10 Stocks the Best Fund Managers Have Been Buying

On one hand, it’s good to be a stock investor in 2024: Through mid-June, the Morningstar US Market Index is up more than 13%. But if you’re trying to put new money to work, the pickings are getting slim: According to Morningstar’s US Market Fair Value estimate, stocks look about fairly valued today.

Where has the “smart money” been finding investment opportunities during the past few months?

To find out, we’ve taken a look into the latest portfolios of some of the best mutual fund managers. To isolate the top stock investors among current active fund managers, we screened on the following:

• Actively managed funds that land in Morningstar’s US large-value, US large-blend, or US large-growth categories.
• Funds with at least one share class earning Morningstar Medalist Ratings of Gold with 100% analyst coverage.
• Funds that hold 100 stocks or fewer as of their most recently reported portfolios.

Eleven separate fund portfolios passed our screen. We then compared the latest portfolios of these funds with their portfolios three months prior, to determine what stocks these managers have been buying.

Good news, stock investors: Top managers have been investing in some stocks that Morningstar thinks still look undervalued today.

10 Stocks That the Best Fund Managers Are Buying

Here are some of the stocks that top managers have been investing in during the past few months.

1. Tesla TSLA
2. Deere DE
3. Realty Income O
4. Charter Communications CHTR
5. Boeing BA
6. Broadcom AVGO
7. ServiceNow NOW
8. Kenvue KVUE
9. Starbucks SBUX
10. Delta Air Lines DAL

Here’s a little bit about each stock pick, along with some commentary from the analyst who follows the company. All data is as of June 14, 2024.

Tesla

• Number of best managers buying the stock: 3
• Morningstar Price/Fair Value: 0.89
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Very High
• Morningstar Style Box: Large Growth
• Sector: Consumer Cyclical

The top stock pick during the latest quarter from the best fund managers is Tesla. After more than doubling in price during 2023, Tesla stock plummeted more than 42% between the start of the year and late April, creating a buying opportunity for three of the managers on our list. Why did the stock decline? The company announced a strategic shift in January, signaling lower growth expectations for 2024 and an emphasis on reductions and development of its new affordable sport utility vehicle instead. Yet Morningstar continues to forecast margin expansion over the long term as Tesla begins to sell its affordable vehicles and benefits from cost-reduction initiatives, says Morningstar strategist Seth Goldstein. Tesla stock trades 11% below our $200 fair value estimate.

Tesla is one of the largest battery electric vehicle automakers in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. The company competes in the entry-level luxury car and midsize crossover sport utility vehicle markets with its Model 3 and Model Y vehicles. Tesla also sells a light truck—the Cybertruck, and a semi truck. The company plans to launch an affordable SUV and luxury sports car in the future.

Tesla aims to retain its market leader status as EVs grow from a niche market to reaching mass consumer adoption. We forecast EVs will reach 40% of global auto sales by 2030. To meet growing demand, Tesla opened two new factories in 2022, which increased its production capacity. Tesla also invests around 4% of its sales in research and development, focusing on improving its market-leading technology and reducing its manufacturing costs. For EVs to see mass adoption, they need to reach cost and function parity with internal combustion engines. To reduce costs, Tesla focuses on automation and efficiency in its manufacturing process, such as reducing the total number of parts that need to be assembled in a vehicle. The company also began designing its own batteries. Tesla's goal is to reduce costs by over 50%.

To reach functional parity, EVs will need to have adequate range, reduced charging times, and availability of charging infrastructure. Tesla’s extended-range EVs are already at range parity with ICE vehicles. The firm also continues to expand its supercharging network, which consists of fast chargers built along highways and in cities throughout the US, EU, and China. The range and supercharger network help eliminate road trip anxiety, or the functional barrier to mass market EV adoption.

Tesla is also attempting to take a larger share of its customers’ auto-related spending, which includes selling insurance and offering paid services such as autonomous driving software.

It also sells solar panels and batteries used for energy storage to consumers and utilities. As the solar generation and battery storage market expands, Tesla is well positioned to grow accordingly.

Deere

• Number of best managers buying the stock: 2
• Morningstar Price/Fair Value: 1.12
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Large Value
• Sector: Industrials

The first of three industrials names on the list of the stocks that the best managers have been buying is Deere. Deere is having a tough year, as global demand cools across all of the wide-moat company’s segments: In fact, management lowered its guidance for 2024 (again) after reporting fiscal second-quarter earnings. Morningstar forecasts Deere’s sales to decline by 2% in 2025 before increasing to 5% in 2026, reports Morningstar analyst Dawit Woldemariam. Even though Deere stock is down more than 5% this year, shares look expensive, as they trade 12% above our $339 fair value estimate.

