A few months ago, GuruFocus launched the "baskets" feature, which allows users to place stocks in one of four virtual baskets based on their level of interest:
- Buying: You have invested money in the stock.
- Considering: You have done research on the stock and you are considering purchasing shares.
- Researching: You are doing research on the stock but are undecided about buying shares.
- Not Interested: You have excluded the stock from consideration. Either you think the stock is too tough to understand or the stock is not worth considering at all.
Since the time of the feature's July debut, several stocks have emerged as the most popular picks for each basket. For example, Intel Corp. (INTC, Financial) is the top stock in the buying basket, while Tesla Inc. (TSLA, Financial) occupies the number one spot in the not interested basket.
Berkshire Hathaway Inc. (BRK.A)(BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) have previously said that they pace stocks into one of three baskets when researching potential investment opportunities: yes, no and too tough to understand. The principle behind this is that it is not worth wasting time researching a stock if there is something about it that puts you off, whether it be a lack of understanding or a lack of interest in the business. Thus, organizing stocks into the buying, considering, researching and not interested baskets could help investors keep track of where they stand in terms of the evaluation process of certain stocks.
We will take a look at the stocks that the highest number of GuruFocus users have shown interest in by placing them in the buying, considering or researching baskets in order to get an idea of which names have been catching investors' eyes.
Intel (INTC, Financial) is the number one stock in the buying basket with 105 votes, the number two stock in the considering basket with 29 votes and the number one stock in the researching basket with 14 votes.
Intel is a semiconductor company based in Santa Clara, California. It is involved in the design, manufacturing and sale of computer products and technologies, and it also provides computer, networking, data storage and communications platforms.
On April 9, shares of Intel traded around $68.21 for a market cap of $276.85 billion and a price-earnings ratio of 13.77. The GuruFocus Value chart rates the stock as fairly valued.
The company has a financial strength rating of 6 out of 10 and the profitability rating of 9 out of 10. While the cash-debt ratio of 0.66 is less than half the industry median, the Piotroski F-Score of 6 out of 9 indicates a healthy financial situation. The three-year revenue growth rate is 12.3% while the three-year Ebitda growth rate is 14.2%.
Intel is undergoing a transformation process, part of which involves slowly selling its flash-memory, or NAND, business to Korean chipmaker SK Hynix Inc. (XKRX:000660) over the next few years. The $9 billion deal represents a move to get rid of the hot potato of a declining business as more data is moved to the cloud, though it will take a while due to existing long-term commitments. Other recent developments include VMWare (VMW, Financial) CEO Pat Gelsinger taking the reigns as Intel's new CEO on Feb. 15 and activist investor Daniel Loeb (Trades, Portfolio) showing an interest in the business as a turnaround opportunity.
Biogen is a biotech company based in Cambridge, Massachusetts that researches and develops therapies for neurological and neurodegenerative diseases, including multiple sclerosis, leukemia and Alzheimer's.
On April 9, shares of Biogen traded around $268.17 for a market cap of $40.85 billion and a price-earnings ratio of 10.97. The GF Value chart rates the stock as modestly undervalued.
The company has a financial strength rating of 5 out of 10 and the profitability rating of 9 out of 10. The interest coverage ratio of 19.97 and Altman Z-Score of 3.94 show the company is not likely to face liquidity issues. The three-year revenue growth rate is 13.1%, while the three-year Ebitda growth rate is 5.4%.
Biogen's stock has been on a roller coaster over the past few years as the biotech giant struggled to replace lost and expired patents with new blockbusters. The cutting-edge biotech industry is known for being a risky area to invest in, as success often rests on one or two drugs, and those drugs are expensive to develop. Recently, it seems like Biogen's future success lies with its aducanumab, its drug candidate for the treatment of Alzheimer's. The drug has been delayed at several stages of the development process; it was initially shelved for not being effective enough before being picked back up again, and the Food and Drug Administration has pushed back its review on whether or not to approve the drug to June.
The Cupertino, California-based technology company designs, develops and sells consumer electronics (such as Mac computers, iPhones, iPads and related accessories), computer software and online services, with a growing focus on Software-as-a-Service (SaaS).
On April 9, shares of Apple traded around $133 for a market cap of $2.23 trillion and a price-earnings ratio of 36.01. The GF Value chart rates the stock as significantly overvalued.
The company has a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10. The Piotroski F-Score of 7 out of 9 and Altman Z-Score of 6.24 indicate a very healthy financial situation. The three-year revenue growth rate is 12.8%, while the three-year Ebitda growth rate is 82.%.
The bull case for Apple hardly needs an introduction. Even though it has already garnered a massive active user base, the company continues to grow, hitting a new record of 1.65 billion active devices in March. In addition to growing its footprint outside of its home base in the U.S., the consumer electronics giant is also turning its focus to more effectively monetizing its existing user base through transitioning more of its offerings to a more lucrative SaaS model. The pricing power of its brand name is also considered invaluable and a key driver of the high multiples it trades at.
Alibaba Group Holding Ltd. (BABA, Financial) stands at number two in the buying basket with 70 votes and fifth in the considering basket, though it does not appear in the top 10 list for the researching basket.
Alibaba is a Chinese multinational conglomerate with holdings in e-commerce, retail, internet and technology assets, among many others. By volume, Alibaba is the largest e-commerce company in the world, with millions of merchants and hundreds of millions of users.
On April 9, shares of Alibaba traded around $223.31 for a market cap of $605.73 billion and a price-earnings ratio of 26.08. The GF Value chart rates the stock as significantly undervalued.
The company has a financial strength rating of 7 out of 10 and the profitability rating of 9 out of 10. The cash-debt ratio of 3.93 is higher than 81% of industry peers and the Altman Z-Score of 5.71 suggests the company is not likely to face liquidity issues. The three-year revenue growth rate is 45%, while the three-year Ebitda growth rate is 38.1%.
Alibaba's stock price has taken a severe hit in recent months due to concerns that the Chinese government could take action to curb its Amazon (AMZN) style monopoly over the Chinese e-commerce sector. On Dec. 24, regulators launched an anti-monopoly probe into the company as a follow-up to founder Jack Ma's public criticism of the regulatory system. Regulators also cited such comments as their reason for derailing Alibaba's fintech arm Ant Group from going public. Ant Group's hopes of going public now lie in restructuring itself as a financial holding company, but separating this arm from the main company could help Alibaba lessen the regulatory pressures it faces.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.
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