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Investing Specialists

10 Conviction Buy Ideas from Our Top Managers

The holdings of a majority of our Ultimate Stock-Pickers yield 10 5-Star stocks.

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By Greggory Warren, CFA | Senior Stock Analyst

With over two-thirds of our Ultimate Stock-Pickers having reported their third-quarter holdings, we've been able to glean some of the higher conviction purchases made by our top managers during the most recent period. Much as we had noted last quarter there was a fair amount of buying going on in the health care sector, with at least 19 different securities purchased by our Ultimate Stock-Pickers during the quarter. It wasn't too surprising to see large-cap health care names like  Pfizer (PFE) and  Johnson & Johnson (JNJ) pop up as conviction purchases. However, given the impact that near-term concerns over a government-sponsored health-care plan have had on the stock prices of firms in this sector, it was interesting to see a couple of non-traditional names see new money purchases as well, namely  DENTSPLY International (XRAY) and  Patterson Companies (PDCO), both of which are focused on dental products.

Our Ultimate Stock-Pickers were also putting money to work in the industrial materials sector, which is another unique Morningstar sector designation that encompasses everything from producers of farm equipment and agricultural products (like  Deere (DE) and  Monsanto (MON)), to aerospace firms (such as  Boeing (BA)) and waste haulers (like  Waste Management (WM)). Our top managers bought 22 different names in the sector, with  Republic Services (RSG) being the one name that was bought with the most conviction. As you may recall from one of our more recent articles,  Oak Value Fund (OAKVX) made a significant new money purchase of Republic Services, the nation's second-largest non-hazardous solid waste company behind Waste Management, during the third quarter (contributing greatly to its designation as a high conviction purchase during the period).

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.