Billionaire Ray Dalio is betting on 3 “Strong Buy” shares
When billionaire Ray Dalio takes a step, Wall Street pays attention. Dalio, who began trading on the New York Stock Exchange, founded Bridgewater Associates, the world’s largest hedge fund, in 1975. The company managed approximately $ 140 billion in global investments and Dalio’s own assets of $ 17 billion have earned him legendary status on Wall Street. Dalio sums up his success and gives three pieces of advice for investors. First, diversify. The safest way to invest well is to hold a wide range of stocks from different sectors in your portfolio. Second, don’t think that rising markets will rise forever. This is Dalio’s take on an old saw where past performance is no guarantee of future returns. Dalio will tell you that any strong past returns are truly guaranteed high prices. Finally, Dalio says to investors, “Do the opposite of your instincts.” In other words, don’t follow the herd, as thinking like this often leads to suboptimal results. Looking at Dalio for inspiration to invest, we used TipRanks’ database to find out if three stocks the billionaire recently added to the fund were making compelling results. According to the platform, the analyst community believes this is the case as all picks receive a consensus rating of “Strong Buy”. Linde PLC (LIN) The first new position is in Linde, the world’s largest industrial gas production company, regardless of sales or market share. Linde produces a range of gases for industrial use and is the dominant supplier of argon, nitrogen, oxygen and hydrogen as well as niche gases such as carbon dioxide for the soft drink industry. The company also produces gas storage and transfer equipment, welding equipment, and refrigerants. In short, Linde embodies Dalio’s “diversifying” dictum. Linde’s industry leadership and key products helped the company recover from the corona crisis. The company’s sales declined in the first half of 20 but rose in the second half, hit pre-corona levels in the third quarter, and exceeded those levels in the fourth quarter. In a sign of confidence, the company kept its dividend constant at 96 cents per common share during the “Corona year” – and in its most recent first-quarter statement, Linde increased the payment to USD 1.06 per share. This equates to an annual return of $ 4.24 and a return of 1.7%. The key point here is not the modest return, but the company’s confidence in the security of its positions, which enables it to maintain a constant dividend at a time when many colleagues are cutting profit sharing. So it’s no wonder that an investor like Dalio is interested in a company like Linde. The billionaire’s fund raised 20,149 shares valued at $ 5.05 million at current prices during the fourth quarter. Analyst John McNulty rates Linde for BMO and expresses his confidence in Linde’s current performance. “LIN is continuing its growth strategy to deliver solid double-digit earnings growth, particularly without the need for further macroeconomic improvement. In our view, management’s guidance for 2021 remains conservative of 11-13% on upcoming projects and continued ones Efficiencies and solid buybacks due to strong balance sheet and cash flows, plus solid FCF position offers plenty of dry powder for M&A, de-caps, etc. We believe LIN will continue to surprise investors and outperform the broader one Group even in a cyclical market. The largest global industrial gases company, “said McNulty. In line with his bullish comments, McNulty rates LIN as a buy and its target price of $ 320 implies an upward movement of ~ 28% for the coming year. (To see McNulty’s track record, click here.) Wall Street analysts broadly agree on the quality of Linde stock, as evidenced by the 15 buy ratings that offset the 3 holds. This gives the stock a Strong Buy analyst’s consensus rating. The stock is priced at $ 250.88, and their average price target of $ 295.73 suggests they have ~ 18% growth ahead of them. (See LIN stock analysis on TipRanks) BlackRock (BLK) Next up is the world’s largest wealth manager. BlackRock manages over $ 8.67 trillion in assets. The company is one of the dominant index funds in the US financial scene, generating sales of $ 16.2 billion with net income of $ 4.9 billion last year. BlackRock’s latest Q4 report shows its strength, as far as the numbers can. Earnings per share were $ 10.02 per share, sequential earnings of 12% and earnings of 20% year over year. Quarterly revenue of $ 4.8 billion increased 17% year over year. Total annual sales increased 11% compared to 2019. BlackRock achieved all of this despite the