Deere offers customers an extensive portfolio of agriculture and construction products. We think it will continue to be the leader in the agriculture industry and one of the top players in construction. For over a century, the company has been the pre-eminent manufacturer of mission-critical agricultural equipment, which has led to its place as one of the world’s most valuable brands. Deere’s strong brand is underpinned by its high-quality, extremely durable, and efficient products. Customers in developed markets also value Deere’s ability to reduce the total cost of ownership.

The company’s strategy focuses on delivering a comprehensive solution for farmers. Deere’s innovative products target each phase of the production process, which includes field preparation, planting and seeding, applying chemicals, and harvesting. The company also embeds technology in its products, from guidance systems to seed placement and customized spraying applications. Over the past decade, the company has continually released new products and upgraded existing product models to drive greater machine efficiency. Customers also rely on the services that Deere and its dealers provide, for example, machine maintenance and access to its proprietary aftermarket parts. Furthermore, its digital applications help customers interact with dealers, manage their fleet, and track machine performance to determine when maintenance is needed.

Deere has exposure to end markets with attractive tailwinds. In agriculture, we think demand for corn and soybeans will remain resilient in the near term. On the construction side, we believe the company will benefit from the $1.2 trillion infrastructure deal in the US. The country’s roads are in poor condition, which has led to pent-up road construction demand. Looking further out, we believe precision ag will be an incremental value driver for Deere. The company recently closed the precision ag loop (in terms of capabilities) with the introduction of its autonomous 8R tractor. We estimate precision ag presents a $6 billion sales opportunity for the ag leader this decade.

Realty Income

• Number of best managers buying the stock: 1
• Morningstar price/fair value: 0.70
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Low
• Morningstar Style Box: Mid Core
• Sector: Real Estate

Realty Income is the only REIT on our list of stocks that top investors have been investing in. Like most real estate investment trusts, Realty Income has taken it on the chin as interest rates have risen: Shares of this REIT are down nearly 23% since the Federal Reserve began raising rates in March 2022. Yet today, Morningstar thinks Realty Income is attractive, providing low but steady growth for income-oriented investors, says Morningstar senior analyst Kevin Brown. The REIT offers a compelling yield approaching 6% and capital appreciation potential too, as shares trade at a sizable 30% discount to our $76 fair value estimate.

Realty Income is the largest triple-net REIT in the United States, with over 13,400 properties that mainly house retail tenants. The company describes itself as “The Monthly Dividend Company,” and its line of business and operating metrics make its dividend one of the most stable sources of income for investors. Even though over 80% of Realty Income’s tenants are in retail, most are focused on defensive segments, with characteristics such as being service-oriented, naturally protected against e-commerce pressures, or resistant to economic downturns. Additionally, the triple-net lease structure places the burden of all operational risk and cost on the tenant and requires the tenant to make capital expenditures to maintain the property rather than the landlord. These leases are often long term, frequently 15 years with additional extension options, which provides Realty Income a steady stream of rental income. Coverage ratios are also very high, so tenants are healthy and unlikely to request rent concessions, even during downturns. The steady, stable stream of revenue has allowed Realty Income to be one of only two REITs to be members of the S&P High-Yield Dividend Aristocrats Index and have a credit rating of A- or better. This makes Realty Income one of the most dependable investments for income-oriented investors.

Stability comes at the cost of economic profit, however. The lease terms include very low annual rent increases around 1%, which helps keep the coverage ratio high but severely limits internal growth for the company. Therefore, to grow, Realty Income must rely on acquisitions. The company has executed nearly $37 billion in acquisitions over the past decade at average cap rates around 6%. Given the access to cheap debt during this time, it has created a lot of value. However, increased competition has lowered cap rates, and the recent rise in interest rates has started to squeeze the company's spread and its ability to create value. We remain concerned that at some point, the valve for creating value will shut off and Realty Income will be left with just a low internal growth story.

