Read Why Michael Farr Sees Apple, Disney, Visa As Top Picks For 2022

Michael K. Farr, President and CEO of Farr, Miller & Washington, named his top ten picks for 2022, CNBC reports.

  • “These are companies that I find especially attractive in light of their valuations or their potential to benefit from economic developments.”

  • Farr’s top picks include Apple Inc (NASDAQ: AAPL), The Walt Disney Co (NYSE: DIS), and Visa Inc (NYSE: V).

  • Apple is the world’s most valuable company by market capitalization.

  • The iPhone segment is still the most significant contributor to revenue and earnings, but Services is the fastest-growing and highest-margin business.

  • He sees Apple gaining mass attraction in 2022 on releasing its first AR/VR device.

  • Looking further, he sees double-digit EPS growth through mid-to-high-single-digit revenue growth combined with a steady to increasing margin and share repurchases as the company moves toward a cash neutral balance sheet position.

  • He sees growth in the installed base continuing with increased penetration of “halo” products and services like the Watch, AirPods, music, TV , Arcade, Fitness , News , and iCloud.

  • Farr sees Disney subscriber growth improve over the next few quarters as it launches service into new markets and adds original content to the service.

  • As for the legacy businesses, the theme parks have seen an uptick in recent months, and that should continue given the pent-up demand for travel and experiences.

  • He expects demand to be the strongest for tentpole films, as seen by the release of “Spider-Man: No Way Home.”

  • Farr still sees a long runway for Visa’s growth in electronic payments with business-to-business payments as an opportunity to expand its addressable market significantly.

  • Farr considers the threat from “buy now, pay later” is overblown, as up to 80% of those using such services pay off their balance using a debit or credit card, resulting in Visa revenue being as much as or more significant than if the network had been used on the initial purchase.

  • The balance sheet is solid, and Farr sees a recovery in personal travel over several years, and secular tailwinds from cash-to-card (and digital) should continue.

  • Price Action: DIS shares traded higher by 1.63% at $155.30 on the last check Tuesday.

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