The 3 Biggest Winners in Barron’s Top 24 CEOs
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Barron’s is the sister publication to the Wall Street Journal, founded by Clarence W. Barron and published by Dow Jones & Company (owned by News Corp.) since 1921.
It’s held prominence as a respected source of financial journalism for the last 101 years. And today, nearly 920,000 readers turn to Barron’s for its perspective every week.
But a pedigree that goes back to the time after the Great World War, the rise of jazz cafes, and the birth of the pizzeria doesn’t mean they always get it right.
In fact, I passed Barron’s list of companies helmed by the 24 CEOs through the TradeSmith algorithms, and what I discovered was truly eye-opening…
Well over half — 17 of the 24 companies — were in the Red “no-buy” Zone, three were in the Yellow “wait and see” Zone, and one didn’t even qualify for a Health Status Indicator.
It’s tempting to act on headlines from a respected publication like Barron’s, especially during a bear market when investors are looking for direction and particularly vulnerable to making emotion-driven decisions.
The companies headed up by these top-ranked CEOs could easily feel like a light in the dark. Strong leadership is one of the most important characteristics we look for in an investment, after all, so one might assume these companies would make good investments.
But leadership is only one piece of the puzzle.
For the full picture, you need to dig deeper to make sure they have the numbers to back it up.
From Barron’s list of 24 CEOs, our most popular portfolio and risk management software, TradeStops, identified only three of their companies as being healthy investment opportunities with a high profit potential.
These companies in the Green Zone are the winners of the numbers game, and their CEOs should be commended.
1. Miguel Patricio, CEO of The Kraft Heinz Co. (KHC)That’s right — topping the list of Green Zone companies, we have “the ketchup people.” Maybe it was the branding move to shorten the name “Kraft Macaroni & Cheese” to “Kraft Mac & Cheese,” but you can’t deny that the leadership behind KHC is doing something right. Aside from a new logo, complete with a smiling noodle on the familiar blue box, the maker of America’s favorite comfort food has emboldened at least 18 analysts to predict a median stock price of $45, representing an 18.4% bump from current levels. The analysts’ high price target of $48 represents a 26% increase.
Investors seem to be experiencing the same optimism, because the short interest on KHC dropped 17% since its last report — meaning more investors have become bullish on this stock than before.
Patricio credits his success to his background in marketing, saying, “we don’t have too many CEOs that come from the marketing part of the business.”
Our own lead analyst, Mike Burnick, loves KHC, saying:
“It’s a top Buffett holding, and if it’s good enough for Buffett, it’s good enough for me. Plus, it just flipped into the Green Zone (from Red) in May, which means a high probability of market-beating returns according to (our) research. Finally, its rich dividend yield of 4% pays you generously while you wait for the shares to move higher.”
In addition to Warren Buffett, billionaire investor Ray Dalio also counts KHC among his portfolio holdings. And our TradeSmith algorithms show it has medium-risk volatility, with a VQ (Volatility Quotient) of 22.41%.
Kraft Heinz releases its second-quarter earnings in just over a week, on July 27. We’ll be watching intently to see what news that report brings.
2. Toby Rice, CEO of EQT Corp. (EQT)Starting out in the energy business in 2007, Toby Rice launched Rice Energy with his brothers, and in just 10 years, he grew that company to become one of the top 10 producers of natural gas in the country.
In 2017, Rice combined his company with EQT Corp., and two years later, he became president and CEO. EQT is now the largest producer of natural gas in the United States.
EQT reentered the Green Zone on July 11, after a very brief hiccup that pulled it into the cautionary Yellow Zone. It’s been on an impressive march to its most recent high of $49.80 on June 1, gaining more than 60% since the start of 2022.
Analysts’ forecasts for EQT predict a median price target of $54, another small bump even after the run it’s already generated. The high price target is more impressive at $83, amounting to a nearly 130% jump on top of the current price per share.
Not surprisingly, given its solid potential, this stock appears in the portfolios of no less than three billionaire investors we track.
While EQT is currently in an uptrend, and there does appear to be some upside potential yet to play out, EQT has a sky-high-risk VQ of 52.89%. So you’ll want to closely monitor this stock with our tools.
3. David A. Ricks, CEO of Eli Lilly and Co. (LLY)After joining pharmaceutical manufacturer Eli Lilly in 1996, paying his dues, and distinguishing himself over a 21-year tenure, David A. Ricks became the company’s CEO in 2017.
That degree of familiarity with Eli Lilly at all levels of management has allowed him to drive shareholder value and help the company prosper. Projections for 2022 revenue are between $28 billion and $28.3 billion — up from last year’s revenue of $24.5 billion.
A suite of medicines launched since 2014 are expected to drive two-thirds of LLY’s profit. And NONE of those include COVID-19 antibody vaccines.
LLY entered the healthy Green Zone on February 24, rising 36.66% to its recent high on July 11. LLY is in an uptrend and has only medium-risk volatility, with a VQ of 25.11%.
As long as the uptrend is maintained, which is key, there is more potential upside forecasted: Analysts have predicted a high price target of $395 for another 20% gain from current levels. But beware, the low price target of $202 represents a plunge of nearly 40%.
The Honorable Mention Goes To…Before wrapping up, I’d like to give an “honorable mention” to Rick Muncrief, who piloted Devon Energy (DVN) through a period of nearly 20 months in the Green Zone.
DVN has been on an upward march since the beginning of the year, achieving a peak of $76.77 on June 7, representing a gain of 62.65%. It fell off from there, pulling back slightly into the Yellow Zone on July 11, just missing the cut for this list.
However, because of its tremendous run this year, the brief pullback could be setting it up as another Low Risk Runner, so DVN is one to add to your watchlist.
Mike weighed in on this one, too, saying:
“Energy stocks are right at the top of my list for low-risk buying opportunities right now after the recent pullback. DVN is one of the best in the business and its 5.5% dividend yield makes you money while you sleep.”
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There you have it: three impressive CEOs (and one honorable mention) and their successful companies representing huge opportunities for further growth and potential portfolio profits.
One Final CautionWhen it comes to your financial future, don’t blindly follow the words of any single authority. Not Barron’s, not the Wall Street Journal — not even me. Check things out for yourself. Trust the “signals” and follow the data.
TradeSmith makes that easy with a full suite of investment research, risk-management, and portfolio-monitoring software at your fingertips.