Charter Communications

• Number of best managers buying the stock: 3
• Morningstar Price/Fair Value: 0.56
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High
• Morningstar Style Box: Mid Value
• Sector: Communication Services

Charter Communications is the most undervalued stock pick on our list of buys from the top managers, trading 44% below Morningstar’s $490 fair value estimate. The stock is down a stunning 29% this year, as the company has been plagued by broadband customer losses. Morningstar director Mike Hodel notes that the next couple of quarters will be tough for the narrow-moat firm and that the company carries high uncertainty around how many customers it may lose as the Affordable Connectivity Program ends. However, Hodel admits that the stock looks “deeply undervalued” today.

We generally like Charter’s efforts to drive customer penetration by limiting price increases, improving customer service, and expanding its offerings to appeal to a variety of preferences. However, we aren’t enamored with the extremely heavy discount on broadband and wireless services it offers. We believe this type of promotion tends to attract disloyal customers while also diminishing the value of these services in consumers’ minds. Charter’s heavy exposure to the Affordable Connectivity Program, a federal broadband subsidy, may also impair growth in the short term as funding dries up in 2024. Still, we believe the firm is positioned to remain a dominant broadband provider and produce stable cash flow.

Charter’s cable networks have provided a significant competitive advantage versus its primary competitors—phone companies like AT&T—as high-quality internet access has become a staple utility. Charter has been able to upgrade its network to meet consumer demand for faster speeds at modest incremental cost while the phone companies have ignored their networks across big chunks of the country. Phone companies, notably AT&T, have increased fiber network investment, which we expect will limit Charter’s ability to grow as fast as it has over the past few years. However, we believe Charter will remain a strong competitor and that competition will remain rational, as seen in steadily increasing revenue per broadband customer across most providers in recent quarters.

Wireless technology has emerged as a potential new competitor to fixed-line internet access. We’re skeptical of wireless’ ability to meet network capacity on a wide scale for the foreseeable future. Both T-Mobile and Verizon have increased prices for their fixed-wireless broadband offerings recently, as we suspect both firms are looking to slow growth to preserve capacity and maintain service quality.

We also expect dense fixed-line networks like Charter’s could play an increasingly important role in powering wireless networks in the future. While we don't like heavy discounting to drive growth, Charter has amassed nearly 8 million wireless customers, primarily relying on Verizon's network.

Boeing

• Number of best managers buying the stock: 2
• Morningstar price/fair value: 0.80
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High
• Morningstar Style Box: Large Growth
• Sector: Industrials

Boeing stock has seen better days: It’s down 32% in 2024 as safety concerns and a management shakeup have cast a pall over shares. Morningstar analyst Nic Owens acknowledges that Boeing faces some execution and supply risks but argues that the wide-moat company can reestablish its footing. “We think the enormous special charges and fleet groundings are mostly behind Boeing, and we forecast one or two more years of hard slogging as it clears up manufacturing and supply chain issues.” Morningstar’s $221 fair value estimate reflects healthy long-term global demand for Boeing’s products in the 2026-27 time frame. The stock looks 20% undervalued.

Boeing is a major aerospace and defense firm that makes most of its money manufacturing large commercial airplanes. Its narrow-bodied planes are ideal for high-frequency, short-haul routes, and its wide-bodied ones are used for long-haul and transcontinental flights. Worldwide sales of narrow-bodies have increased over the past 20 years with the rise of low-cost carriers and middle-class consumers in emerging markets.

Boeing’s narrow-body business was battered by the extended grounding of its 737 MAX due to two fatal crashes of the plane before the covid-19 pandemic. The pandemic cut air travel by two thirds between 2019 and 2020. Boeing’s primary competitor, Airbus, saw a one-third drop in airplane deliveries while Boeing had to cease deliveries of its workhorse plane entirely for 20 months to rework the navigation and other systems on hundreds of jets. We see long-term increases in demand for air travel in emerging-markets economies. Boeing aims to expand 737 MAX production to meet that demand, once the safety standards of its manufacturing process have again been approved by the Federal Aviation Administration. Our forecast anticipates Chinese carriers will take up to one fourth of new airplanes in the next decade.

We expect wide-body demand to take longer to recover from the pandemic than narrow-body demand because wide-bodies are used for longer and international trips, which are bouncing back slower than domestic routes. We think Boeing's 787 Dreamliner is a fantastic aircraft for long-haul travel, but it too experienced a months-long production halt as manufacturing quality issues were ironed out and planes refurbished. Deliveries recommenced in August 2022, but we don't expect them to return to 2019 levels until 2029.

