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Yamil Berard
Yamil Berard
Articles (171) 

George Soros' High-Conviction Picks

The guru loaded up on shares of these three high-performers by as much as 500% over two consecutive quarters

George Soros (Trades, Portfolio)’ high-conviction stock picks in two consecutive quarters are among some of the best performers of the S&P 500.

Soros placed his greatest bets on the shares of companies like Laboratory Corp. of America Holdings (NYSE:LH), aerospace giant Rockwell Collins Inc. (NYSE:COL) and Aetna Inc. (NYSE:AET)

In the case of each company, GuruFocus’ business predictability ranking system gave it top marks in the category of solid earnings and revenue growth over the long term.

Let’s take a look at Soros’ high-conviction picks, stocks that represent up to more than 1% space in his portfolio. The guru expanded his position by up to 500% on shares of these quality companies. So far, he's reaped up to an estimated 11% return on these picks.

His other high-conviction picks include the stocks of the following: Lam Research Corp. (NASDAQ:LRCX), GCI Liberty Inc. (NASDAQ:GLIBA), Cigna Corp. (NYSE:CI), Alphabet Inc. (NASDAQ:GOOGL), Canadian Natural Resources Ltd. (NYSE:CNQ), Universal Health Services Inc. (NYSE:UHS) and Orbital ATK Inc. (NYSE:OA).

Laboratory Corp. of America Holdings

Shares of one of the world’s largest health care diagnostics companies grabbed a larger piece of Soros’ portfolio in the first quarter of the year. Over two consecutive quarters, he has increased his stake by more than 200%.

The North Carolina-based company made its first appearance in the third quarter of 2017. Since then, Soros piled on 242,700 shares at an average price of $163.58 per share. Shares sit in 0.73% of the portfolio. The guru has produced an estimated gain of 11%.

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The company is among GuruFocus' five-star performers under its business predictability ranking system. The five-star designation is reserved for stocks of companies that have posted average stock gains of 12% per year. The companies must show consistent profit and revenue growth over 10 years to receive a five-star rating.

Laboratory Corp. was trading at $181.51, up about 0.72%, after market close on Friday afternoon. The GuruFocus median price-sales chart showed the company is trading slightly above historical value.

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The company with a market cap of $18.57 billion has a financial strength rating of 5 out of 10 and a profitability and growth rating of 8 of 10.

It is trading at 15.07 times its price-earnings, higher than 88% of companies in the Global Diagnostics and Research industry. It is trading 15.65 forward earnings, or higher than 95% of its competitors.

The company does not pay a dividend.

Some potential concerns include gross margins and operating margins, which have been on the decline. However, as the five-star ranking notes, the company has seen consistent growth in revenue per share.

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Guru shareholders in the first quarter included Pioneer Investments (Trades, Portfolio), Leucadia National (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Richard Snow (Trades, Portfolio), Jim Simons (Trades, Portfolio), John Hussman (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio).

Rockwell Collins Inc.

Rockwell shares are in 1.39% of the portfolio. Over two consecutive quarters, Soros has increased his exposure in the Iowa-based company by more than 500%.

The company made its first appearance in the guru’s portfolio in the third quarter of 2017. Since then, Soros has piled on 556,700 shares at an average price of $134.71. The estimated gain is at break-even.

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Rockwell Collins is among the stocks that holds a three-star rating on the GuruFocus ranking system. The company has produced a steady 8.2% growth in stock price over the last 10 years. It also has produced consistent revenues and profits.

It has a market cap of $22 billion and has a financial strength rating of 5 out of 10 and a profitability and growth rating of 8 out of 10.

The Connecticutt-based company is trading at 24.36 times price-earnings, which is lower than 52% of its peers in the global aerospace and defense industry. It is trading 17 times forward earnings.

It pays a dividend yield of 0.98%, which is lower than 62% of its sector peers.

The stock is trading above its historical value, according to the median price-sales chart by GuruFocus.

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In net income and revenue, the company has seen consistency, primarily in revenue per share. GuruFocus spotted a rising debt load of $2.8 billion. But the debt level is acceptable.

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Guru shareholders in the first quarter included Paul Tudor Jones (Trades, Portfolio), Leucadia National, John Paulson (Trades, Portfolio), Pioneer Investments, Simons and Jeremy Grantham (Trades, Portfolio).

Aetna

Shares of the health care company sit in 1.7% of the portfolio. Soros has been stockpiling shares of the company for years. Aetna’s plan to merge with CVS Health Corp. (NYSE:CVS) also has boosted its attractiveness with gurus like Soros. If approved, the merger would create one of the most powerful players in the health care space.

Soros latest new holding in the company was in the third quarter of 2017. Since then, he has added a total of 545,585 shares. Over the last two quarters, he added more than 400% to his position. The average share price was $174.27. Soros has produced an estimated gain of 7% on his investment in Aetna.

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One of the largest managed-care organizations the U.S., the company has a business predictability ranking of 4.5 out of five stars. That means the company’s stock averages a gain of 10.6% a year. It has produced steady earnings and revenues over the last decade. Revenues and net income show steady increases, although growth in revenue per share has somewhat slowed down.

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The stock pays a dividend yield of 1.08%.

It has a financial strength rating of 5 out of 10 and a profitability and growth rating of 5 out of 10. The company has a market cap of $60 billion.

It closed at $186 a share, up 0.59%, on Friday. It was trading at 17 times its price-earnings, which is lower than 90% of the 21 companies in the Global Health Care space. It was trading at 16 times its forward earnings, which is 62% lower than 13 companies in the space.

GuruFocus' median price-sales chart shows the stock is above its historical value.

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Guru shareholders included Gabelli, David Abrams (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio), Simons, Caxton Associates (Trades, Portfolio), Paulson and Jeff Auxier (Trades, Portfolio).


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