The best investors will often tell you that one of the most overlooked and underappreciated ingredients to stock market success is patience.
While this year’s bull market seems to have stalled, billionaire stock picker Ken Fisher reminds investors that the quality needed to weather tough times is a natural part of any bull market.
“Volatility is not a drawback in this bull market. It’s a feature of all bull markets, metaphorically climbing the ‘wall of stress,’” the founder of Fisher Investments said recently. “The bull market born last October should continue to deliver decent returns, but sporadically. Harvesting them takes patience. This may be difficult for some.
But sticking with it is Fisher’s advice: “Don’t be fooled — this bull market has legs, and it’s critical not to fear it now.”
Fisher has decades of stock market success behind him and a fortune of $7.1 billion, so he certainly knows what he’s talking about here. For investors looking to get ahead of the market, it’s worth knowing which stocks to count on to patiently fetch the goods once the upward curve resumes.
We’ve started this process and looked at a pair of stocks that make sense in Fisher’s portfolio — both holdings are worth more than $1 billion. But Fisher is not the only one showing great faith in these names; According to the TipRanks database, the analyst consensus rates both as strong buys. Let’s see what makes them so.
Fisher holds a position at one of the most prominent firms in the investment world. Charles Schwab is a brokerage firm that has played a major role in shaping the landscape of online investments and financial services. In the year Founded in 1971 by Charles R. Schwab, it has grown to become one of the largest and most respected financial institutions in the US.
The company offers a wide range of services including stock and bond trading, mutual funds, exchange traded funds (ETFs), retirement accounts and wealth management services. Charles Schwab provides investors with a user-friendly and technologically advanced platform and pioneered the introduction of online trading, which has revolutionized the way individuals manage their investments. With a market capitalization of over $106 billion, the company is America’s largest publicly traded investment services firm with ~$8 trillion in client assets.
That said, 2023 hasn’t been an easy ride, especially since the start of the year saw the stock fall amid the collapse of several prominent banks. Between January and early March, the shares fell nearly 40%. The stock has since bounced back, aided by a better-than-expected Q2 print.
While revenue was down 8.4% year-over-year to $4.66 billion, the figure beat road safety by $50 million. Likewise, adj. It beat the consensus estimate of $0.75 EPS by $0.04.
Meanwhile, Fischer must have realized that it would provide an opportunity to impose a backlash. It bought 1,302,697 shares in Q2, increasing its stake in SCHW by 8%. His total holdings now stand at over 18 million shares, currently valued at ~$1.04 billion.
Assessing the company’s future prospects, Piper Sandler analyst Patrick Moley thinks the future is bright for this financial giant.
“While eBrokers typically fall out of favor with investors at the end of rate hike cycles, this unprecedented rate hike presents a unique opportunity for earnings growth even as this cycle begins to expand NIM and the Fed begins to cut,” Mole said. “In our view, SCHW remains a ’24/’25 story as (1) return of deposit growth, (2) disbursement of interim ST funding, (3) NIM expansion, and (4) realization of AMTD merger arrangements. And more Expenditure saves accumulation to produce strong earnings power and attractive value for LT investors who run financial services franchises in this industry.
Likewise, Molly has an Overweight (i.e., Buy) rating on SCHW shares, with a price target of $86, implying ~49% upside over the coming year. (To see Molly’s story, Click here)
Most on the street agree with Molly. It says the stock has a consensus rating of Strong Buy, based on 13 buys, 2 holds and 1 sell. At $73.80, the average target shows a 12-month upside of 28%. (See the SCHW stock forecast)
Possible surgery (ISRG)
Patience may be one quality investors should pursue, but diversification is often seen as another. And in light of that, it’s only fitting that the next angler-backed stocks we’re looking at have a completely different hue. Fisher owns 4,444,151 shares of medical device maker Intuitive Surgical. These command a market value of over $1.32 billion.
In a way, Intuitive Surgical is similar to Charles Schwab above – a pioneer in its field. It is a healthcare technology company that has revolutionized the field of minimally invasive surgery. The Sunnyvale, California-based company is best known for its robotic surgery platform, the Da Vinci Surgical System. The Da Vinci System enables surgeons to perform complex surgical procedures with improved precision, efficiency and control using minimally invasive techniques. This innovative technology has found applications in various medical specialties, including urology, gynecology, general surgery and cardiovascular medicine.
Usage is on the up. In the most recently reported quarter, for 2Q23, global da Vinci processes increased by around 22% compared to the same period last year, with the company placing 331 systems, compared to 279 placed in 2Q22. As of the end of the quarter, the installed base stood at 8,042 systems, which represents a 13% increase over the year.
These activities have resulted in superior results in both the top and bottom lines. Q2 revenue rose 15.8% year-over-year to $1.76 billion, ahead of Street expectations of $20 million, while adjusted EPS of $1.42 beat forecasts by $0.09.
Piper Sandler analyst Adam Mader has been tracking ISRG’s progress and has pointed to a unique opportunity that could be appreciated to some extent.
“We recently revisited Intuitive’s China opportunity, which we think is very large in the coming years,” the 5-star analyst said. “Not only will ISRG place a significant amount of systems under the new quota, but the Da Vincis in China are some of the most heavily used systems in the world – which should bode well for process growth. Our calculations show that system allocations from the new quota will be accompanied by strong process volume and growing workloads.” Based on this, they will generate acceptable growth in 2023-2027. We believe ISRG China revenue could more than double from ~300M (our estimate) in 2023 to $650M in 2027. While the trajectory sees China as a significant contributor, we do not believe models fully capture the growth rate. From this potential growth lever.
These comments support Meder’s Overweight (i.e., Buy) rating, and his $385 price target suggests shares will appreciate by ~30% over the next year. (To see Mader’s story, Click here)
Now turning to the rest of the street, most other analysts are on the same page. With 12 buys and 2 holds in the last three months, the word on the street is that ISRG is a strong buy. Additionally, the average price target of $377.14 brings upside potential to ~27%. (look out ISRG stock forecast)
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Disclaimer: The opinions expressed in this article are those of the featured analysts only. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.