPS And Science Act allocate trillions of dollars to upgrade America’s infrastructure and set up large chip manufacturing facilities. Over the long term, these will introduce significant tailwinds for Cleveland-Cliffs Inc. (NYSE:CLF)’s revenue. US hot roll steel prices fell to $745 per ton in June from $775 in May, which could lead to problems down the road. Yet, the firm has also shared plans to acquire Canadian steel company Stelco for a $2.5 billion price tag which could expand its revenue base.
Commenting on the pricing trends, here’s what Cleveland-Cliffs Inc. (NYSE:CLF)’s management had to say during the Q1 2024 earnings call:
“With production and sales of cars, trucks and SUVs remaining healthy in the US throughout Q1, our average sales pricing came in much better than expected due to a greater participation of automotive in our Q1 steel sales mix.
Conversely, in January and February, service centers went on a typical buyer strike, which led to reduced sales to the distribution sector. The net result of this dynamic of more sales to automotive and fewer tons delivered to service centers, led to a reduced sales output of 3.9 million net tons. Now that the distributors and service centers have come off the sidelines and steel pricing is on an upward trend, we expect to again exceed the 4 million tonne shipment level in the second quarter.”
CLF tops Ken Fisher’s growth stocks.But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None.
