What Stocks Is Paul Meeks Buying?

What Stocks Is Paul Meeks Buying? Paul Meeks is one of the most well-known and experienced tech investors active today. Meeks become prominent during the tech boom of the late 1990s and has remained relevant ever since.

 

Recently, Meeks’ public statements have had a distinctly bearish tone, suggesting that he is looking for low-risk plays in the tech sector. Here are some of the stocks Meeks is buying and the rationales behind them.

 

One of the first stocks mentioned by Meeks in a recent CNBC interview focusing on his investment activities is IBM (NYSE:IBM). Despite describing it as a “yesteryear stock” that he would not have owned for most of his career,

 

Meeks explained that the current volatility in the tech sector called for a return to stable tech companies with large cash flows. He also noted that IBM’s new CEO, Arvind Krishna, has begun to turn the company around following a prolonged period of anemic growth.

In the short term, IBM’s upside is likely quite limited. Analyst price targets give the stock a median 12-month price of $145, up just 2.7 percent over the current price of $141.18.

 

The stock does, however, provide investors with a generous dividend yield of 4.73 percent. High-yield stocks like IBM may be safe havens as the more growth-oriented parts of the tech sector weaken.

 

IBM’s growth is also beginning to gain more steam. In Q1, the company reported an 8 percent revenue growth. While far from meteoric, this level of growth is fairly impressive for a legacy company that at one time appeared to be on an inexorable decline. Under the new management’s guidance, it’s likely that IBM will see slow and steady growth for some time to come.

 

Another legacy stock Meeks has expressed considerable interest in is AT&T (NYSE:T).

 

In the same interview, he noted that the company had returned to its core telecommunications business after dumping what he referred to as its “dumb Hollywood assets.”

 

With a renewed focus on telecom networks, the company will likely be more successful than it was while it attempted to break into the entertainment industry.

Like IBM, AT&T probably doesn’t have much short-term upside in terms of share price. The stock is currently trading at $20.90, and the median price forecast over the next 12 months is $22. This would give it a slightly better upside than IBM at 5.3 percent, but the projected return still isn’t stellar.

 

AT&T’s dividend, however, is quite exceptional. The stock yields 5.23 percent for an annual payout of $1.11 per share. This makes it one of the highest-yielding blue-chip stocks and a reasonable income choice.

 

While it’s unlikely that AT&T will see significant growth anytime soon, it does project low single-digit growth in 2022. This, paired with its strong cash flows and excellent dividend, may allow it to ride out the volatility of the current tech market.

 

With the advent of 5G and the migration of its legacy networks from copper to fiber optic technology, however, AT&T could begin to see higher levels of growth on a longer time horizon.

 

Although Paul Meeks is obviously eyeing safe and stable investments for his company’s portfolio, there’s still at least one high-growth startup catching the noted tech investor’s eye. Palo Alto Networks (NASDAQ:PANW) is a cybersecurity company that provides services to both government and business customers.

 

With fears of Russian cyberattacks on Western powers rising, Palo Alto Networks is widely seen as a strong play on the future cybersecurity landscape.

Palo Alto Networks has by far the largest potential upside of the stocks recently discussed by Meeks. Analyst forecasts give the stock a median 12-month price target of $620, up 21 percent from the current price of $512.59. Unlike IBM and AT&T, Palo Alto Networks does not currently offer a dividend.

 

In the most recent quarter, Palo Alto reported revenue growth of 29 percent for a total of $1.4 billion. Billings advanced 40 percent to reach $1.8 billion. The company’s forward guidance for the current quarter suggested that growth would continue at a strong pace.

 

In this quarter, Palo Alto projects 25-27 percent revenue growth. FY2022 guidance calls for total yearly revenue growth of 29 percent and billing growth of 30-31 percent.

 

Although he hasn’t discussed it recently, semiconductor manufacturer Micron (NASDAQ:MU) is a well-known part of Meeks’ portfolio.

 

The stock boomed as a result of the chip shortage that began alongside the COVID-19 pandemic and has remained elevated ever since.

 

Given that the economics of the semiconductor business haven’t changed appreciably since, it’s reasonable to assume that the tech investor is still bullish on Micron. Meeks has not, however, said whether he is planning to add to his position on this stock.

Like Palo Alto Networks, Micron is projected to have considerable upside over the next year. Currently trading at $69.94, the median price target for Micron is $113.00. This would give the stock an upside of more than 60 percent. Even if it achieves half that amount of gain, the returns would still be impressive.

 

For the most recent quarter, Micron reported revenues of $7.8 billion, up from $6.2 billion in the same quarter last year. The company’s gross margin also climbed sharply from 26.4 percent to 47.2 percent.

 

Diluted earnings per share represented perhaps the most positive metric, as the company’s earnings skyrocketed from $0.53 last year to $2.00.

 

Throughout the stocks Paul Meeks is bullish on today, there’s one consistent theme. While the last several years have been excellent for high-growth entertainment and social media companies, the tech landscape has become far more volatile.

 

Meeks appears to be refocusing on core technologies, such as chips, communications networks and computer hardware.

 

While this certainly doesn’t mean that the bull run is permanently over for companies like Alphabet, Netflix and Meta, it does present a good model for constructing a less risky tech portfolio during turbulent times.

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