Susan Dziubinski: I’m Susan Dziubinski from Morningstar. Bill Nygren, the manager of the Oakmark Fund OAKMX, is recognized as one of the top stock-pickers in the investment industry. The Oakmark Fund has consistently outperformed most of its peers over the last decade and has received Morningstar’s highest rating, Gold. Nygren and his team primarily invest in large-cap stocks that are at least 30% undervalued based on their intrinsic worth, emphasizing companies whose management has an ownership mindset.
New Stock Picks from Oakmark Fund
Recently, Nygren and his team added four new stocks to the Oakmark Fund’s portfolio. Let’s examine these selections to see if they represent good investment opportunities according to Morningstar’s analysis.
Top Stock Picks
The first addition to the portfolio was Nike NKE. The stock has declined approximately 60% from its peak as it faces strong competition. Nygren believes that the new CEO’s strategy to improve relationships with wholesalers and diversify distribution, alongside a boost in product innovation, will enhance growth and profit margins. Morningstar estimates Nike’s fair value at $104, indicating it is currently undervalued.
The second stock, Amazon AMZN, was purchased due to a decline in its share price linked to tariffs and other macroeconomic issues. Nygren regards Amazon as one of the best companies globally, and Morningstar concurs. With a stronghold in e-commerce and cloud computing, Amazon possesses a wide economic moat, currently set at a fair value of $245 per share, which suggests it is also undervalued.
The third stock added is Salesforce CRM. The stock is down about 30% from its 2024 highs. Nygren believes there is significant upside potential as Salesforce continues enhancing its AI capabilities and reorganizes its sales team. Morningstar has awarded Salesforce a wide economic moat rating, with a fair value estimate of $325.
The final new addition is Zimmer Biomet ZBH, a prominent player in the orthopedic medical-device market. Despite recent disappointing results, Nygren is optimistic about the impact of new management’s initiatives on operation efficiency and product innovation. Morningstar believes Zimmer is undervalued with a fair value estimate of $130.