Boeing also supplies military products to governments and aftermarket services to its commercial customers. These businesses together generate just over a third of its operating income over a cycle. We are broadly assuming GDP-like growth in the defense business and expect the services business will regain profitability faster than Boeing as a whole because aftermarket revenue increases directly with flight activity

Broadcom

• Number of best managers buying the stock: 1
• Morningstar Price/Fair Value: 1.13
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Large Growth
• Sector: Technology

The first technology name on our list, Broadcom stock looks about 13% overvalued relative to Morningstar’s fair value estimate of $1,550. We recently increased our fair value estimate on the stock by $200 after earnings, boosting our medium-term forecast for artificial intelligence revenue, explains Morningstar analyst William Kerwin. We expect networking to benefit from robust generative AI investment and for Ethernet to take share within generative AI networks, he adds.

Broadcom is an amalgamation of high-value chip and software businesses that on the whole are differentiated and moaty, in our view. Broadcom is a terrific aggregator of firms, big and small. Its ability to acquire and streamline generates strong profits and cash flow, and fuels its robust dividend. We laud the firm for its execution and operating efficiency, which build upon its large organic investment and help it to outperform its end markets organically.

In our view, Broadcom’s networking and wireless chip businesses are its strongest and contribute heavily to the firm’s wide economic moat. We anticipate it maintaining a technological lead in thin-film bulk acoustic resonator, or FBAR, filters, which it sells exclusively into Apple’s iPhone. We also expect it to maintain product leadership in merchant silicon for switching and routing applications and to defend its strong relationships with heavyweight equipment vendors Cisco Systems and Arista Networks. Broadcom’s software businesses sell virtualization software, mainframe software, and cybersecurity software, and we see its offerings as highly competitive. Broadcom’s focus on strategic large software customers like financial institutions, governments, and large enterprises—where it is deeply embedded—elicits steep switching costs. We also see upselling opportunities with VMware under the firm’s belt.

Going forward, we see Broadcom benefiting from moderate, steady growth from data center networking, Apple unit sales, and upselling for its software customers. We believe artificial intelligence will become a material organic driver to the networking business, as applications like large language models require advanced network switching, where Broadcom’s chips are best-of-breed. We expect acquisitions to still be on Broadcom’s radar but perhaps with larger, less frequent deals. After closing on VMware in 2023, we expect the firm to focus on deleveraging for a couple years before tapping back into the acquisition market.

ServiceNow

• Number of best managers buying the stock: 1
• Morningstar Price/Fair Value: 0.92
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Large Growth
• Sector: Technology

A better tech stock pick on our list from a valuation perspective, ServiceNow looks 8% undervalued relative to Morningstar’s $790 fair value estimate. Morningstar senior analyst Dan Romanoff argues that ServiceNow is leading the AI revolution for enterprise workflows. In fact, strong AI adoption was the key story for first-quarter earnings, and the wide-moat company’s revenue strength was impressive and among the best within our enterprise software coverage. We think new products and use cases within a customer will continue to help drive growth over the medium term, he adds. We model a five-year compound annual growth rate for revenue of 19%.

ServiceNow has been successful so far in executing a classic land-and-expand strategy. First, it built a best-of-breed SaaS solution for IT service management based on being modular and flexible, having a superior familiar user interface, offering a way to automate a wide variety of workflow processes, and becoming a platform to serve as a single system of record for the IT function within the enterprise. Having established itself in ITSM and the IT operations management market, the firm moved beyond the IT function. The same set of product design features and technologies allowed ServiceNow to bring its process automation approach to HR service delivery, customer service, finance, and operations. The firm then introduced more sophisticated and industry-specific versions of its core solutions. In September 2023, ServiceNow was one of the first software companies to release generative artificial intelligence solutions. Each of these products carries higher pricing to help drive incremental growth and boost margins.

ServiceNow’s success has been rapid and organic. The firm already offers high-end enterprise-grade solutions and boasts elite-level customer retention of 98%. ServiceNow focuses on the largest enterprises in the world and these customers continue to renew for larger contracts containing more products. Additionally, customers overall are re-upping for more than one solution, as more than 75% of customers are multiproduct purchasers, which is driving deal sizes higher. Further, the firm has no small business exposure.

We believe that having the IT function within an enterprise as the initial landing pad is fortunate, as it provides a built-in advocate for software (an IT responsibility) for other functional areas of the enterprise. ServiceNow will continue to use its position to land new IT-driven customers and upsell ITOM features on the platform, but we believe the firm will increasingly cross-sell emerging products in HR and customer service, along with the platform-as-a-service offering. In our view, product strength, market presence, and a strong sales push into areas outside of IT, will continue to drive robust growth.

