In this article, we discuss 10 value stocks to buy in 2022 according to Ken Fisher. You can skip our in-depth analysis of Ken Fisher’s 13f portfolio for value stocks and go directly to 5 Value Stocks to Buy in 2022 According to Ken Fisher.
Ken Fisher is one of the most well-known investment managers in the world. He was born to Phillip A. Fisher, a renowned stock investor himself. In addition to managing a mammoth fund, Ken Fisher is also a widely acclaimed author of 11 books on investment and has penned research papers on behavioral finance. He also contributes to publishers like USA Today and Financial Times.
Ken Fisher founded Fisher Asset Management in 1979 with only $250 out of his own pocket which has scaled to managing $169 billion worth of assets as of 2022. Fisher’s own net worth according to Forbes, is $5 billion.
Investment Philosophy of Ken Fisher
Ken Fisher is fond of value stocks and is widely regarded as the pioneer of Price to Sales Ratio (P/S), a valuation metric often used to determine how good a company does in revenue relative to its market cap. It is a particularly useful metric for evaluating stocks in cyclical industries that may not have an annual net profit every year. Fisher believes that timing the market in the short and medium run is virtually impossible but cyclical changes can be reliably forecasted. He also believes that global diversification is the most effective hedge against localized problems in the market.
Fisher is a staunch free market capitalist and believes that the stock market is fundamentally driven by supply and demand and that all widely available information is priced into these factors so the key to add value to an investment is to dig deeper and look for information not widely known or to interpret the available information in a better way than the market because the market course-corrects in the long run, recovering from the short-term irrational sentiments, imperfect/incomplete factoring of information and hype.
Another approach that finds practical applications at Fisher Asset Management is Behavioral Finance. It is a field that studies the thought processes that influence investors in making investment decisions. The fund applies behavioral finance to predict long-term stock market dynamics.
Fisher Asset Management
Fisher Asset Management has just a little over $169 billion worth of assets under management as of Q1 of 2022. Most of the portfolio is dedicated to technology, healthcare, services and financial sectors with the top 10 holdings dominated by technology and finance stocks in the first quarter of 2022. According to Forbes’ estimates, Fisher’s hedge fund outperformed the broader US markets by an average of 4.2% annually for 18 years leading to 2015.
The hedge fund’s top 3 holdings are in Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN).
In this list, we cover the top 10 of the value stocks to buy in 2022 according to Ken Fisher.
For our list of value stocks to buy in 2022 according to Ken Fisher, we’ll be selecting value stocks from the Q1, 2022 holdings in Fisher Asset Management showcased on Insider Monkey.
We’ve selected stocks with Price to Earnings ratios below 18. The lower the Price to Earnings Ratio for a company, the stronger it is in terms of value. The market average for P/E ratio is in the range of 20-25 overall but P/E ratio varies sector by sector. We have factored this fact in our selection and each stock has a lower P/E ratio within its specific sector but they generally all fall below under the ratio of 18.
We’ve also used other metrics with discretion like Price to Sales, Price to Book and Debt to Equity Ratio along with the hedge funds sentiment relating to the particular stock. The metrics come from the first quarter of 2022 except for the total number of hedge fund holders for each stock, which comes from the last quarter of 2021. We’ve ranked the stocks based on Fisher Asset Management’s stake values.
10. Intel Corporation (NASDAQ:INTC)
Fisher Asset Management’s Stake Value: $88 million Number of Hedge Fund Holders: 72 P/E Ratio: 6.9
Intel Corporation (NASDAQ:INTC) is a multinational American technology corporation. It is the world’s largest semiconductor chip manufacturer in terms of revenue. The company is renowned for creating the first ever microcontroller ushering the world in the computing age.
Intel Corporation (NASDAQ:INTC) is also the developer of x86 microprocessors found in most personal and commercial computers around the world. The company has a P/E ratio of 6.9 which is below average in the technology sector. When it comes to debt and equity, the company’s debt is only 36% of its equity used in running the company’s day to day operations.
