Founded on May 1, 1975 by John C. Bogle, Vanguard Group, Inc. is an investment advisor firm managing approximately $1.6 trillion in assets. The firm manages the Vanguard series of mutual funds in addition to other funds and caters to individual and institutional investors. As per its latest 13F filing, it was having $631.7 bn worth of position in equities. The following is a list of its top buys from the last quarter.
Stock | Symbol | Shares Held - 09/30/2011 | Shares Held - 12/31/2011 | Change in shares |
Ross Stores Inc. | 7,233,749 | 14,016,979 | 6,783,230 | |
Apple Inc. | 36,569,629 | 37,185,503 | 615,874 | |
Eastman Chemical Co. | 4,424,292 | 8,846,018 | 4,421,726 | |
The Coca-Cola Company | 93,020,865 | 95,144,729 | 2,123,864 | |
Microsoft Corporation | 301,111,558 | 306,613,758 | 5,502,200 | |
TE Connectivity Ltd. | 8,255,093 | 16,337,652 | 8,082,559 | |
Xylem Inc. | 0 | 9,556,542 | 9,556,542 | |
Ecolab Inc. | 10,431,259 | 13,866,503 | 3,435,244 | |
Cooper Industries Plc | CBE | 5,332,447 | 8,339,216 | 3,006,769 |
RLJ Lodging Trust | 196,463 | 9,401,010 | 9,204,547 |
I like Apple, Coca Cola and Microsoft the most among above stocks and believe they are likely to outperform broader markets going forward.
Apple Inc. looks good, trading below 10x forward earnings despite ~$100 billion in cash and expected 43% growth in sales in the current year. Apple recently posted good December quarter results beating even the most optimistic estimates. Its guidance was also above street estimates. Apple continues to remain a secular growth and market-share-gain story in the smartphone and tablet space. I would recommend buying the company's shares given its low valuations and several upcoming catalysts over the next few quarters; such as strong iPhone 4S sell-through and anticipated iPad 3 and iPhone 5 launches this year.
Coca-Cola is another good company to have in a portfolio. The company gave a good 11% plus return in 2011. Coca-Cola is a high-dividend-yielding company with a consistent growth rate and stable business. It is a good defensive pick for the current uncertain environment. Its stock price has corrected in the past few months as investors have moved to "risk-on" mode. However, I would recommend long-term investors utilize this recent underperformance as a buying opportunity in this quality company.
Microsoft is trading at a forward P/E of 8.5x. I believe Microsoft is a good medium-term investment in these uncertain times. Its cash cushion limits the downside as well as enables it to make opportunistic acquisitions if the valuations of target companies reach attractive levels. In addition, Microsoft is also taking a lot of new initiatives, which can drive meaningful growth over the next few years. Some of the major catalysts for the stocks are the Windows 8 launch, Office 365 gaining traction and a successful adoption of Nokia (NOK)-WP7 phones. I think Microsoft offers an attractive risk/reward for investors who can hold the stock for one year.