corona crisis wrecking the economy in the first half of 20. In the first quarter of this year, BlackRock declared its regular quarterly dividend, increasing the payment 13% to $ 4.13 per common share. With an annualized payment of $ 16.52, the return is 2.3%. The company has consistently held its dividend for the past 12 years. The Dalio Fund didn’t want to miss a compelling opportunity and pulled the trigger for 19,917 shares, which gave it a new position in BLK. The value of this new addition? More than $ 14 million. Brian Bedell, analyst for BLK for Deutsche Bank, writes: “We view the fourth quarter results as very good, with strong long-term net inflows on its products despite a one-time outflow from pension funds with low-priced equity of 55 billion . USD expected to continue, index assets are expected in 1H21 which mgmt. This would only have a minimal impact on the income from the basic fee. In addition, total net inflows resulted in an annualized organic base management fee growth of 13%, a quarterly record, with annualized long-term organic AuM growth of 7%. We anticipate that organic base rate growth will exceed organic AuM growth by 2021 due to a flow mix that is initially geared towards products with higher fees. “To that end, Bedell gives BLK a buy and its target price of $ 837 suggests the stock is on an uptrend of ~ 18%. (To see Bedell’s track record, click here.) The analyst consensus tells a very similar story. BLK has received 6 buy ratings against a single hold in the past three months – a clear sign that analysts are impressed with the company’s potential. Stocks sell for $ 710.11, and the average target price of $ 832.17 gives the stock 17% upside. (See BLK stock analysis on TipRanks) AbbVie, Inc. (ABBV) AbbVie is a big name in the pharmaceutical industry. The company makes Humira, an anti-inflammatory drug used to treat a variety of chronic diseases including rheumatoid arthritis, Crohn’s disease and psoriasis. The company’s other immunological drugs, Skyrizi and Rinvoq, were FDA approved for the treatment of psoriasis and rheumatoid arthritis in 2019 and had total sales of $ 2.3 billion last year. AbbVie believes these drugs will fill the profit gap when Humira’s patents expire in 2023 and sales of up to $ 15 billion by 2025. Humira is currently the lead driver of AbbVie’s immunology portfolio, providing $ 19.8 billion of the portfolio of $ 22.2 billion in annual sales and a significant portion of the company’s total sales. For the full year 2020, AbbVie had sales of $ 45.8 billion across all divisions on adjusted diluted earnings per share of $ 10.56. In addition to its high-profile anti-inflammatory line, AbbVie also has a “stall” of longstanding drugs in the market. As an example, the company owns Depakote, a common anti-seizure drug. AbbVie also maintains an active research pipeline with numerous drug candidates undergoing studies in immunology, neuroscience, oncology, and virology. For investors, AbbVie has a longstanding commitment to returning profits to shareholders. The company has an 8 year history of having held a steady and growing dividend. In the latest statement made this month for a May payment, AbbVie increased its dividend by 10% to $ 1.30 per common share. At an annualized value of $ 5.20, the return is 4.9%. We look again at stocks that embody some of Dalio’s advice. Dalio’s firm pulled the trigger for ABBV in the fourth quarter, buying 25,294 shares. At the current valuation, this is worth $ 2.66 million. Leerink analyst Geoffrey Porges reports on ABBV and is impressed with the way the company is preparing in advance for the loss of US exclusivity on its best-selling product. “Between the growth trajectory of ABBV’s ex-Humira portfolio and a broad portfolio of catalysts for early, mid and late stage assets, it is difficult to find a biopharma company that is better positioned despite the looming LOE. ABBV is prepared for 2023 and has growth drivers that are better than the industry average sales and profit growth in the period before (2021-2022) and after (2024-2028) 2023, ”said Porges. Porges gives ABBV an Outperform (i.e. Buy) rating and sets a price target of $ 140, which indicates room for an uptrend of 33% for a year. (To see Porges ‘track record, click here.) There are 10 total reviews of ABBV stock, 9 of which are for sale – a margin that makes analysts’ consensus rating a strong buy. The stock trades for $ 105.01 with an average target price of $ 122.60. This points to an upward movement of ~ 17% over the next 12 months. (See ABBV stock analysis on TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.