According to data tracked by Insider Monkey, 72 hedge funds were bullish on Intel Corporation (NASDAQ:INTC) in the last quarter of 2021. Baupost Group was the leading stakeholder in Intel Corporation (NASDAQ:INTC) as of Q1 of 2022, with an investment worth $822 million.
O’Keefe Stevens Advisory, an investment firm, discussed Intel in their Q1,2022 investor letter. This is what they said.
“Intel announced they are removing stock-based compensation from non-GAAP earnings in 2022 to report results aligning with semiconductor peers. This may seem like a reasonable thing to do as comparability between peers becomes easier. On the other hand, what exactly is the point of adjusted earnings? It is not to conform to some industry norm or because the management teams need to make performance metrics. The point of adjusting earnings is to present results in a light that more closely reflects the actual underlying performance of the business. That is, backing out expenses that might be one-time in nature, such as legal or fire expenses. First off, share-based compensation is an actual expense. Decreasing my ownership stake in a company without receiving any compensation is not free. If a company paid its employees in all stock, would they add back the entire SBC? What a margin profile that would be. Second, should a company be worried about reporting results similar to other companies? Every company is unique. Management should not waste time determining what expenses should be excluded. Run the business, don’t worry about adjusting the numbers.”
In April, Truist analyst William Stein lowered the price target on Intel Corporation (NASDAQ:INTC) to $49 from $53 while keeping a ‘Hold’ rating on the shares as part of a broader analytical note on semiconductors market.
While Intel Corporation (NASDAQ:INTC) shares technology sector with Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN), its focus is much more on the hardware aspects.
9. Exxon Mobil Corporation (NYSE:XOM)
Fisher Asset Management’s Stake Value: $160 million Number of Hedge Fund Holders: 71 P/E Ratio: 8.2
First value stock in the energy sector on our list of value stocks to buy in 2022 according to Ken Fisher is Exxon Mobil Corporation (NYSE:XOM), an American multinational oil and gas corporation with a P/S of 0.58. Lower than average P/E and P/S within the sector suggests XOM is a value stock.
It is a popular value stock with hedge funds with Fisher Asset Management’s equity holding in the company amounting to 0.09% of the fund’s portfolio but the leading stakeholder in Exxon Mobil Corporation (NYSE:XOM) in the first quarter of 2022 was GQG Partners with an equity of $4.2 billion.
In terms of positive opinion, Saturna Capital discussed Exxon Mobil Corporation (NYSE:XOM) in their 2021’s Q4 investor letter. Here’s what they said:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon Mobil Corporation (NYSE:XOM), which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
The analyst opinions are optimistic as well. On May 9, Argus analyst Bill Selesky raised his price target on Exxon Mobil Corporation (NYSE:XOM) to $104 from $92 and assigned a ‘Buy’ rating on the shares.
The analyst expects Exxon to take advantage of the energy sector’s robust fundamentals, as well as the enhancing balance sheet, declined capital spending, and higher free cash. He raised his 2022 EPS estimate to $9.52 up from $6.40 based on expectations for continuing high prices of commodities for the remaining part of the year.
8. Verizon Communications Inc. (NYSE:VZ)
Fisher Asset Management’s Stake Value: $855 million Number of Hedge Fund Holders: 63 P/E Ratio: 9.8
Verizon Communications Inc. (NYSE:VZ) is a US-based telecommunication company with a multinational presence providing mobile network, WiFi and internet television services. Verizon Communications Inc. (NYSE:VZ) has a P/E ratio of 9.8, well below the industry average, indiciating value.
The hedge fund sentiment surrounding Verizon Communications Inc. (NYSE:VZ) is monotonously optimistic. Here is what ClearBridge Investments’ investor letter of the last quarter of 2021 had to say about Verizon Communications Inc. (NYSE:VZ).
