Shares of Amazon (AMZN), Meta Platforms (FB) and Netflix (NFLX) may have dropped in recent months, but Bill Nygren portfolio manager at Oakmark isn’t giving up on them.
As for retail/technology giant Amazon, it has its appeal.
“Recently, concerns about rising investment spending have weighed on the stock — as they have in times past — providing us another opportunity to purchase shares at an attractive multiple of normalized earnings and a discount to its peer-weighted enterprise value-to-sales multiple,” Nygren wrote in a commentary about Oakmark Fund (OAKMX).
Turning to social media titan Meta, "Shares are now valued as if the company won’t grow much at all going forward, which we believe is misguided, Nygren wrote in a commentary about Oakmark Select Fund (OAKLX).
"We sold put options to add to our economic exposure in Meta to take advantage of the price weakness," the fund manager said.
“When other investors believe our companies are substantially riskier than we do, options prices will be higher than our estimate of their intrinsic value,” Nygren said.
“When opportunities like this surface, we’ll sell puts or calls as an alternative to purchasing or selling shares, respectively.”
On the Netflix front, its growth is slowing after surging during the height of the Covid pandemic.
"Looking at Netflix’ business performance with a longer term lens, one hardly sees any disruption in the franchise,” Nygren said.
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Morningstar on Amazon
Morningstar analyst Dan Romanoff is bullish on Amazon, assigning it a wide moat. He puts fair value at $4,100, compared to a recent quote of 3,025.
“Amazon dominates its served markets, notably for e-commerce and cloud services,” he wrote in a commentary. “It benefits from numerous competitive advantages and has emerged as the clear e-commerce leader given its size and scale, which yield an unmatched selection of low-priced goods for consumers. … Amazon is also a clear leader in public cloud services.”
Morningstar on Meta Platforms
Morningstar analyst Ali Mogharabi is positive on Meta, assigning it a wide moat. He puts fair value at $400, compared to a recent quote of $214.50.
“Meta is the largest social network in the world, with nearly 3 billion monthly active users,” he wrote in a commentary.
“The growth in users and user engagement, along with the valuable data that they generate, makes Meta’s platforms attractive to advertisers.
"The combination of these valuable assets and our expectation that advertisers will continue shift their spending online bodes well for the firm’s top-line growth and cash flow.”
Morningstar analyst Neil Macker assigns Netflix a narrow moat. But he puts fair value at $305, compared to a recent quote of $345.28.
“We continue to think the [company’s] lower subscriber guidance reflects not only saturation in its largest markets, but strong competition in the regions with the most potential growth, such as India,” he wrote in a commentary.
