In this article, we discuss the 12 best stocks to buy for flat markets according to Stanley Druckenmiller. If you want to see more stocks in this selection, click 5 Best Stocks To Buy For Flat Markets According To Druckenmiller.
Stanley Druckenmiller of Duquesne Capital is one of the most well-known Wall Street money managers. On September 13, 2022, in an interview with Alex Karp, the chief executive officer of software firm Palantir, Druckenmiller highlighted investment options in the artificial intelligence sector and the market concerns about an impending recession. Druckenmiller credited the unpredictability in the equity market to the Russia-Ukraine war, the aftermath of the COVID-19 pandemic, and the Federal Reserve’s tightening fiscal policy. He further explained:
“There’s a high probability in my mind that the market, at best, is going to be kind of flat for 10 years, sort of like this ’66 to ’82 time period.”
Stanley Druckenmiller noted that the current market conditions are similar to those during 1966 and 1982. The billionaire also touched upon US-China relations, and said that the cold war which had been brewing in the last years might be turning into an active war. He also said that the relations between the two superpowers were at their best when President Trump was in power.
Stanley Druckenmiller’s Duquesne Capital manages a portfolio worth $1.76 billion as of the third quarter of 2022. In the three months through September, Druckenmiller scaled back its stake in Microsoft Corporation (NASDAQ:MSFT), Moderna, Inc. (NASDAQ:MRNA), and Antero Resources Corporation (NYSE:AR), while dumping Booking Holdings Inc. (NASDAQ:BKNG), Global-e Online Ltd. (NASDAQ:GLBE), and Phillips 66 (NYSE:PSX) completely.
Some of the top stocks that Druckenmiller held in his portfolio to navigate flat markets include Eli Lilly and Company (NYSE:LLY), T-Mobile US, Inc. (NASDAQ:TMUS), and Amazon.com, Inc. (NASDAQ:AMZN).
Our Methodology
We selected the top 12 stocks from Stanley Druckenmiller’s Duquesne Capital portfolio as of the end of the third quarter of 2022 for this analysis. The stocks are arranged according to the hedge fund’s stake value in each holding. Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022 was used to assess the hedge fund sentiment around the securities.
Best Stocks To Buy For Flat Markets According To Druckenmiller
12. Sea Limited (NYSE:SE)
Duquesne Capital’s Stake Value: $30,252,000
Number of Hedge Fund Holders: 55
Sea Limited (NYSE:SE) was incorporated in 2009 and is headquartered in Singapore. The company engages in the digital entertainment, e-commerce, and digital financial service businesses in Latin America, Asia, and internationally. On November 15, Sea Limited (NYSE:SE) stock rose nearly 40% as the company reported third-quarter results that outperformed Wall Street expectations. Stanley Druckenmiller added Sea Limited (NYSE:SE) to his Q3 2022 portfolio by purchasing 539,740 shares worth $30.25 million.
On November 21, Cowen analyst John Blackledge downgraded Sea Limited (NYSE:SE) to Market Perform from Outperform with a price target of $60, down from $72. The analyst cited the lack of visibility in both commerce and gaming for the downgrade. The increase in consumer mobility and difficult demand environment create an “unclear” path to profitability for Sea Limited (NYSE:SE), the analyst told investors in a research note.
According to Insider Monkey’s data, 55 hedge funds were long Sea Limited (NYSE:SE) at the end of September 2022, 65 funds in the prior quarter. Chase Coleman’s Tiger Global Management is the largest stakeholder of the company, with 9.5 million shares worth $535.5 million.
Like Eli Lilly and Company (NYSE:LLY), T-Mobile US, Inc. (NASDAQ:TMUS), and Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE) is one of the top stocks to buy for flat markets according to Druckenmiller.
Here is what Hayden Capital has to say about Sea Limited (NYSE:SE) in its Q3 2022 investor letter:
“Sea Limited (NYSE:SE) reported earnings last week, after which the share price rebounded +36% in a single day. The most obvious question that comes to mind is why didn’t we sell more last year, when prices were still high? The truth is that we did sell a significant amount, but in hindsight obviously wish we were more aggressive with the sales.
