Bill Niglen, a portfolio manager for Oakmark Fund since the 1980s, mentioned on Tuesday that investors might want to explore options beyond the S&P 500, which he views as largely focused on major tech companies. As a seasoned value investor, he’s been on the lookout for undervalued stocks outside the tech sphere, particularly those with strong fundamentals and revenue multiples at single-digit prices. Recently, the S&P 500 has rebounded, largely thanks to a few megacap tech stocks like Nvidia and Alphabet.
Niglen expressed interest in Corebridge Financial, a retirement services company with a robust stock buyback initiative. He noted, “It’s a competitive space, but it doesn’t claim it’s worth 20 times the revenue.” Currently, it’s valued at around five times its revenue, and the company is investing a significant portion of its capital into stock repurchases over the next several years.
Another stock attracting his attention is Delta Air Lines, especially since its shares have dropped considerably this year. He praised the management team and pointed out that Delta’s balance sheet stands out among major airlines, alongside a healthy demand for travel. “This is a tough environment for discount airlines, allowing major carriers to slightly raise prices and regain normal profit margins,” he stated, adding that Delta’s single-digit price-to-earnings ratio is appealing.
In July, Delta reported that its third-quarter revenue and forecasts surpassed expectations, with CEO Ed Bastian commenting on stabilizing bookings following initial dips in demand. Additionally, Niglen shared his optimism about New Jersey pharmaceutical companies, particularly on their varied offerings such as vaccines and cancer treatments. He believes, “We think [vaccines] combine Keytruda with other drugs to target specific cancers, and I think we have a reasonable chance for at least one of them to succeed.”
