Billionaire Ray Dalio pulls the trigger for 3 “Strong Buy” shares
There are experts in the stock market whose investment movements require respect. They earned this by long-term cultivating a reputation for crafting solid returns – and few of these experts have the stature of billionaire financier Ray Dalio. Dalio began trading commodity futures on Wall Street and founded Bridgewater Associates in 1975 from his New York City apartment. Today, with Dalio still at the top, Bridgewater has sales of over $ 46 billion and assets under management of over $ 140 billion. Dalio built his castle by following three rules for his investments. First, he reminds us that “being well diversified is the most important thing you have to do to invest well.” Dalio’s second tip recalls the old market stereotype that past performance does not guarantee future return, but its own Style is formulated. He says, “Don’t make the mistake of thinking that things that have gone up are better than more expensive.” Finally, Dalio tells us to always do the opposite of your instincts. Dalio would buy when others sell and sell when they buy – and the results for Bridgewater’s long-term success are clear. With Dalio in mind for inspiration to invest, we used TipRanks’ database to find out if three stocks the billionaire recently added to the fund were producing compelling results. According to the platform, the analyst community believes this is the case as all picks receive a “strong buy” consensus rating. Let’s get started right away. Aptiv PLC (APTV) Aptiv has a long history in the automotive industry, where it used the Delphi name and was an integral part of the Detroit supply chain from the mid-1990s to 2017, changing both its name and focus. In its modern incarnation, Aptiv is working on the fusion of high-tech and automotive technology. The company develops software, network and computer platforms to improve vehicle safety and efficiency. In January of this year, Aptiv introduced ADAS, its open and scalable platform that enables software-defined vehicles while reducing complexity. The platform offers powerful computing power to improve connectivity and get one step closer to autonomous vehicle propulsion systems. The platform also enables continuous updates over the life of the vehicle. In the first quarter, Aptiv had sales of $ 4 billion, up 20% year over year. Operating income was $ 437 million, up nearly 11% year over year, and earnings per share were $ 1.03. Earnings per share were below $ 6 a year ago but were on par with $ 1.04 for the last two quarters. So Aptiv is working to break new ground in the automotive industry and its work is profitable. No wonder, then, that Dalio added 256,497 shares to its existing stake in the stock in the first quarter – an increase of more than 1,500% – and increased its stake in the company at its current valuation to $ 35.12 million. Now if we turn to analysts, the stock has a strong following, which includes 5-star analyst Brian Gesuale of Raymond James. “Business trends are solid and a combination of typical conservatism and several uncontrollable industry dynamics (supply chain, input costs, etc) provides ample opportunity for upgrades and beats / raises throughout the year…. We continue to see APTV as one of the best positioned auto tech names to benefit from the growth in adoption of green, connected and autonomous technologies, ”said Gesuale. Based on all of the above, the analyst rates APTV as Outperform (i.e. Buy) and his target price of $ 200 implies an upward move of 46% for the year ahead. (To see Gesuale’s track record, click here.) In general, the rest of the street agrees. 11 buys, 1 hold, and 1 sell made in the past three months give a consensus rating of “Strong Buy”. Additionally, the average target price of $ 170.33 suggests upside potential of 24%. (See APTV stock analysis on TipRanks) Vroom, Inc. (VRM) The second stock we’ll look at, Vroom, is an online retailer that specializes in used cars as well as parts and accessories, insurance, rental cars, and purchase finance. In short, Vroom is an online one-stop-shop for automotive needs – for customers who are not interested in buying new products and are located in the United States. Vroom was founded in 2012 and went public last summer. The IPO was priced at $ 22 and the stock closed at $ 47.90 on its first day of trading. In total, Vroom raised $ 467.5 million to bring its shares to market. In the past few months, the company has expanded its last mile concierge service, delivering purchased vehicles and picking up customers’ old cars. The company added Detroit, LA, and Chicago to this service in May and Denver in April. Last week the company released its first quarter results, the fourth as a public entity. For the third year in a row, the quarter saw revenue grow at $ 591.1 million. E-commerce accounted for $ 422.3 million of that revenue, an 81% year-over-year increase, and total online vehicle sales reached 15,504 units, an increase of 96% year-over-year. Bridgewater pulled the trigger on VRM in the first quarter and bought over 47,000 shares. This is a new position in the stock of Dalio’s company and is currently valued at $ 2.01 million. Five-star analyst Seth Basham, weighing the company for Wedbush, points to the first quarter results as an encouraging sign. “VRM delivered solid results for Q1 21 that exceeded expectations on the buy and sell side. In addition to benefiting from strong market momentum, VRM is also generating higher margins by virtually eliminating bottlenecks related to post-sale support processes and investing to stay ahead of growth in this and other key areas, ”wrote Basham. The analyst summarized: “With these strong results, solid forecasts and continuous improvements, we believe VRM could exceed its unchanged growth targets for FY21 of 100% + e-commerce units and 200% gross profit and increase those targets with results of the second quarter 21. “Unsurprisingly, Basham is giving VRM shares an Outperform (i.e. Buy) rating, along with a price target of $ 60 that implies an uptrend of ~ 41% for the next 12 months. (To see Basham’s track record, click here.) With buy ratings topping 10 to 1, VRM stocks have a solid strong buy consensus rating. The share price is $ 42.60, and the average target of $ 53.64 indicates an upside of ~ 26% for a year. (See VRM stock analysis at TipRanks.) Tempur Sealy (TPX) From the automotive industry, we shift gears, slow down, and take a look at the bedding. You probably don’t think much about your bed, mattress, or pillow, but taken together they are big business. Tempur Sealy, which owns the well-known bedding products Tempur-Pedic, Stearns & Foster and Sealy, is a leader in the industry. Last year, the company increased its revenue 18% from $ 3.11 billion to $ 3.68 billion. Over the past 12 months, TPX stocks have soared an impressive 155%, more than doubling in value. While the company experienced a short-lived decline in sales during the corona crisis, the business has since recovered, with each of the past three quarters posting sales of more than $ 1 billion. In April, TPX reported first quarter earnings that show a 27% year-over-year increase in total revenue and earnings per share of 62 cents. EPS declined sequentially from the fourth quarter, but increased 121% year over year. The company saw a significant increase in cash flow from operating activities from $ 15 million to $ 86.3 million year over year. We see a solid company with a solid foundation that is sure to attract an investor interested in diversity and returns. Dalio’s company bought 199,649 shares of TPX in the first quarter. This was a new position for Bridgewater, but an essential one; At the current stock price, it’s worth $ 7.24 million. Among the bulls is the 5-star analyst Peter Keith from Piper Sandler, who underscores the solidity of the TPX investment. “TPX’s competitive position remains at an all-time high, the bedding industry has never been healthier, the consumer is in great shape, and international trends should see sequential improvement by 2022. While supply chain constraints have caused disruption, TPX believes headwinds will ease significantly by the end of the second quarter, ”said Keith. To do this, Keith rates TPX as overweight (i.e. buy) and has a target price of $ 50, which indicates a year-long upward movement of ~ 40%. (To see Keith’s track record, click here.) Wall Street clearly agrees with Keith on this, as the 8 ratings of the stock include 6 to buy and only 2 to hold for a strong buy consensus rating. The trade price is $ 35.83 and the average target price of $ 46 implies an uptrend of 28% from that level. (See TPX stock analysis on TipRanks.) To find great ideas for trading stocks 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 presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.