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like telecom (Verizon). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
On May 16, Bloomberg reported that Verizon Communications Inc. (NYSE:VZ) is planning to increase prices on wireless bills for the first time in two years. Consumers will have to contend with a $1.35 increase in administrative charges for each voice line starting in their June bill, while business customers will find a new “economic adjustment bill” from June 16 onward.
Fisher Asset Management is the leading stakeholder in the company with Renaissance Technologies coming in second with an equity worth $540 million.
7. Toyota Motor Corporation (NYSE:TM)
Fisher Asset Management’s Stake Value: $925 million Number of Hedge Fund Holders: 12 P/E Ratio: 9.8
Toyota Motor Corporation (NYSE:TM) is a well-known multinational automobile manufacturer. It is one of the largest car makers in the world and produces roughly 10 million vehicles a year. Fisher Asset Management’s stake in Toyota Motor Corporation (NYSE:TM) took up 0.54% of the fund’s portfolio in the first quarter of 2022 with over 5 million shares making it the leading stakeholder in the company.
Toyota Motor Corporation (NYSE:TM) had a Price to Earnings ratio of 9.8 in the first quarter of 2022, indicating significant value in the stock when compared within the automotive industry. The company’s other valuation metrics are also positive, with Toyota Motor Corporation having a Price to Sales ratio of 0.8 showing that the company generates 20% more in revenue relative to its market cap, an indication of a value stock.
On April 19, it was announced that Toyota Motor Corporation (NYSE:TM) will invest $383 million in 4 of its manufacturing plants in the United States. The investment is expected to support the production process of four-cylinder engines, including options for hybrid vehicles, at its Missouri, Tennessee, Kentucky and Alabama plants.
6. Shell plc (NYSE:SHEL)
Fisher Asset Management’s Stake Value: $1 billion Number of Hedge Fund Holders: 41 P/E Ratio: 9.8
Another energy stock that also happens to be one of the value stocks to buy in 2022 according to Ken Fisher is Shell plc (NYSE:SHEL). Shell plc (NYSE:SHEL) like TotalEnergies SE (NYSE:TTE) makes up one of the seven supermajor energy companies in the world but unlike some of its peers, its P/S ratio is substantially better at 0.17.
On May 14, Andrew Bary wrote on Barron’s weekly edition that investors have been piling up into energy stocks this year, sending prices dramatically higher, but there are still bargains in the sector like Shell plc (NYSE:SHEL). Shell plc (NYSE:SHEL) has some of the most attractive assets in the global energy sector, most prominently the world’s largest LNG business and the largest network of service stations around the world.
Goehring & Rozencwajg Associates, an asset management fund, discussed Shell plc (NYSE:SHEL) in their 2021’s Q3 investor letter. Here is what they had to say:
“Royal Dutch Shell’s ESG challenges continue unabated. A Dutch court ruled in May that Shell plc (NYSE:SHEL) must cut its CO2 output by 45% by 2030 to align their policies with the Paris Climate Accord. In a statement issued after the verdict, a Shell plc (NYSE:SHEL) spokesperson acknowledged that “urgent action is needed on climate change and the company is accelerating efforts to reduce emissions.” If the pressure from the Dutch court system was not enough, an activist shareholder has proposed breaking the company apart to address ESG concerns. On October 27th, Third Point Management announced the following.
“If Shell plc (NYSE:SHEL) pursues this type of strategy it would probably lead to an acceleration of carbon dioxide reduction. […] Breaking Shell into two operating units would create a standalone legacy energy business (upstream, refining, and chemicals) that could slow capex beyond what is has already promised, sell assets, and prioritize return of cash to shareholder which can be reallocated into low-carbon areas of the market.”
Fisher Asset Management holds Shell plc (NYSE:SHEL) equity worth a billion dollars in the first quarter of 2021 making it the leading stakeholder in the company.
Fisher Asset Management is well-diversified but while it has a significant stake in energy companies, the biggest chunk of its portfolio is its holdings in technology companies like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN).
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Disclosure: None. 10 Value Stocks to Buy in 2022 According to Ken Fisher is originally published on Insider Monkey.