10 stocks the 'smart money' has been buying while the Iran war rattles markets
Michael M. Santiago/Getty Images
- Volatility caused by the Iran war has created opportunities for top stock pickers.
- Morningstar identified the 10 most-bought stocks among top fund managers in the last three months.
- Western Digital, Taiwan Semiconductor, and GE Aerospace were among the most popular names.
Volatility can be tough to navigate for investors, but it can also make for a stock-picker's dream.
The Iran-war-fueled swings have rippled through the stock market for months, but rather than waiting for things to calm down, the "smart money" has been diligently sorting winners and losers, Morningstar said.
The investment research firm surveyed the portfolios of top large-cap fund managers that held 50 or fewer stocks in their portfolios, and analyzed how those portfolios had changed over the last three months. It identified 10 stocks that fund managers had bought most since the start of the war.
Here are the most popular stock among top fund managers since the war began.
Nikos Pekiaridis/NurPhoto via Getty Images
Ticker: WDC
Performance YTD: +203%
Western Digital has been the most-bought stock among top fund managers, Morningstar said. It is among the companies that have been swept up in the wave of bullish sentiment for memory chip makers this year.
"We expect overall HDD industry revenue will grow at a 30%-plus average rate over the next several years, as prices rise and the amount of storage shipped increases," Eric Compton, a Morningstar director, wrote in a note.
NYSE
Ticker: TSM
Performance YTD: +40%
Taiwan Semiconductor could see long-term growth due to growing demand for "integrated systems," as well as "organic growth" for AI and high-performing computing software in the coming decades, Phelix Lee, a senior analyst at Morningstar, said.
Shares of TSM are likely 5% undervalued, the research firm estimated.
Costfoto/NurPhoto via Getty Images
Ticker: GE
Performance YTD: +5%
"Our outlook for commercial aircraft entails a near doubling of the global fleet by 2042 through secular growth and replacement of older, less efficient aircraft. GE Aerospace stands to participate heavily in this upswing," Nicholas Owens, an analyst at Morningstar, wrote in a note.
GE is likely trading near fair value, Morningstar added.
Mario Tama/Getty Images
Ticker: NFLX
Performance YTD: -8%
Netflix appears to have "superiority" over other companies in the streaming space, Matthew Dolgin, a senior analyst at Morningstar, wrote. "We still expect an impressive growth trajectory," Dolgin said, though he pointed to key risks, like the need for Netflix to maintain a "robust" lineup to keep customers subscribed.
Morningstar said it believed Netflix shares could be 11% overvalued.
Visual China Group via Getty Images/Visual China Group via Getty Images
Ticker: APP
Performance YTD: -9%
"We are intrigued by AppLovin's intention to automate ad production with new artificial intelligence tools that can increase conversions and drive revenue growth. Early pilot programs targeting e-commerce advertisers and non-gaming inventory have been well received, but scaling beyond initial pilots remains the company's largest unknown," Mark Giarelli, an analyst, said.
Morningstar said it believed AppLovin's shares were fairly valued.
Bloomberg/Getty Images
Ticker: MU
Performance YTD: +232%
Micron looks like a "strong supplier," but the chipmaker isn't believed to have an economic moat, Morningstar said, referring to the company's lack of competitive advantage over other chipmakers in the industry.
"We don't see enough scale to generate consistent economic profits. Micron holds a third-place market share in dynamic random access memory, or DRAM, chips and a fifth-place market share in not-and, or NAND, flash chips," William Kervin, a senior analyst, said.
Morningstar estimated that Micron stock was 65% overvalued. It received a 1-star rating, the lowest on Morningstar's ranking tier.
NYSE
Ticker: AZN
Performance YTD: About flat
The research firm pointed to AstraZeneca's recent acquisitions and the company having one of the "strongest" product pipelines among drugmakers.
"We expect operating margins to improve based on the strong pricing power of the new drugs and the operating leverage the firm should attain as the new drugs reach critical mass," Jay Lee, a senior analyst, said.
Morningstar said it believed shares were fairly valued.
: GHI-Plexi Images/UCG/Universal Images Group via Getty Images
Ticker: MRSH
Performance YTD: -13%
"We view Marsh McLennan as something of a tollbooth business. Its leading position in the brokerage industry would be difficult to displace, and its sticky customer relationships allow it to benefit from a relatively stable level of insurance transactions," Brett Horn, a senior analyst at Morningstar, wrote in a note.
"We think Marsh McLennan's long-term future will largely resemble its past, with moderate growth and attractive profitability," he added.
Morningstar said it believed the insurance broker was 17% undervalued.
Nikos Pekiaridis/NurPhoto via Getty Images
Ticker: KLAC
Performance YTD: +59%
The semiconductor firm has a large competitive advantage, Morningstar said, pointing to its "strong design expertise" and "steep customer switching costs."
"We expect cyclicality in the semiconductor industry long-term, but see durable growth in the medium term," William Kerwin, a senior analyst at Morningstar, wrote in note.
The semiconductor firm is likely 26% overvalued, per Morningstar's estimate.
Bloomberg/Getty Images
Ticker: NBIS
Performance YTD: +165%
Neocloud firms like Nebius could struggle in the coming years as the supply-demand of AI chips "normalizes," Javier Correonero, a senior analyst at Morningstar, said. That's largely because the business model of neocloud firms is "only viable" due to the physical constraints on AI resources, he wrote.
"Long-term, Nebius will try to move up the chain, closer to where hyperscalers operate. This is a herculean task, but we believe it's the only strategy with chances of long-term success," he added.
Morningstar said it believed the stock was 79% overvalued.
from Business Insider https://ift.tt/ezUJi7M
via IFTTT
Comments
Post a Comment