4 Stock Picks From Top Managers

Each quarter, we take a look at the recent transactions of some of the top money managers around today--who we call our Ultimate Stock-Pickers. Last quarter, four stocks were high-conviction purchases for three of our favorite managers. What's considered a high-conviction purchase? A high-conviction purchase is one that makes a meaningful addition to a portfolio, as measured by the size of the purchase in relation to the size of the portfolio.

First up is Apple. Morningstar assigns Apple a narrow economic moat rating and a stable moat trend. We think the firm's primary moat source is customer switching costs, because Apple bolsters the user experience with a variety of extra products--such as the iPad, Apple TV, Apple Watch, and AirPods--and services, including iMessage, FaceTime, and Apple Pay, that augment Apple's sphere of influence on the consumer. We think shares are worth $98 apiece.

Amazon is another high-conviction purchase. Morningstar assigns Amazon a wide economic moat and a stable moat trend. 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 remains well positioned to prosper from the secular shift toward e-commerce in the long term. We are particularly impressed by the firm's recent margin performance. We think shares are worth $4,000 each.

The third high-conviction purchase is Bank of America, which Morningstar assigns a wide and stable economic moat rating. After more than a decade of work, we think Bank of America now has one of the best retail branch networks and overall retail franchises in the United States, is a Tier 1 investment bank, is a top-four U.S. credit card issuer, is a top-three U.S. acquirer, has a solid commercial banking franchise, and owns the Merrill Lynch franchise, which has turned into one of the leading U.S. brokerage and advisor firms.

The final high-conviction name among top managers is Comcast. We think Comcast has a wide economic moat and a stable moat trend. Comcast's core cable business, which accounts for more than half of the firm's value, enjoys significant competitive advantages. We think the NBCUniversal acquisition has added shareholder value through a combination of a reasonable purchase price and strong execution. Comcast has steadily gained market share over its primary competitors, phone companies like AT&T and Verizon, as high-quality Internet access has become a staple utility in more households. We think shares are worth $54.

Sector strategist Abhinav Davuluri, analyst Dan Romanoff, senior analyst Eric Compton, associate analyst Malik Ahmed Khan, and sector director Mike Hodel contributed the research behind this report.