‘Patience Pays Off’: Billionaire Ken Fisher Loads Up on These 2 ‘Strong Buy’ Stocks
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Investors looking for a guiding hand to guide them safely through today's dangerous stock market landscape could do worse than listen to what billionaire Ken Fisher has to say.
The founder of Fisher Investments famously started his independent wealth management firm with $250 in 1979, a company that is now a $197 billion+ company while Fisher's own net worth is over $5 billion.
For those unnerved by the relentless bear in 2022, Fisher has very simple advice: "The things that tend to fall the most in a bear market are when you come on the other side and come up on the other side of the V, when whatever it is, tend to bounce off the earliest. That's why patience is a virtue... If you become patient, you become worth more money. "
We took inspiration from Fisher and take a closer look at two stocks the billionaire has recently moved. Using TipRanks' database to find out what the analyst community has to say, we learned that each ticker has been awarded a "Strong Buy" consensus rating by the analyst community. Let's see why they are currently considered good investment choices.
Marvell Technology (MRVL)
The first Fisher recommended stock we'll look at is a staple in the chip industry. Marvell is a manufacturer of semiconductors and related technology. The specialist for integrated circuits serves a variety of markets, from data centers to automotive, corporate networks to cloud and carrier infrastructure. After various acquisitions, the company's main source of income has shifted from consumer electronics to data infrastructure (data centers, industry, automobiles, mobile communications).
Meanwhile, Marvell's revenue and earnings are trending in one direction -- up. And while supply chain issues have made themselves felt, Marvell has still managed to meet Wall Street expectations.
The company will report its fiscal third quarter on December 1st, but in the meantime, we can get a good feel for the company's situation by looking back at the F2Q22 numbers. Notably, revenue rose 41% year-over-year to $1.52 billion, meeting Street's expectations, while the company posted adj. EPS of $0.57, which is $0.01 above the consensus estimate of $0.56.
Citing issues in the supply chain, the company expects Q3 revenue of $1.56 billion, falling short of the $1.58 billion expected by analysts, while the outlook for the bottom line is adj. EPS of $0.59 to midpoint, below consensus at $0.61.
Overall, Marvell has failed to withstand declining market forces, and shares are down ~50% this year.
Fisher obviously thinks they represent excellent value. He significantly increased his stake in the third quarter, purchasing 11,133,134 shares of MRVL, which is now valued at over $478 million.
Credit Suisse's Chris Caso, who echoes Fisher's bullish stance, sees a lot he likes about the chip company.
"Our longer-term positive view on MRVL is due to the number of company-specific factors driving well over half of Street's revenue growth expectations in CY23," said the 5-star analyst. “These drivers include Hyperscale Semi-Custom Silicon, the former Inphi business, Automotive Ethernet, the Innovium Switch business and continued 5G rollouts. We expect growth in all of these areas to be much less dependent on end markets and cushion any market slowdown. Additionally, cloud operator spending has held up better than we expected given the reduction in ad spend.”
Caso reiterates his comments and rates MRVL stock as Outperform (i.e., Buy), while its $56 price target leaves room for 12-month gains of 28%. (To see Caso's track record, click here)
His colleagues agree – almost unanimously. While one analyst prefers to sit on this rating, all 11 other ratings are Buy, giving the stock a Strong Buy consensus rating. The average target is more bullish than Caso lets on; at $61.67, the number suggests the stock will gain ~42% in the coming year. (See MRVL Stock Prediction on TipRanks)
Karl Schwab (SCHW)
Now let's move from the chip industry to an entirely different segment for Fisher's next pick -- that of financial services. Charles Schwab as a leading investment services firm, helping both private and institutional clients invest in the capital markets in an intelligent and efficient manner. Services range from banking and securities brokerage to asset and wealth management, custody and financial advice. With approximately $7 trillion in customer assets, the company is the seventh largest bank in the United States.
Part of Schwab's approach is to collect as many deposits and cash as possible and invest them in a way that generates interest. This is particularly helpful in the current climate of rising interest rates and has helped the company fare well in the challenging environment of 2022.
In its most recent quarterly report for Q3'22, revenue rose 20% year over year to $5.5 billion, beating Street's call by $80 million. The company generated record earnings of $2 billion, compared to $1.5 billion in the same period last year. This led to adj. EPS of $1.10, beating Street's forecast of $1.05.
Not wanting to miss a compelling opportunity, Fisher pulled the trigger for 15,433,332 shares and gave his fund a new position in SCHW. If you look at the value of the new investment, it amounts to almost $1.26 billion.
While Ken Worthington of J.P. When Morgan finds that the stock's valuation is not cheap, he believes there are good reasons for doing so.
"We believe Schwab is a well-run and highly valued company, trading on an industry-leading retail financial services brand at a premium to its peers," said Worthington. “We view Schwab as a growth company with numerous initiatives to drive both incremental organic growth and a higher fee rate. We see Schwab benefiting from a dedicated retail base that should fuel a future generation of Schwab's investor clients."
To that end, Worthington ranks SCHW stock as Overweight (i.e., buy), while its median target of $102 suggests investors will see returns of ~26% a year from now. (To view Worthington's track record, click here)
Looking at the 9 Buy vs 3 Hold consensus breakdown, analysts think this stock is a Strong Buy. At $92.9, the average target implies a ~15% 12-month stock gain. (See SCHW 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 analyst. The content is for informational purposes only. It is very important that you do your own analysis before making any investment.
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