BRK.B, BNTX, CVX - Barrons 2024 Top 10 Picks (2). Buy ?
In case you are reading this post for the first time, it is actually a continuation to my yesterday’s post.
Click here ! to read, give a “Like” ok - thanks.
Before proceeding with the remaining 7 US stocks that Barron’s has selected, it is timely to look at Barron’s last year (2022) recommendations that have registered a success rate of approx. 67% returns. (see below)
Barron's stock picks in Dec 2022, heading into new year 2023
Data analysis.
I have performed a simple breakdown by grouping, the list of stocks based on their sectors’ categorization. (see below)
Basic materials - 10%.
Communication Services - 30%.
Consumer cyclical - 20%.
Financial services - 20%.
Healthcare - 10%.
Industrials - 10%.
In total there are 5 sectors where Barron’s have picked up their stocks recommendations from.
I have taken note of this, for future reference.
Without further ado, let’s continue to reveal next 3 of Barron’s picks.
Barron’s 2024 reveal - Part 2.
Barron’s list for 2024 includes a diversified mix of familiar stocks and some surprises, once again leaning toward, but not exclusively to, the value camp:
Due to limited real estate, this post will cover the next 3 recommended stocks:
Why Barron’s likes.
The recent passing of Berkshire Vice Chairman Charlie Munger at 99 years old, highlights the key-man risk at Berkshire.
Afterall, the incomparable Mr Warren Buffett is also at a spritely 93 years old and impossible to replace.
Thankfully, he has positioned Berkshire to succeed without him, and the stock should do just fine with him still at the helm in 2024.
Berkshire Hathaway has a super strong financial foundation.
They have a huge cash pile of > $150 Billion, that is about 20% of their total value.
With earnings continue to grow, Berkshire’s after-tax operating profits up nearly +20% so far in 2023.
It will not be a surprise, if they hit $40 Billion this year, given:
The current market rally.
The higher interest income on Berkshire’s cash pile.
Its strong insurance underwriting results, helped by a turnaround at Geico.
And of course, Berkshire’s equity portfolio #1 stock Apple Inc, having a great year.
Berkshire Hathaway Class B stock - YTD performance
Berkshire Hathaway’s stock looks reasonably priced:
Valued at 1.4x estimated year-end 2023 book value.
And about 18x next year’s (2024) projected earnings.
Its Class B shares, at $360.99, is trading at a 2% discount to the Class A stock and look like the better bet.
As highlighted by UBS analyst Brian Meredith:
Berkshire shares are attractive in an uncertain macro environment.
He puts Berkshire’s intrinsic value at about $600,000 per Class A share, with a price target of $620,000, versus a recent $545,000.
All Covid-19 vaccine makers have gotten crunched in 2023, BioNTech was not spared either.
It’s one saving grace is its cash pile, so much so that it would have appealed to Warren Buffett’s mentor, famed value manager Benjamin Graham.
Shares of companies involved in Covid-19 vaccine production, namely — BioNTech, $Pfizer(PFE)$ and Moderna, have declined due to rising concerns about future demand for the vaccines.
Those concerns were confirmed recently, after Pfizer cut its guidance for Covid-related sales.
BioNTech stock - YTD performance.
BioNTech stock is currently trading around $106.58 down from a 2021 peak of $447. (see above)
Wall Street and investors worry that BioNTech might be in trouble after 2024.
Their only moneymaker is the Covid vaccine, and it would not sell as well then. More importantly, their other drugs do not look promising.
This is exactly the reason, why JP Morgan has recently revised BioNTech’s rating from “Hold” to “Underweight”.
On a brighter note, Barron’s has noticed the followings as well:
BioNTech is not a cash-burning biotech company, unlike so many in the market.
BioNTech is expected to remain profitable in 2024.
Its oncology-focused pipeline could prove more promising than some investors believe. (see below)
BioNTech has also said it would not blow the cash on an expensive deal.
With a cash pile of > $18 Billion. that is nearly ¾ of its current market value ($25 Billion).
Investors effectively are paying just $7 Billion for its Covid franchise and drug pipeline.
Graham would call that a margin of safety. Barron’s call that a stock worth owning.
Chevron is one of the best-run energy conglomerates in the world, despite some of the sheen came off in 2023.
Overall, energy stocks did not perform as well in 2023, as market has expected.
Chevron is currently trading at approx. $151.15 and is off by -13.13% YTD.
Comparatively speaking, its performance failed to match or better its peers:
$Exxon Mobil(XOM)$: -3.3% YTD.
Shell Plc: +6.36% YTD.
TotalEnergies: +10.51% YTD.
Two reasons for Chevron’s underwhelming performance:
Two of Chevron’s biggest oil fields in (a) the Permian basin and (b) Kazakhstan have fallen short in production.
Wall Street and investors have been unimpressed with Chevron’s $60 Billion purchase of Hess. Many believe it was too steep a price for a company whose chief asset is a 30% stake in the huge offshore field in Guyana.
Despite the possibility that 2024 earnings estimates come up short of expectations due to recent weakness in oil and gas prices, Chevron still look inexpensive,
It is currently trading at 10.7x projected 2024 earnings, with a yield of 4.2%, based on the company’s plan to boost its dividend by 8% in January 2024.
Eventually when the Hess deal closes, Chevron management also plan to buy back $20 Billion of stock annually, or about 6% of its shares.
Adams Funds’ analyst, Greg Buckley, has the following positive notes:
Chevron has a lower-risk growth profile than its peers.
It is trading at a 15% discount to its average cash-flow multiple.
After the Hess deal is completed, Chevron should have a total yield of about 12% (including dividends & shares buybacks).
Compared to its current transitory yield of 4.2%, isn’t Chevron’s soon-to-be valuation compelling?
My viewpoints:
In Barron’s first 3 stocks recommendations, I am interested only in Google.
I am still bleeding from Albaba’s massive paper loss, that I don’t see it recovering anytime soon.
Lastly, Gold (metal) is not a compelling investment for me.
The current 3 stocks recommendations are at $360 (Berkshire), $107 (BioNTech) & $151 (Chevron) a pop.
I am still keen on both healthcare and energy stocks.
Must Read: Click on below titles to access. Give a like & help to repost ok. Thanks.
Do you think you will be interested in any of the 3 recommendations?
Do you think these stocks will perform better in 2024; given that interest rates would begin easing?
Please give a “LIKe” and “Re-post” ok. Thanks. Rating is very important (to me).
Do consider “Follow me” and get firsthand read of my daily new post/s ok. Thanks.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Would you consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!
Follow BRK!! Good choice!!!