To make money like a big time investor such as Warren Buffett or George Soros, you have to think like them. Now wouldn’t we all want a piece of their investment knowledge? Below, I have made a short list of stocks that have recently been added to the shopping lists of premier portfolio managers. I’ve then compiled a brief analysis of each, comparing them to their peers, providing readers with the fundamentals needed to engage in further research and draw a conclusion about whether to add the companies to their portfolios.
Time Warner (TWX) operates in three business segments: filmed entertainment, cable networks and publishing. The company competes with entertainment companies such as Walt Disney (DIS) and News Corp. (NWS). Time Warner has performed extremely well since third quarter 2010, beating analyst estimates in each quarter since, primarily due to filmed revenues from motion pictures such as Harry Potter, Horrible Bosses and Happy Feet. Sherlock Holmes, released in the fourth quarter, is anticipated to edge revenues even further to end 2011. The company has also signed major deals with Hulu and Netflix (NFLX) which will enable Time Warner content to be streamed via the Internet and boost revenues. Consumers now demand content instantly, and Time Warner’s purchase of Flixter enables the company to reach more customers and meet the needs of existing customers.
In regards to performance, Time Warner is the best in class. Revenues have grown 11% over the last quarter on a year-over-year basis. Likewise, profits have grown an impressive 58% during the same period. Time Warner is definitely a smart buy, not only because the company seems poised to continue impressive growth, but it pays shareholders a dividend yielding 2.5% and has continually made share repurchases; by the end of third quarter 2011 the company repurchased over $3.7 billion of stock. Moreover, making the company even more enticing is the current forward P/E of 11.9, below the long-term average S&P average of 15.
Sirius XM Radio (SIRI) radio has become a favorite for many investors as the company's shares have rallied over 60% in the few months since its 52-week low of $1.27. The company has deals in place with the largest global auto manufacturers to equip new cars with Sirius Radio; moreover, management has released rather optimistic estimates for fiscal year 2012. The company has also increased subscription prices by 12% for 2012, which has not been subject to consumer backlash such as rate hikes announced earlier this year by Bank of America (BAC) and Netflix (NFLX).
Management also managed to increase earnings by 54% from revenues gains of 6% in the most recent quarter.
QUALCOMM Inc. (QCOM) manufactures telecommunication products and services, including microchips for smartphones. The company owns the licensing for 3G and 4G data and now has its sights set on microprocessors and home connectivity. For every mobile device sold, QUALCOMM generates a licensing fee.
The company has performed extremely well in 2011. Revenues have grown 40% each quarter on a year-over-year basis compared to the industry average of 13.6%, and profits have also increased 22%. The nature of the industry also enables the company to retain much of income as profits; the company retains a 29% profit margin in the first three quarters of 2011. QUALCOMM also offers investors a dividend yield of 1.5%. QUALCOMM is a diverse and safe alternate for investors to ride the mobile device wave without betting on a specific provider such as Verizon (VZ), AT&T (T), Apple (AAPL), etc.
Pfizer Inc. (PFE) is the largest bio-pharmaceutical company in the world. The company manufactures and distributes prescription medications such as Lipitor, Spiriva, Celebrex and Detrol. Shares are currently trading near their 52-week high of almost $22 a share and paying a dividend yield of 4%. Pfizer is certainly a smart money pick for investors, providing reliable and consistent growth; EPS has grown at over 30% last quarter on a year-over-year over year basis, and the revenue grew almost 35% in 2010. The company continues to invest heavily in research and development, providing long-term sustainability and wealth for investors. The low forward P/E multiple of 9.48 makes Pfizer the perfect buy for investors at a low price.
Merck & Company Inc. (MRK) is another global pharmaceutical leader. Shares are currently trading at their 52-week high of $39.50. Merck has performed exceptionally well in recent history, and the beta of .54 portraits how stable and reliable the company is even in down markets. Revenues have grown 8% and profits have grown at an even faster pace. Furthermore the company's diverse product line which includes vaccines, consumer care products, animal health products and biological therapies, ensures the company can meet consumer demands for the next few years. Merck is definitely a smart buy for institutions and personal investors. Shareholders will also earn a dividend that is currently yielding 4.3%.
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