We recently published a list of 10 Best Stocks to Buy for the Long-Term According to Charles Akre. In this article, we are going to take a look at where Danaher Corporation (NYSE:DHR) stands against other best stocks to buy for the long-term according to Charles Akre.
“Above-average returns at below-average risk” is the mantra that defines Charles Akre, one of the most successful asset managers on Wall Street. As the founder of Akre Capital Management, he is a celebrated value-oriented investor. He is best known as a collector of great business, which he has invested in for many years to generate optimum value.
His dedication to long-term planning and systematic valuation has consistently yielded exceptional results. Akre’s investment portfolio has generated more than 300% returns over the past ten years.
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He has become one of the most successful investors focusing on an investment philosophy dubbed the “three-legged stool” approach. The investment approach advocates for examining business models’ rates of return and reinvestment opportunities before investing. Likewise, Akre advocates investing in companies with enduring competitive advantages, robust balance sheets, and long-term earnings growth prospects.
Unlike most investors focusing on market trends, Akre’s philosophy focuses on finding companies trading at fair value. By avoiding popular stocks, the value investor has succeeded in concentrating on cheap opportunities that most investors often overlook. He also adopts a strategic approach that goes beyond buying and holding stock for the long term.
Instead, Akre consistently evaluates the core business strengths and fundamental aspects of companies. His focus on “outstanding businesses” indicates that he has carefully considered factors like competitive advantage, growth potential, and top-notch management. Consequently, the best stocks to buy for the long term, according to Charles Akre, are companies well poised to navigate short-term market fluctuations. Similarly, they are companies that capitalize on long-term compounding effects.
In contrast to passive index investing, Akre’s approach necessitates active monitoring of a company’s performance to ensure that it maintains the standards of an exceptional business. Having a thorough understanding of the management team, business operations, and industry dynamics is also essential.
The value investor also advocates for diversification as one of the ways of spreading the risk and shrugging off market volatility. Therefore, Akre Capital Management’s portfolio is spread across technology, financial services and other sectors. While the overall market has been trending over the past year, resulting in overstretched valuations, Akre believes there is still value to unlock. Nevertheless, he expects the financial markets to remain volatile.
“…The US stock market and quite likely the markets of Western Europe can continue to be very volatile as they respond to good news and bad news, which will pop up on a regular basis. From my perspective, this is actually good news-that kind of volatility will increasingly give us opportunities periodically… Therefore, markets can go up even when economic activity has not picked up. But my expectation is a fair amount of volatility for some time,” said Charles Akre.
Our Methodology
To compile our selection of the best stocks to buy for the long-term, according to Charles Akre, we began by analyzing Akre Capital Management’s 13F portfolio and chose to highlight the stock holdings that have remained within the portfolio for at least 5 years. Next, we assessed the number of hedge fund investors associated with each stock as of the end of the third quarter of this year. Finally, the stocks were ranked in ascending order based on the value of Charles Akre’s stakes in the companies.
At Insider Monkey, we are obsessed with 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).
A healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.
Danaher Corporation (NYSE:DHR)
Akre Capital Management’s First Major Purchase: 2013
Akre Capital Management’s stake value: $493.60 million
Number of Hedge fund holders as of Q3: 98
Danaher Corporation (NYSE:DHR) is a healthcare company that designs, manufactures, and markets professional, medical, industrial, and commercial products and services. While the stock has been flat for the year, its diverse portfolio and strategic positioning affirm why it is one of the best stocks to buy for the long term.
The company is well-positioned within its sector thanks to its strong portfolio and exposure to diverse geographies and product categories. Danaher Corporation (NYSE:DHR)’s operations are spread across several crucial areas, such as bioprocessing, molecular diagnostics, and laboratory equipment. The company’s key bioprocessing business has already returned to growth by impressive third-quarter results delivered on October 22, 2024.
Revenues in the quarter were logged in at $5.8 billion, up 3% year-over-year and better than the $5.59 billion expected. Earnings per share came in at $1.71, topping consensus estimates of $1.57 a share. During the quarter, the bioprocessing unit bounced to low-single-digit growth. The segment has been under pressure due to destocking from larger clients following the COVID-19 pandemic.
Danaher Corporation (NYSE:DHR) is well poised to generate high single-digit core revenue growth and margin expansion heading into next year. Due to improved operational efficiency, it is also expected to convert 100% of its net income into free cash flow.
Here is what Madison Sustainable Equity Fund said about Danaher Corporation (NYSE:DHR) in its Q3 2024 investor letter:
“Danaher Corporation (NYSE:DHR) released its 2024 Corporate Sustainability Report. It highlighted several milestones across its three pillars of sustainability (building the best team, innovating products that improve lives and the planet, and protecting the environment). The company has committed to setting greenhouse gas emission reduction targets in line with the Science Based Targets initiatives (SBTi), including reaching net-zero value chain emissions by 2050.”
Overall, DHR ranks 8th on our list of best stocks to buy for the long-term according to Charles Akre. While we acknowledge the potential of DHR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DHR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.