Tepper has positioned his portfolio based on his market forecasts before. He accurately predicted that the stock market would rise with the injection of QE2 in 2010. The Federal Reserve would break any fall in the market with QE2, providing an unusually strong safety net.
That year he amassed equities on the reasoning that ��f the economy does well, stocks will do well,��he told NBC. His purchases were primarily undervalued large caps such as Hewlett Packard (HPQ) and Cisco (CSCO), pharmaceutical stocks and paper products stocks. The strategy rewarded him with a 22 percent return.
His outlook going into 2011 was less rosy. He believed unemployment would not return to previous levels for 10 or more years, Europe was still rife with uncertainty, and though the market went up, it made him worry that it would go back down. By June 2011, he told CNBC, ��e are in a difficult investment environment.��He also said he did not see a QE3 forthcoming.
His second-quarter 2011 filings revealed that he had greatly reduced his market exposure, particularly to financial stocks. In the third quarter he sold completely out of Bank of America (BAC) and Wells Fargo (WFC) and reduced Citigroup (C). The value of his portfolio at the third quarter was $1.5 billion, a mere third of its value six months prior.
Tepper withdrew from the market just in time for the S&P�� 14% decline in the third quarter, its biggest quarterly drop since 2008. He likely foresaw trouble in the markets coming, ! particularly with turmoil in Europe, which he mentioned on CNBC. Without a QE3, his safety net no longer existed, either.
Now that Tepper is further retreating from the market it could indicate that he is bearish about the market going into 2012. But there are other possibilities.
For instance, Tepper said on CNBC in 2011, ��f I got the right things out of Europe I�� really invest more in Spain. But if I don�� get the right things I�� going to get killed there. We buy before we get high fliers.��
Tepper, known for investing in situations so dire other investors won�� touch them (he bought Citigroup for under $1 in 2009), could be waiting for the first sign of a solution in Europe to begin making big purchases amid the carnage there. His only bank stock in his most recent filing is located there, the Royal Bank of Scotland (RBS). He told NBC he was looking for certain things to happen before he invested there, but that essentially it would only take the economy getting better before Ireland, Spain, Portugal and others would be fine.
Additionally, Tepper was at 30 percent cash ��a similar amount to now ��going into 2009. In March and February of that year, he went on a spending spree in bank stocks, and ended the year with his famous 120 percent return.
The stocks he did buy in the fourth quarter are almost all large positions. The largest, Boston Scientific (BSX), is 5.4 percent of his portfolio. He bought 7,797,503 shares at an average price of $5.50. The stock has declined over 20 percent in the last year and 65 percent over the last five years. The company has had volatile free cash flow over the last ten years and declining annual revenue since 2007. However, it has cut expenses (including jobs), is investing in China, and is launching two dozen new devices in 2012, in an effort to increase earnings by double digits in the next five years. Year to date, the stock is up 12 percent.
His second-largest new buy, Oracle Corp. (ORCL), is now hi! s seventh! -largest position, accounting for 4.1 percent of his portfolio. He bought 1,218,526 shares at an average price of $31 per share. Oracle is a stock that GuruFocus author Chuck Carnevale in February called ��oo cheap to ignore any longer.��It has a P/E ratio of 12.9, low like many of its growing, famous-name peers. It trades for $28 per share, has a $140 billion market cap, and consistent operating results over decades. Recently, it has continued the growth, increasing earnings more than 20 percent per annum since 2008, and has new products it has not yet introduced. Carnevale mentions several other reasons he foresees the dynamic company continuing growth here.
These two new sizable equity investments, in addition to a vast addition of Apple shares, also suggest that Tepper does not see disaster ahead in the U.S. market, but is perhaps preparing for aggressive buying elsewhere.
See David Tepper�� current portfolio here, and also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of David Tepper.
Hot Undervalued Stocks To Watch For 2014: Caterpillar Inc.(CAT)
Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.
Advisors' Opinion:- [By Roberto Pedone]
Caterpillar (CAT) is staging a textbook breakout in May. Shares of heavy equipment maker haven't exactly been kind to investors year-to-date; CAT has barely broken even during a time when the broad market has been in a historic rally. But a textbook breakout should change that.
CAT started forming an inverse head and shoulders pattern back in early April. The inverse head and shoulders is formed by two swing lows that bottom out around the same level (the shoulders), separated by a lower low called the head; the buy signal comes on the breakout above the pattern's "neckline" level, which was just below $86 for CAT. That puts this stock's upside target right around $92.