For example, we owned the peak number of shares of Sea Ltd in Q1 2020, and steadily trimmed over the next two years. From Q1 2020 to Q1 2022, we trimmed ~39% of our shares over that period. However, the issue was that the investment continued to grow as a percentage of the overall portfolio, since the share price appreciated much faster than our sales (+620% from 1Q20 to 3Q21). This was a similar case for our other long-tenured positions as well.
So why didn’t we trim more aggressively and just hold cash? The answer is that at its core, I believe that holding cash is implicitly a market timing call. I certainly didn’t foresee a likely recession on the horizon so quickly after the turbulence of Covid already had on the economy. Even in late 2021, after it was clear interest rates would start rising, we were still operating under the assumption that rates would cause valuations to compress, but likely wouldn’t have an impact on the overall earnings trajectory. Given our expectations for strong earnings growth, we thought this could more than offset the valuation compression over time, and would still generate strong IRRs over a 3 – 5 year timeframe…” (Click here to see the full text)
11. Workday, Inc. (NASDAQ:WDAY)
Duquesne Capital’s Stake Value: $36,674,000
Number of Hedge Fund Holders: 92
Workday, Inc. (NASDAQ:WDAY) is a California-based company that provides enterprise cloud applications in the United States and internationally. The company’s applications allow its customers to plan, execute, analyze, and extend to other applications and environments and manage their business operations. Druckenmiller, in the third quarter of 2022, raised his Workday, Inc. (NASDAQ:WDAY) stake by 193%. He owned 240,925 shares of the company worth $36.6 million.
On December 20, Jefferies analyst Brent Thill raised the price target on Workday, Inc. (NASDAQ:WDAY) to $235 from $225 and maintained a Buy rating on the shares. The analyst said that the appointment of Carl Eschenbach as co-CEO is a “very strong” addition to the leadership team and can also “open additional doors” for Workday, Inc. (NASDAQ:WDAY).
According to Insider Monkey’s third quarter database, 92 hedge funds were bullish on Workday, Inc. (NASDAQ:WDAY), compared to 71 funds in the prior quarter. Stephen Mandel’s Lone Pine Capital is the biggest position holder in the company, with 5 million shares worth $764 million.
Here is what RiverPark Large Growth Fund has to say about Workday, Inc. (NYSE:WDAY) in its Q3 2022 investor letter:
“We also added a small position in Workday this quarter, taking advantage of its 2022 price decline. WDAY is a leading SaaS software solutions provider with two key subparts: Workday HCM offering end-to-end software for human resource departments, and Workday Financial Management for planning, spending, auditing, analytics, and reporting. The company sells to more than 9,500 medium-sized through enterprise customers across more than 175 countries, including more than 50% of the Fortune 500.
The company is benefitting from the secular shift to digitization for businesses and despite its 21% annual subscription revenue CAGR over the past 2 years (with 95%+ gross revenue retention), Workday still has less than 5% penetration of its $105 billion TAM. We believe the company can grow its top-line high-teens over the long-term, while continuing to improve margins (non-GAAP gross operating margin expanded 900 basis points to 22.4% over the past two years), leading to approximately 30% EPS growth for the foreseeable future. The company also requires limited capital expenditures, producing significant and growing FCF ($1.4b last year, up 37% year over year), which WDAY has used for acquisitions and debt repayment.”
10. Teck Resources Limited (NYSE:TECK)
Duquesne Capital’s Stake Value: $41,698,000
Number of Hedge Fund Holders: 47
Teck Resources Limited (NYSE:TECK) was founded in 1913 and is headquartered in Vancouver, Canada. The company engages in the exploration, acquisition, development, and production of natural resources in Asia, Europe, and North America. It operates through Steelmaking Coal, Copper, Zinc, and Energy segments. On November 16, Teck Resources Limited (NYSE:TECK) declared a C$0.125 per share quarterly dividend, in line with previous. The dividend is payable on December 30, to shareholders of record on December 15.
Securities filings for the third quarter of 2022 reveal that Stanley Druckenmiller’s Duquesne Capital raised its stake in Teck Resources Limited (NYSE:TECK) by 30%, holding 1.3 million shares worth $41.7 million.
On December 1, investment advisory Stifel raised the firm’s price target on Teck Resources Limited (NYSE:TECK) to C$61 from C$58 and kept a Buy rating on the shares. Analyst Alex Terentiew issued the ratings update.
