Billionaire Ray Dalio Loads Up on These 3 “Strong Buy” Stocks

Over the past month, both the S&P and NASDAQ have climbed out of bear territory, posting gains of 10% and 13%, respectively. It's enough to make investors' heads spin. Let's not forget that markets presented investors with a bearish challenge in 1H22 with 6 consecutive months of losses. Headwinds in the form of supply chain issues, Russia's invasion of Ukraine, generation-high inflation, rising interest rates, all combined to give investors the chills.
For the retail investor looking for meaning, following some investment market legends is a solid strategy. Ray Dalio, the billionaire founder of Bridgewater Associates, is considered one of the most successful investors in the hedge world - and he's not resting on his laurels. Bridgewater, which now has over $150 billion in assets under management, boasts that its flagship fund, Pure Alpha II, has beaten the bears -- up a whopping 32% for the first half of the year.
We took inspiration from Dalio and used TipRanks' database to find out if three stocks the billionaire recently added to the fund make compelling plays. According to the platform, the analyst community believes that is the case, with all picks receiving a strong buy consensus rating.
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Builders First Source (BLDR)
We start with Builders FirstSource, a Dallas-based supplier of building materials to the home construction industry. Builders FirstSource has a wide range of products from prefabricated frames to finished lumber, roofing shingles, insulation and weather protection to siding and windows - just to name a few. The company also offers finishing products for decking, doors, ceilings, stairs and interiors. Support services include design and estimates, delivery and collection, custom milling and installation. The company has 565 showrooms and sales locations in 42 states.
Over the past two years, BLDR has benefited greatly from the end of COVID confinement, a return to normal business conditions and a hot real estate market. The company has consistently reported quarterly revenue gains year over year -- and the most recent quarter, 2Q22, showed the company record revenue of $6.9 billion, up 24% year over year. Net income grew even more, rising 98.5% year over year to $987.2 million, or $6.26 per diluted share on an adjusted basis. The company had free cash flow of $881 million for the quarter.
So it's no wonder that an investor like Dalio is interested in a company like Builders FirstSource. Dalio's Bridgewater bought 196,973 shares of the stock last quarter, increasing its stake by 2,397%. The company's total interest in BLDR is now $14.3 million.
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This action will come as no surprise to Benchmark's 5-star analyst Reuben Garner, who takes a bullish stance on the company and its stock.
“We consider BFS to have a unique position in the building products ecosystem. As one of the biggest players in distribution, there's a clear path for organic growth to meet long-term goals...in the face of a more bullish residential environment, especially given the traction of BFS' digital foray. In the event of an industry downturn (which we continue to believe will be more modest and short-lived than feared), we view BFS's size and balance sheet as attractive characteristics that should lead to continued outperformance in any environment," said Garner .
Garner not only writes a rave review, he backs it with a Buy rating and a price target of $125, which implies ~81% upside potential over the next 12 months. (To view Garner's track record, click here)
A total of 13 analysts have rated Builders FirstSource and their ratings include 10 to buy and 3 to hold for a consensus rating of Strong Buy. The shares are priced at $69.20 and the average price target of $92.17 suggests an increase of ~33% in one year. (See BLDR Stock Prediction on TipRanks)
Sarepta Therapeutics (SRPT)
Next up is Sarepta Therapeutics, a gene-editing biopharmaceutical company focused on treating genetic diseases, particularly muscular dystrophy. The Company has an active pipeline of new drug candidates in discovery, preclinical and clinical trials, as well as three FDA-approved drugs for the treatment of Duchenne muscular dystrophy. This combination provides Sarepta with the best of both worlds in the biopharmaceutical sector: commercial-stage, marketable medicines generating sales and revenue, together with an extensive research program and the potential for additional commercial products in the future.
On the clinical trials side, Sarepta's lead drug candidate, SRP-9001, has progressed to the point where the company is ready to submit a Biologics License Application (BLA) to the FDA. This is an important regulatory milestone on the road to approval as it seeks an expedited federal agency process. SRP-9001 is an investigational gene therapy for Duchenne and Sarepta is working on it with partner Roche, which has exclusive rights to launch and commercialize the drug in markets outside the US. Recent clinical trial data releases show that SRP-9001 demonstrates long-term beneficial effects in patients, including improved muscle function.
