Get Premium to unlock powerful stock data

My Buy-Sell Ratings on the 20 Largest Stocks

An overview of my recommendations and why

Author's Avatar
John Dorfman
Sep 27, 2021

Summary

  • Here are my latest ratings, from the very largest (Apple) to the merely immense (Adobe).
Article's Main Image

You won’t find Facebook or Procter & Gamble in the portfolios I run, but that doesn’t mean I never think about them.

Once a year in this column, I give my “buy” or “avoid” opinion on the 20 largest stocks. Here are my latest ratings, from the very largest (Apple) to the merely immense (Adobe).

Apple Inc. (

AAPL, Financial)($2.4 trillion) – Buy. The iPhone rolls on. Apple’s app store in the future will no longer be a quasi- fantastic.

Microsoft Corp. (

MSFT, Financial)($2.2 trillion) – Avoid. Operating results have gone from strong to even stronger, but I feel the stock is fully valued at 14 times revenue.

Alphabet Inc. (

GOOGL, Financial)($1.9 trillion) – Buy. I consider Alphabet the most innovative company in the U.S. It owns Google, You Tube, Waymo and Deep Mind.

Amazon.com Inc. (

AMZN, Financial)($1.7 trillion) – Avoid. The pandemic accelerated the trend to online shopping but that tailwind may abate in the next few months.

Facebook Inc. (

FB, Financial)($995 billion)—Avoid. Highly profitable, but I think the company lack of customer service, carelessness with customer data, and capricious enforcement of its own rules will eventually cause it problems.

Tesla Inc. (

TSLA, Financial)($775 billion)—Avoid. People tend to love Tesla or hate it. With the stock at 162 times estimated earnings, I certainly don’t love it.

Berkshire Hathaway Inc. (

BRK.B, Financial)($629 billion)—Buy. I know that genius CEO Warren Buffett (Trades, Portfolio) can’t live forever, but I think he has built a wonderful combination of businesses.

Nvidia Corp. (

NVDA, Financial)($552 billion) — Avoid. Its chips enjoy huge demand, especially for gaming and cryptocurrency mining. But the stock is simply too expensive in my opinion.

Visa Inc. (

V, Financial)($508 billion)—Avoid. Visa has been a superb company for ages, but revenue growth slowed to a crawl last year, even though the economy did surprisingly well.

JPMorgan Chase & Co. (

JPM, Financial)($487 billion)—Buy. This stock sells for less than 11 times earnings in a pricey market, and I like CEO Jamie Dimon.

Johnson & Johnson (

JNJ, Financial) ($433 billion) – Buy. Its business model, with dozens of health-care businesses each enjoying some autonomy, has worked well. Revenue and earnings accelerated last year.

Walmart Inc. (

WMT, Financial)($399 billion) – Avoid. Its discount stores hold up well when times are tough, but in 2022 I think some consumers will be moving up to more expensive stores.

UnitedHealth Group Inc. (

UNH, Financial)($384 billion)—Avoid. Profits lately have been subdued, and dividend growth has slowed. I don’t think it’s bad but I can’t get excited about it.

Home Depot Inc. (

HD, Financial)($356 billion) – Avoid. The company is in a good niche, but I don’t like the balance sheet. Debt is 20 times stockholders’ equity.

Bank of America Corp. (

BAC, Financial)($355 billion) – Avoid. The stock is modestly valued, which is a big plus. But return on assets is just under 1%. I like to see banks above that level.

Mastercard Inc. (

MA, Financial)($353 billion) – Avoid. Still a wonderful company but, like Visa, it has slowed down a bit lately. And the stock is expensive at 21 times revenue.

Procter & Gamble Co. (

PG, Financial)($349 billion) – Avoid. Classic consumer-staples stock, with brands like Pampers, Tide, and Charmin. Well run and steady, yet I feel the stock is slightly too expensive for what the company is.

PayPal Holdings Inc. (

PYPL, Financial)($327 billion) — Avoid. This newcomer to the largest-stocks list sells for 62 times forward earnings. Value investors like me balk at such things.

Walt Disney Co. (

DIS, Financial)($320 billion)- Buy. Disney had a good run last year, and hasn’t done much this year. I think it will get another leg up as theme parks and movie theatres reopen.

Adobe Inc. (

ADBE, Financial)($297 billion)- Avoid. Adobe is another great company that sells at high multiples – for example, 51 times recent earnings. It’s not my cup of tea.

Past record

My “buy” recommendations on this list last year returned a little over 40%. My “avoids” were up 36%, while the Standard & Poors’ 500 Index was up almost 35%.

Longer term (over 17 years), my record on rating the largest stocks is undistinguished. My “buys” and “avoids” have each risen about 13% on average. Meanwhile, the S&P 500 has averaged 14.5%.

Bear in mind that my column results are hypothetical: They don’t reflect actual trades, trading costs or taxes. These results shouldn’t be confused with the performance of portfolios I manage for clients. Also, past performance doesn’t predict future results.

John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at [email protected].

Also check out:
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

Disclosures

I am/we are Long AAPL, GOOGL,BRK.B,DIS,ADBE,AMZN,HD,MSFT and NVDA.
Disclosure: I own Apple, Alphabet, Berkshire Hathaway and Walt Disney personally and for most of my clients. I own JP Morgan and Johnson & Johnson for some clients. My wife and some clients own Adobe, Amazon.com, Home Depot, Microsoft and Nvidia.
Rating:
4 / 5 (2 votes)
7 Comments
Load More

Please Login to leave a comment