4 mega-cap picks to run with the bulls

Money manager Ken Fisher likes 'the biggest of the big.'

By GuruFocus.com Oct 19, 2012 12:50PM

Image, Bull figurine on ascending line graph and list of share prices copyright Adam Gault, OJO Images, Getty ImagesAs the founder of Fisher Investments, an independent adviser with more than 25,000 private and 100 institutional clients, Ken Fisher employs a "variety of strategies" to manage assets, adding value by "identifying information not widely known" or interpreting readily available information more accurately than other market players.

Fisher also frequently deciphers the market in his Forbes column. On Sept. 5, he wrote that it was currently in the latter half of a bull run, with more ahead. Hence he advised investors to buy "the biggest of the big," as companies with $78 billion market capitalization or higher have traditionally performed best in similar scenarios.

"And if I'm wrong and a bear lurks soon, mega-cap stocks will drop far less than more speculative smaller stocks," he said.

In his updated portfolio, Fisher reveals these were his biggest purchases of the third quarter: Comcast, Petroleo Brasileiro, Toyota Motor and Royal Bank of Canada. He also bought 61 other stocks.

Comcast (CMCSA)
Fisher purchased 11,737,561 million shares of Comcast for an average of $33.50 per share. The stock has increased 57% year to date. It has a market cap of $99.8 billion.

Comcast is a media, entertainment and communications company and majority of NBCUniversal. Its business ranges from high-speed Internet and cable television networks, to film and theme parks.

Comcast's five-year annual revenue growth rate is 17.4%, EBITDA rate is 15.2% and free cash flow rate is 32.1%. It also has a price-to-earnings (P/E) ratio of 20.5, price-to-book (P/B) ratio of 2 and price-to-sales (P/S) ratio of 1.7.

Petroleo Brasileiro (PBR)
Fisher purchased 17,914,836 shares of Petroleo Brasileiro at an average price of $21 in the third quarter. The stock has declined 7% year to date. The company has a $150 billion market cap.

Petroleo Brasileiros, or Petrobras, is the Southern Hemisphere's largest company by market cap and Latin America's largest by revenue. It is a multinational energy corporation headquartered in Rio de Janeiro, Brazil, and majority-owned by the Brazilian government.

Petrobras has a P/E ratio of 13, P/B ratio of 0.5 and P/S ratio of 0.6.

Toyota Motor (TM)
Fisher purchased 4,740,858 shares of Toyota Motor at an average price of $79. The stock is up 19% year to date, while the auto and truck manufacturers segment is down almost 5%. Toyota has a market cap of $124.3 billion.

The Japanese automaker is operating in three segments: automobile, finance and other (which is involved in housing and communications). At the end of the first quarter, it had 507 subsidiaries and 2012 associated companies.

TM has a P/E ratio of 16.1, P/B ratio of 0.9 and P/S ratio of 0.5.

Royal Bank of Canada (RY)
Fisher purchased 6,074,439 shares of Royal Bank of Canada for an average of $54 per share. The stock has gained 13% year to date. The bank has a market cap of $84.9 billion.

Royal Bank of Canada is one of the largest banks in Canada by assets and market cap, and one of the largest in the world by market cap. It has more than 15 million clients in personal business, public sector and institutional, and has offices in Canada, the U.S. and 51 other companies.

It has a P/E ratio of 12.2, P/B ratio of 2.1 and P/S ratio of 2.4. 

More from GuruFocus

Oct 19, 2012 1:33PM
It's like everything else.  We see it coming but nothing is done to detour it.  Except allow more time for us and money to be manipulated.
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