Commercial-stage products include three gene therapy drugs for Duchenne; Exondys 51, Vyondys 53 and Amondys 45. In the second quarter of '22, the company generated sales of over $211 million from these drugs, up 49% year over year. Total revenue, which includes the collaboration feed, was reported at $233.5 million. The company had $1.9 billion in cash and cash equivalents at the end of the second quarter.
Ray Dalio, who doesn't pick stocks lightly, bought 121,144 shares of Sarepta last quarter, a 2,700% increase over his firm's existing holdings. Bridgewater now owns 125,518 shares of SRPT, valued at $13.6 million.
RBC Capital analyst Brian Abrahams is also bullish on Sarepta's potential, writing of the upcoming BLA filing: “We continue to see significant upside potential in shares on Ph.III approval and believe that the potential provides an additional upside option for expedited approval to expedite the contribution to drug sales and potentially reduce the risk of the pivotal trial. Although stocks have been up recently, we continue to see an attractive entry point ahead of the regulatory events of '9001.”
The analyst puts his stance in numbers, setting a price target of $182 for SRPT along with an Outperform rating (i.e. Buy). Its price target points to a one-year upside potential of 68%. (To view Abraham's track record, click here)
Overall, the breakdown of analyst ratings makes it clear that Wall Street is siding with the bulls. There are 18 ratings, including 14 buy versus just 4 hold, supporting the strong buy consensus rating. The stock trades for $108.39 and its average target of $131.94 suggests upside potential of ~22% in one year. (See Sarepta Stock Prediction on TipRanks)
Brunswick Corporation (BC)
Turning now to the leisure sector, Brunswick builds and sells a range of boats and marine engines and their accessories and parts. Boat lovers will be familiar with Brunswick brand names including SeaRay, Mercury and Boston Whaler.
Brunswick's financial results have improved -- and improved dramatically -- in recent years. Braunschweig has found that the leisure sector - particularly the boating segment - has been profitable despite the impact of the COVID pandemic. Boating and other ocean activities can easily lend themselves to both social distancing and socializing when conditions permit, and Brunswick has found this fact to generate heavy revenue.
In the second quarter of '22, the company posted revenue of $1.84 billion, the latest in a two-year string of quarters that showed consistent year-over-year revenue increases. Bottom line, the company reported net income of $197.3 million, which translates to adjusted earnings per share of $2.82. Looking ahead, Brunswick is forecasting full-year sales of $6.9 billion to $7.1 billion, which would translate to medium-term sales growth of 19% year over year.
Ray Dalio likes what Braunschweig has to offer. During the second quarter, Bridgewater increased its holdings by 3260% when it bought 136,377 shares. Now the fund's total position is 140,561 shares worth $11.89 million at current prices.
This company has also caught the attention of Baird analyst Craig Kennison, a 5-star analyst, who writes of his situation: "Demand remains far ahead of supply, suggesting retail should recover, when availability improves. In the meantime, we believe the market has overlooked the impact of new engine performance coming into service in late 2022, including a strong mix of higher powered engines. We recognize the economic uncertainty and recognize that bottoming out is difficult, but we see excellent value for investors looking for early-cycle names in a late-cycle market."
According to Kennison, Brunswick has been given an Outperform rating (i.e. Buy) and the analyst's price target of $120 suggests room for a ~42% stock appreciation in the coming year. (To view Kennison's track record, click here)
Kennison represents the bullish view of this stock -- and he's clearly in the mainstream. BC stocks have 10 unanimous positive ratings from Street analysts, supporting the Consensus Strong Buy rating. The average price target of $103.20 implies a ~22% annual gain from the current trading price of $84.64. (See Brunswick Stock Prediction on TipRanks)
For great stock trading ideas 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 featured analysts. The content is for informational purposes only. It is very important that you do your own analysis before making any investment.
BLDR
-3.89%
B.C
+0.14%
SRPT
-0.14%

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