The list includes the top 10 high-conviction stock purchases in the fourth quarter by Morningstar’s “Top Stock Pickers.”
If you’re trying to figure out which stocks to buy right now, this might help.
Morning Star has created a list of what it calls the top 10 high-conviction stock purchases by its “latest stock pickers” in the fourth quarter.
The selectors include 22 money managers who oversee mutual funds covered by Morningstar analysts and four who manage the investment portfolios of large insurance companies. A total of 24 have reported their holdings in the fourth quarter so far.
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“We think of high-conviction buys as times when managers have made significant additions to their portfolios, as defined by the size of the buy relative to the size of the portfolio,” Morningstar said.
Morningstar analysts assign the 10 stocks on the list a narrow or wide moat (enduring competitive advantage).
Here is the list in order of the amount of funds that bought the shares in a high-conviction manner.
- Amazon (AMZN) – Get a free report, the online retailer/cloud giant. five funds
- Alphabet (Google) – Get a free report, the titan of Internet searches and advertising. five funds
- CarMax (KMX) – Get a free report, the car retailer. four funds
- equifax (effects) – Get a free report, the credit reporting firm. four funds
- Linde LIN, the world’s largest supplier of industrial gases. four funds
- Texas Instruments (txn) – Get a free report, the stalwart of semiconductors. four funds
- United Parcel Service (UPS) – Get a free report, the delivery company. four funds
- charles schwab (BLACK) – Get a free report, the stock brokerage. four funds
- Pfizer (PFE) – Get a free report, the big pharmaceutical company. four funds
- MasterCard (BREAST) – Get a free report, the credit card company. four funds
Amazon: Morningstar analyst Dan Romanoff gives the company a wide margin and puts the fair value of the shares at $137. It recently traded for $95.50, giving it a 43% advantage over fair value.
“Wide-moat Amazon reported strong fourth-quarter results, but provided a first-quarter outlook that fell short of our expectations,” he wrote in a comment.
“Ecommerce was strong across the board, while Amazon Web Services (AWS, the cloud division) continues to slow, even through January.”
Overall, “we see real progress on the operational side, which was masked by the impairment charges,” Romanoff said.
“We still anticipate healthy long-term growth fueled by the proliferation of e-commerce, AWS, and advertising. But the near term remains a work in progress with macro issues weighing on 2023.”
Linde: Morningstar analyst Krzysztof Smalec gives the company a narrow moat and puts the fair value of the shares at $359, up 8.6% from recent listings at $330.50.
He was impressed with Linde’s fourth-quarter earnings, which helped him raise his fair value estimate to $347. “We are pleased with Linde’s continued strong margin expansion,” he wrote in a comment.
In addition, “we remain optimistic about Linde’s long-term prospects,” Smalec said. “The industrial gas company announced a $1.8 billion investment in a blue ammonia project on the Gulf Coast, which is expected to come online in 2025.”
In addition, “Linde is ready to capitalize on an acceleration in clean energy opportunities, spurred by the Inflation Reduction Act,” he said.
The author of this story owns shares of Amazon, Alphabet, UPS, Pfizer, and Mastercard.