Kenvue

• Number of best managers buying the stock: 1
• Morningstar price/fair value: 0.71
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Mid Core
• Sector: Consumer Defensive

This stock of this global leader in consumer health products has struggled since it was spun out from Johnson and Johnson: It’s down 28% since its market debut in May 2023. First-quarter 2024 results were mixed, but margins were good; after earnings, Morningstar analyst Keonhee Kim called the shares “cheap.” “We still believe that the market is underappreciating the firm’s portfolio of category leading brands and that the stock has a lot of upside,” he continued. Kenvue is a deeply undervalued stock pick, trading 29% below Morningstar’s fair value estimate of $25.50.

Kenvue is the world’s largest pure-play consumer health company by revenue, generating $15 billion in annual sales. Formerly known as Johnson & Johnson’s consumer segment, Kenvue spun off and went public in May 2023. We expect Kenvue, with the freedom to allocate capital and invest as a stand-alone entity, to mainly focus on growing its 15 priority brands (including Tylenol, Nicorette, Listerine, and Zyrtec) to drive future growth. We forecast the company to spend roughly 3% of sales in research and development, on par with some of its wide-moat competitors, to launch innovative products, specifically in digital consumer health. Recent examples include the Nicorette QuickMist SmartTrack spray and Zyrtec AllergyCast app.

Kenvue has been rationalizing its portfolio through a reduction in a number of stock-keeping units and business selloffs (15 divestitures from 2016-22). Now that most of this optimization is behind us, we expect a more agile portfolio. Macro factors such as an aging population, premiumization of consumer healthcare products, and growing emerging markets should provide tailwinds for Kenvue’s wide array of brands. We also expect Kenvue to benefit from an increasing digital investment—71% of the company’s marketing spending in 2022 was digital versus 44% in 2019—as this should fuel both e-commerce and in-person store sales.

We expect margin expansion from two channels: favorable pricing dynamics and improving supply chain efficiencies. Our analysis tells us that Kenvue has been able to stay ahead of its markets in terms of price hikes, and we expect this trend to continue thanks to its products’ strong brand power. During an inflationary environment, we have seen Kenvue astutely pass over rising costs through robust price hikes, with 7.7% of sales growth from price and mix during 2023. We also expect cost savings over the next five years from supply chain optimization initiatives as Kenvue dedicates roughly 60% of capital expenditures to automation and digitalization of its manufacturing and distribution network, improving end-to-end integration.

Starbucks

• Number of best managers buying the stock: 1
• Morningstar Price/Fair Value: 0.83
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium
• Morningstar Style Box: Large Core
• Sector: Consumer Cyclical

Starbucks stock is down nearly 16% this year: Earnings for the most recent quarter were weak as global traffic sputtered, and Morningstar expects sales pressure to persist this fiscal year. But while Morningstar senior analyst Sean Dunlop admits that Starbucks’ immediate prospects look cloudy, he calls this wide-moat company’s long-term trajectory “enviable.” Starbucks’ brand strength is a significant advantage, and we expect Starbucks to continue to outgrow the global coffee market: We model 7% average annual top-line growth through 2033. Starbucks stock is trading at a 17% discount to our $96 fair value estimate.

Starbucks is the largest specialty coffee chain in the world, generating $36 billion in sales during fiscal 2023. The firm’s attention to premium-quality coffee distinguishes it from chained competitors, alleviating pressure from quick-service peers and at-home consumption while underpinning substantially higher pricing for what has historically been a commoditized product. This positioning looks increasingly important to us moving forward, as vending, single-serve coffee machines, and quick-service restaurants continue to improve at the lower end of the market, and as China approaches a similarly tiered competitive equilibrium.

While the subindustry has attracted significant competitive attention, Starbucks' cachet has allowed the firm to outflank competitors, leveraging its brand to raise price and mix 8% annually in the US over the past five years, healthily in excess of category inflation. Commanding unit economics, with payback periods in the ballpark of two to three years should pave the way for mid-single-digit unit growth through 2033, in our view, as the firm increases penetration in its core US and Chinese markets, and with its license partners in more than 80 other global markets.