According to Insider Monkey’s data, 47 hedge funds were long Teck Resources Limited (NYSE:TECK) at the end of the third quarter of 2022, compared to 46 funds in the last quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the largest stakeholder of the company, with 12 million shares worth $366.70 million.
9. Vertiv Holdings Co (NYSE:VRT)
Duquesne Capital’s Stake Value: $47,881,000
Number of Hedge Fund Holders: 32
Vertiv Holdings Co (NYSE:VRT) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. Vertiv Holdings Co (NYSE:VRT) is a new arrival in Druckenmiller’s Q3 portfolio, with the billionaire purchasing nearly 5 million shares worth $47.8 million.
On October 26, Vertiv Holdings Co (NYSE:VRT) reported a Q3 non-GAAP EPS of $0.23 and a revenue of $1.48 billion, topping market estimates by $0.02 and $10 million, respectively. The company expects Q4 sales of $1.64 billion to $1.7 billion versus a consensus of $1.69 billion and adjusted EPS of $0.29 to $0.35, compared to a consensus of $0.34.
On December 9, Citi analyst Andrew Kaplowitz raised the price target on Vertiv Holdings Co (NYSE:VRT) to $18 from $15 and maintained a Buy rating on the shares. The analyst said megatrends and “still emerging fiscal tailwinds” should help moderate potential downside for industrials in a slowing macro-economic environment.
According to Insider Monkey’s Q3 data, 32 hedge funds were long Vertiv Holdings Co (NYSE:VRT), compared to 34 funds in the prior quarter. Ricky Sandler’s Eminence Capital is the largest stakeholder of the company, with approximately 10 million shares worth $97 million.
Here is what Baron Small Cap Fund has to say about Vertiv Holdings Co (NYSE:VRT) in its Q2 2022 investor letter:
“Vertiv Holdings, LLC, a leading provider of critical infrastructure for data centers, fell in the quarter. The market became concerned that capital spending for data centers might be slowing along with the economy, which could be the case. If you recall, shares of Vertiv were very weak when the company reported first quarter costs were not properly passed through to their customers, so margins would fall well short of projections.
We believe that Vertiv is now ahead of the curve on this and will demonstrate robust earnings power in the back half of 2022 and into next year. We think it’s a very cheap stock, with strong management and board oversight, and remain hopeful that when the company reverts to form, the shares can appreciate significantly.”
8. Datadog, Inc. (NASDAQ:DDOG)
Duquesne Capital’s Stake Value: $70,063,000
Number of Hedge Fund Holders: 74
Datadog, Inc. (NASDAQ:DDOG) is a New York-based company that provides a monitoring and analytics platform for developers, information technology teams, and cloud business users in North America and internationally. Stanley Druckenmiller boosted his Datadog, Inc. (NASDAQ:DDOG) stake by 165% in Q3 2022, holding 789,175 shares worth $70 million.
On December 15, Wedbush analyst Taz Koujalgi initiated coverage of Datadog, Inc. (NASDAQ:DDOG) with an Outperform rating and a $101 price target. Datadog, Inc. (NASDAQ:DDOG) is a leader in observability with a growing portfolio and “long runway for growth,” the analyst told investors. The company has a “unique combination” of growth at scale and more than 20% free cash flow margins while maintaining a solid competitive position and is levered to the secular trends of cloud migration and digital transformation, noted the analyst.
According to Insider Monkey’s third quarter database, 74 hedge funds were long Datadog, Inc. (NASDAQ:DDOG), compared to 82 funds in the last quarter. Henry Ellenbogen’s Durable Capital Partners is a prominent stakeholder of the company, with 3.2 million shares worth $290 million.
Baron Funds made the following comment about Datadog, Inc. (NASDAQ:DDOG) in its Q3 2022 investor letter:
“Similarly, we continued scaling up our investment in Datadog, Inc. (NASDAQ:DDOG), recognizing significant opportunities for the long term, while the majority of investors remain preoccupied with the here and now. While the company may see some short-term headwinds to growth (the company reported seeing some impact to its volume-driven logs and Application Performance Management modules), long-term prospects remain bright, in our view. Datadog reported a best-in-class gross retention rate in the “mid-to-high 90s%,” 74% year-over-year revenue growth, and 21% adjusted operating margins.”
