Bank earnings and expectations for easing inflation pushed market indexes to close higher on Friday, with the Nasdaq Composite and S&P 500 recording their best weekly performances since November.
The Dow Jones Industrial Average rose 0.33% on Friday, bringing its return for the week to 2%. Similarly, the S&P 500 increased 0.40% for the day and 2.67% for the week, while the Nasdaq gained 0.71% and 4.82% over the same periods.
In regard to individual sectors, communication services stocks have the best performance year to date with an increase of 12.44%. Last week, they were up 5.37%.
While volatility persists due to inflation, rising interest rates, the war in Ukraine and other geopolitical conflicts, gurus are still finding value opportunities among communication services companies.
According to GuruFocus’ Hot Picks, a Premium feature based on 13F filings, the communication services stocks most-bought by gurus during the third quarter included Alphabet Inc. (GOOGL, Financial), Meta Platforms Inc. (META, Financial), Comcast Corp. (CMCSA, Financial), The Walt Disney Co. (DIS, Financial) and Warner Bros. Discovery Inc. (WBD, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Alphabet
Held by 44 gurus with a combined equity portfolio weight of 111.03%, 18 buys and 19 sells were recorded for Alphabet’s (GOOGL, Financial) class A stock in the third quarter.
The Mountain View, California based company, which owns the Google search engine, YouTube and a number of other businesses, has a $1.20 trillion market cap; its shares closed at $92.12 on Friday with a price-earnings ratio of 18.29, a price-book ratio of 4.71 and a price-sales ratio of 4.34.
The GF Value Line suggests the stock is significantly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
The GF Score of 95 out of 100 indicates the company has high outperformance potential. While it received high ratings for profitability, growth, financial strength and GF Value, the momentum rank was more moderate.
Of the gurus invested in Alphabet, Ken Fisher (Trades, Portfolio) has the largest stake with 0.33% of its outstanding shares. PRIMECAP Management (Trades, Portfolio), the late Spiros Segalas (Trades, Portfolio)’ fund, Dodge & Cox, Chase Coleman (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio) and several other gurus also have large positions in the stock.
Meta Platforms
Recording 18 buys and 21 sells for the third quarter, 44 gurus are invested in Meta Platforms (META, Financial). The combined weight in their equity portfolios is 90.98%.
The social media company formerly known as Facebook, which is headquartered in Menlo Park, California, has a market cap of $359.19 billion; its shares closed at $136.98 on Friday with a price-earnings ratio of 13.06, a price-book ratio of 2.94 and a price-sales ratio of 3.18.
According to the GF Value Line, the stock is significantly undervalued currently.
Further, the GF Score of 88 indicates the company has good outperformance potential on the back of high ranks for profitability, growth and financial strength despite receiving middling marks for GF Value and a low momentum rating.
With a 0.44% stake, Fisher is Meta’s largest guru shareholder. Other top guru investors include Dodge & Cox, Baillie Gifford (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Coleman, Chris Davis (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio) and Steve Mandel (Trades, Portfolio).
Comcast
Comcast (CMCSA, Financial), which recorded an equal number of buys and sells for the quarter at 15, is held by 35 gurus with a combined equity portfolio weight of 34.19%.
The Philadelphia-based media conglomerate, which owns a legacy cable business and NBCUniversal, has a $168.31 billion market cap; its shares closed at $38.93 on Friday with a price-earnings ratio of 33.85, a price-book ratio of 2.10 and a price-sales ratio of 1.45.
Based on the GF Value Line, the stock appears to be modestly undervalued currently.
The GF Score of 92 indicates it also has high outperformance potential, driven by strong ratings for three of the criteria and middling marks for financial strength and momentum.
Dodge & Cox is Comcast’s largest guru shareholder with a 1.90% stake. It is also being held by First Eagle, Barrow, Hanley, Mewhinney & Strauss, Hotchkis & Wiley, First Pacific Advisors (Trades, Portfolio), Bill Nygren (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies, among many others.
Disney
With 13 buys and 17 sells for the quarter, Disney (DIS, Financial) is held by 28 gurus. They have a combined equity portfolio weight of 21.41% in the stock.
The mass media and entertainment company, which is headquartered in Burbank, California, has a market cap of $181.27 billion; its shares closed at $99.40 on Friday with a price-earnings ratio of 57.79, a price-book ratio of 1.86 and a price-sales ratio of 2.20.
The GF Value Line suggests the stock is significantly undervalued currently.
Based on the GF Score of 82, the company has good outperformance potential. While it raked in high ratings for profitability, GF Value and momentum, the growth and financial strength ranks were more moderate.
Of the gurus invested in Disney, PRIMECAP Management (Trades, Portfolio) has the largest stake with 0.31% of its outstanding shares. Fisher, Philippe Laffont (Trades, Portfolio), Diamond Hill, the T Rowe Price Equity Income Fund (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Yacktman Asset Management (Trades, Portfolio), Nygren and Daniel Loeb (Trades, Portfolio) also have significant holdings.
Warner Bros. Discovery
Warner Bros. Discovery (WBD, Financial), which is held by 22 gurus, recorded 13 buys and 12 sells for the three-month period. Their combined equity portfolio weight is 23.44%.
The New York-based media and entertainment company, which was formed through the merger of AT&T’s (T, Financial) WarnerMedia assets and Discovery Inc., has a $31.91 billion market cap; its shares closed at $13.14 on Friday with a price-book ratio of 0.66 and a price-sales ratio of 0.73.
According to the GF Value Line, the stock, while undervalued, is a possible value trap currently. As such, potential investors should do thorough research before making a decision.
The GF Score of 80 indicates the company is likely to have average performance going forward. It received high grades for profitability and growth, middling marks for GF Value and momentum and low points for financial strength.
With a 1.32% stake, Hotchkis & Wiley is the company’s largest guru shareholder. Other gurus with large positions in Warner Bros. Discovery include Seth Klarman (Trades, Portfolio), Mason Hawkins (Trades, Portfolio), Nygren, the Smead Value Fund (Trades, Portfolio), Yactktman Asset Management and Mario Gabelli (Trades, Portfolio).
Other popular picks
Additional stocks that were popular with gurus during the third quarter included Netflix Inc. (NFLX, Financial), Verizon Communications Inc. (VZ, Financial), AT&T Inc. (T, Financial), T-Mobile US Inc. (TMUS, Financial) and Paramount Global (PARA, Financial).