Starbucks’ near-term priorities, as outlined in its reinvention plan, strike us as prudent: investing in the in-store partner experience, recalibrating stores to better meet the needs of an increasingly off-premises consumer, and emphasizing consistent guest experience across omnichannel touchpoints. With more than 70% of sales now coming through the firm’s drive-thru, delivery, and mobile order and payment channels, augmented attention to back-end systems and throughput capacity are cogent.

Finally, the firm’s ongoing investments in its loyalty program, with roughly 33 million active users in the US, clearly resonate with an audience that has grown increasingly amenable to digital ordering, with roughly 60% of US order volume now driven by program participants. We continue to believe that Starbucks remains a compelling long-term “growth at scale” story, with our forecast anticipating average annual top and bottom line growth of 7% and 15% through 2033, respectively.

Delta Air Lines

• Number of best managers buying the stock: 1
• Morningstar Price/Fair Value: 1.25
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High
• Morningstar Style Box: Mid Value
• Sector: Industrials

Delta rounds out our list of the stocks that the best managers have been investing in—it’s the most overvalued stock on the list according to Morningstar’s metrics, too, with shares trading 25% above our $39 fair value estimate. First-quarter results were good, says Morningstar’s Owens, and management expects another record summer travel season this year. Delta books higher revenues per seat than the industry average, but Morningstar expects a more competitive environment in the medium term as consumer spending normalizes, explains Owens.

Delta Air Lines positions itself as a premium airline, with the highest revenue and costs per seat mile in the North American market. Even in the relatively harmonious 2015-19 period after the airline industry consolidated and fuel costs fell, Delta’s industry-leading operating margins declined due to increased fuel, labor, and depreciation expense on almost flat capacity. While we believe Delta will continue to garner premium revenue yields, we see the spread between those yields and its overall costs more closely resembling the industry’s in the long term, especially as the levers of segmentation and the definition of a business traveler evolve.

A pillar of full-service airlines' strategy before the pandemic was price discrimination between so-called business and leisure travelers. More-frequent and shorter-stay travelers who booked through their employers' corporate travel agency got marginal bulk discounts for the highest-priced last-minute fares and premium seats. The pandemic scrambled this formula as travel habits rapidly evolved and the reality dawned that business and leisure travelers can be the same person. Airlines are finding new ways to attract and reward brand-loyal frequent travelers willing to pay up for a more comfortable travel experience.

Our outlook for US airlines is quite rosy in the near term, but these companies are acutely governed by the laws of gravity and economics. As travel restrictions lifted in 2022, demand rebounded more quickly than airlines' capacity to meet it, constrained by shortages of planes, pilots, and other crew. As a result, airlines have recorded record revenue and profits. These conditions function as a boon to the whole industry, and we believe they will take until at least 2024 to even out. When they do, we forecast a return to more normalized operating conditions, which will erode airline profitability. When airplanes and personnel are no longer a constraint, we expect the incremental incentives that airlines constantly operate under to return to the fore, leading to competition over prices and market share anywhere their route maps overlap, which is almost everywhere.

Who Are the Best Fund Managers?

Eleven large-cap funds passed our screen and therefore qualify as our top managers.

• Diamond Hill Large Cap DHLYX
• Dodge & Cox Stock DODGX
• JPMorgan Equity Income OIEJX
• Loomis Sayles Growth LSGRX
• MFS Value MEIJX
• Morgan Stanley Growth MSEQX
• Oakmark OAKMX
• Parnassus Core Equity PRBLX
• Principal Blue Chip PGBHX
• T. Rowe Price All-Cap Opportunities PRWAX
• Vanguard Dividend Growth VDIGX

Five of the funds land in Morningstar’s US large-value category: Diamond Hill Large Cap, Dodge & Cox Stock, JPMorgan Equity Income, MFS Value, and Oakmark. Parnassus Core Equity and Vanguard Dividend Growth are categorized as US large-blend funds. And Loomis Sayles Growth, Morgan Stanley Growth, Principal Blue Chip, and T. Rowe Price All-Cap Opportunities hail from the US large-growth category.

How Do We Determine Which Stocks the Best Managers Are Buying?

To determine which stocks top managers are investing in, we compared the latest portfolios of these funds with their portfolios three months prior. We then calculated a “buy score” for each stock, which is a weighted average that allows us to make apples to apples comparisons of the most-purchased stocks. One or two managers making large purchases of a stock could lead to the same buy score as many managers purchasing small amounts of a stock.

Morningstar editors Margaret Giles and Lauren Solberg developed the methodologies and tools required to create this content.