After the bear market of 2022, the markets have made a recovery in 2023, with both the S&P 500 and, in particular, the NASDAQ showing healthy year-to-date gains. Therefore, it might be a natural instinct for investors who have nursed heavy losses to be eyeing the exit gate now that the market is rebalancing and the initial investment is back to breaking even. However, legendary investor Ken Fisher says that kind of thinking is a big mistake.
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“As initial bull market rallies build, investors — raw from the prior drop — sell. It feels smart,” says Fisher. But it’s the wrong move.
While There might be many bears prowling Wall Street right now, according to Fisher, the pendulum has already swung the other way and we are in the early innings of a bull market. The key, now, is to stay in the game. “While many will suffer breakevenitis, you can avoid it — by keeping long-term goals top of mind,” says the billionaire.
Putting his money where his mouth is, Fisher is staying fully invested. We’ve opened the TipRanks database to see what the Street’s stock experts make of a pair of equities that form part of his portfolio. It looks like they agree these are sound choices; both are rated ‘Strong Buys’ by the analyst consensus. Let’s see why they are worth leaning into right now.
Thermo Fisher (TMO)
The first Fisher-backed name we’ll look at is a giant in its field. Boasting a market capitalization of over $203 billion, Thermo Fisher is one of the world’s most prominent healthcare suppliers. The company provides a wide range of scientific solutions, including analytical instruments, consumables, reagents, software, and services. It caters to a diverse customer base that includes pharmaceutical and biotech companies, academic and research institutions, hospitals and clinical diagnostic labs, as well as government agencies
Despite being a major global concern, TMO is not immune to the changes happening around it. The company’s recent Q1 report reflects the impact of Covid-19, with testing revenue falling from $1.7 billion in the same period a year ago to $140 million. As a result, revenue dropped by 9.4% year-over-year to $10.71 billion, although it exceeded the Street’s forecast by $40 million. On the other hand, the adjusted EPS of $5.03 met the analysts’ expectations. TMO also maintained its guidance for 2023, anticipating revenue of $45.3 billion and EPS of $23.70.
Fisher is evidently keen on this healthcare giant. He holds a big TMO position, owning 2,395,840 shares. These are currently worth over $1.26 billion.
It’s an act that most likely gets the approval of Stifel analyst Daniel Arias. Assessing the Q1 print and outlook, Arias wrote, “We expect the debate on demand risk to continue going forward, but for us TMO is differentiating itself in a way that advertises the company’s strengths (portfolio diversity, execution quality, share gain opportunity). So while some investors seem poised to avoid bioprocess related names (or Tools companies in general) for a bit until the temperature in the room cools, we continue to believe that TMO at 20x is highly attractive for those with a somewhat higher risk tolerance.”
These comments underpin Arias’ Buy rating while his Street-high $700 price target suggests the shares will climb 33% higher over the coming months. (To watch Arias’ track record, click here)
None of Arias’ colleagues appear to have an issue with that take. All 9 recent reviews are positive, naturally making the consensus view here a Strong Buy. Going by the $643.89 average target, the shares will deliver returns of ~21% in the year ahead. (See TMO stock forecast)
Taiwan Semiconductor (TSM)
For our next Fisher-endorsed name, we will shift our focus from one industry giant to another segment leader. Taiwan Semiconductor is a leading global semiconductor manufacturer. Since its founding in 1987, the company has emerged as a key player in the semiconductor industry, specializing in the production of advanced integrated circuits (ICs) and system-on-chip (SoC) solutions. As the world’s largest dedicated semiconductor foundry, Taiwan Semiconductor is contracted by firms such as Apple, AMD, Nvidia, and Qualcomm to manufacture chips. With such prominent clients, it is no surprise that this mega-cap company boasts a market capitalization of $450 billion.
That said, as has been evident at other huge tech companies, the global economic slowdown has affected TSM too. In the most recent quarterly report, the company delivered a mixed statement. Citing “softening end-market demand,” revenue dropped by 4.8% year-over-year to $16.72 billion, in turn missing the consensus estimate by $170 million. However, earnings of $1.31 per share trumped the $1.20 forecast.
For the second quarter, revenue is anticipated in the range between $15.2 and $16 billion, some way off the $18.16 billion generated in the same period a year ago, although the company said that by Q3, it expects inventories to return to a “more healthy level.”
Meanwhile, Fisher is going nowhere. The billionaire holds a sizeable TSM position, with the ownership of 25,228,676 shares. These currently command a market value of $2.33 billion.
For Susquehanna analyst Mehdi Hosseini, it’s clear where TSM’s value proposition lies. “TSM, in our view, remains the preferred foundry choice for leading-edge nodes as Samsung Foundry has yet to demonstrate a stable leading edge process technology, all while IFS is years away from offering a competitive solution,” the 5-star analyst explained. “It’s no wonder large customers rely on TSM as a sole-source foundry partner. Given… the inherent leverage in TSM’s business model, we argue the risk/ reward profile is favorable as quarterly EPS bottoms in 2Q23, followed by a rebound into 2H23 and gaining momentum in 2024.”
Accordingly, Hosseini rates TSM shares as Positive (i.e., Buy) and backs the rating up with a $126 price target. The implication for investors? Potetnial upside of 36% from current levels. (To watch Hosseini’s track record, click here)
Three other analysts have waded in with TSM reviews recently, and they are all singing the company’s praises, providing the stock with a Strong Buy consensus rating. The forecast calls for one-year gains of 29%, considering the average target stands at $118.67. (See TSM stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