7. Lamb Weston Holdings, Inc. (NYSE:LW)
Duquesne Capital’s Stake Value: $73,263,000
Number of Hedge Fund Holders: 42
Lamb Weston Holdings, Inc. (NYSE:LW) was incorporated in 1950 and is headquartered in Eagle, Idaho. The company produces, distributes, and markets value-added frozen potato products worldwide. It operates through four segments – Global, Foodservice, Retail, and Other. Lamb Weston Holdings, Inc. (NYSE:LW) is a new addition in Stanley Druckenmiller’s third quarter portfolio, with the billionaire buying 946,800 shares worth $73.2 million.
On December 14, Lamb Weston Holdings, Inc. (NYSE:LW) declared a $0.28 per share quarterly dividend, a 14.3% increase from its prior dividend of $0.24. The dividend is payable on March 3, 2023 to shareholders of record on February 3.
BofA analyst Peter Galbo on October 6 raised the price target on Lamb Weston Holdings, Inc. (NYSE:LW) to $95 from $90 and kept a Buy rating on the shares after gross margins “well ahead” of estimates drove an adjusted EPS and EBITDA beat in its fiscal Q1. The analyst, who lifted his FY23-25 EPS estimates, contended that Lamb Weston Holdings, Inc. (NYSE:LW) deserves a premium to the packaged food index given it is positioned to approach pre-COVID levels with upside potential to improve demand trends and margins.
According to Insider Monkey’s third quarter database, 42 hedge funds were bullish on Lamb Weston Holdings, Inc. (NYSE:LW), up from 35 funds in the prior quarter. Ben Jacobs’ Anomaly Capital Management is the biggest position holder in the company, with 2.7 million shares worth $210.2 million.
Meridian Funds made the following comment about Lamb Weston Holdings, Inc. (NYSE:LW) in its Q3 2022 investor letter:
“A core hedged holding in the Fund, Lamb Weston Holdings, Inc. (NYSE:LW) benefited from its defensive profile as a leading producer of affordable food staples: French fries and other frozen potato products. In addition to maintaining a leading market share in an attractive consumer category, the scale of the company’s processing and distribution capabilities represents a wide competitive moat, it’s seeing favorable supply and demand dynamics, and it possesses a healthy balance sheet. The restaurant industry’s rebound also bolstered the company’s outlook.”
6. KBR, Inc. (NYSE:KBR)
Duquesne Capital’s Stake Value: $78,495,000
Number of Hedge Fund Holders: 41
KBR, Inc. (NYSE:KBR) is a Texas-based company that provides scientific, technology, and engineering solutions to governments and commercial customers worldwide. The company operates through Government Solutions and Sustainable Technology Solutions segments. Securities filings for Q3 2022 reveal that Stanley Druckenmiller’s Duquesne Capital raised its stake in KBR, Inc. (NYSE:KBR) by 40%, holding 1.8 million shares worth $78.5 million.
On December 5, KBR, Inc. (NYSE:KBR) announced that it has won an engineering services contract to design an advanced offshore energy storage project for CrossWind. CrossWind is a joint venture between Shell and Dutch utility company, Eneco.
Truist analyst Tobey Sommer on December 21 raised the price target on KBR, Inc. (NYSE:KBR) to $68 from $64 and maintained a Buy rating on the shares. The analyst is positive on the company’s successful defense of the critical HomeSafe contract. He also noted that the stock’s sum-of-the-parts valuation may lead shares higher given the company’s “attractive and lucrative growth” in the Sustainable Technology Solutions segment.
According to Insider Monkey’s third quarter database, 41 hedge funds were long KBR, Inc. (NYSE:KBR), and Lauren Taylor Wolfe’s Impactive Capital held the biggest position in the company, with 4.3 million shares worth $188 million.
In addition to Eli Lilly and Company (NYSE:LLY), T-Mobile US, Inc. (NASDAQ:TMUS), and Amazon.com, Inc. (NASDAQ:AMZN), KBR, Inc. (NYSE:KBR) is one of the best stocks to buy according to Stanley Druckenmiller.
Click to continue reading and see 5 Best Stocks To Buy For Flat Markets According To Druckenmiller.
Suggested articles:
- Countries By GDP: 30 Biggest Economies in the World
- Agriculture Stocks List: 25 Biggest Companies
- 10 Best Widow and Orphan Stocks To Buy
Disclosure: None. 12 Best Stocks To Buy For Flat Markets According To Druckenmiller is originally published on Insider Monkey.