Even though CAT has nearly hit its upside target already (the post-breakout buying has been very quick), the longer-term implication for investors is a break of the downtrend that had been haranguing shares this year. Now, with that downtrend broken, CAT should have more room to move higher. I'd just expect some consolidation first.
Hot Undervalued Stocks To Watch For 2014: Schlumberger N.V.(SLB)
Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.
Advisors' Opinion:- [By Kathy Kristof]
Headquarters: Houston
52-Week High: $79.38
52-Week Low: $56.86
Annual Sales: $39.5 bill.
Projected Earnings Growth: 18% annually over the next five years
Energy-services giant Schlumberger is the prototypical multinational. The company derives roughly 85% of its revenues from overseas, including developing markets in Africa, Brazil and Asia.
With particular expertise in deep-water drilling, Schlumberger is well-positioned to compete in a world where oil is harder to find, says Argus Research analyst Philip Weiss. Admittedly, oil exploration is a cyclical business, driven largely by crude prices. And weak prices for natural gas have hit the company’s stock, Weiss says. But the price of natural gas has little to do with Schlumberger’s profits, so Weiss just sees this as an opportunity to get the shares at a more reasonable price. - [By Robert Holmes]
Schlumberger has the most potential upside of any stock in this group of 50 that also makes the firm's Best Ideas list. Analyst Ole Slorer says Schlumberger has "what we consider the most advanced technology portfolio in the industry."
"Its fundamentals are impressive, with what we think are some of the best field personnel, a pristine service and performance reputation, and leading market share in most of its product lines," Slorer writes.
Though Slorer's price target is 42% above current levels, his most bullish scenario for Schlumberger over the next year would see shares climb a whopping 116%. On the downside, his most bearish scenario for the company would see shares slide 38% over the next 12 months.
- [By Brian Stoffel]
This company has been a pick of both Jordan DiPietro and Bryan White. And both analysts have pointed to the company's opportunity for oil exploration abroad -- which is where much of the demand will soon be coming from as well.
Bryan points out that three-fourths of the company's revenue comes from abroad, with "Brazil, the Middle East, and Africa [as] key regions where activity is expected to be robust and growing."
Jordan adds, "[Schlumberger] has an important presence in high-growth regions of the world such as Iraq, Mexico, and Russia, and has the competitive advantage to be able to offer full services, from managing entire oil fields to drilling wells."
- [By Rebecca Lipman]
Together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. Market cap of $91.49B. EPS growth (5-year CAGR) at 24%. According to Morgan Stanley: "Thanks to an estimated $1 billion investment per year in R&D, Schlumberger has what we consider the most advanced technology portfolio in the industry."
Best Low Price Companies To Own In Right Now: Tupperware Corporation(TUP)
Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.
Advisors' Opinion:- [By Sam Collins]
Household name Tupperware Brands Corp. (NYSE:TUP) is a global direct seller of products with multiple brands through an independent sales force of 2.4 million people. Its product line focuses on kitchen storage and serving solutions, as well as personal-care products. Over 60% of sales in 2011 are expected to come from Europe and Asia, and the stock has appeal as an emerging markets story.
S&P estimates that 2011 earnings will increase to $4.54 versus $3.53 in 2010, and it increased its rating to a “five-star strong buy” with a recently revised 12-month target of $81, up from $73. The 2005 purchase of Sara Lee’s (NYSE:SLE) direct-sales business, which has a high growth rate, should be a long-term benefit. TUP’s annual dividend yield is 1.92%.
Technically TUP had a pullback following a new high at over $70 and is currently oversold. Buy TUP at the current market price with a trading target of $70, but longer term a much higher target will likely be attained.
Hot Undervalued Stocks To Watch For 2014: Dollar Tree Inc.(DLTR)
Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.
Advisors' Opinion:- [By Sam Collins]
Dollar Tree (NASDAQ:DLTR) is a leading operator of discount variety stores. The stock has hugged its 50-day moving average since mid-February. But a recent minor revision of earnings for this year by several analysts and the recent market sell-off have resulted in a fall from its high of the year at over $70 to under $66. However, Goldman Sachs (NYSE:GS) increased its price target to $73 from $69.
Technically DLTR is oversold, according to MACD. A break below its 50-day moving average could result in a pullback to $64, but positions could be taken at the current market price. The trading target for DLTR is $72.
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