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Stocks Investor Leon Cooperman Recommends - Part 2

October 30, 2013 | About:
Holly LaFon

Holly LaFon

279 followers
A few weeks ago, Omega Advisors CEO Leon Cooperman appeared on CNBC to elucidate the market for investors. The value investor who looks to “pay less for more,” suggested several stocks to consider trading at attractive valuations in a “fairly valued” market. He says this valuation status has driven his firm to start looking at “red chip” rather than “blue chip” companies, which he defines as “not the major companies, but companies that have a good story, good valuation, and we have to be patient."



His stock recommendations from this group: Sprint (S), American International Group (AIG), KKR Financial (KFN), Qualcomm (QCOM) and Sandridge Energy (SD).

For information on his first three stocks, read Part I here. Below is an overview of the second two.

Qualcomm (QCOM)

Leon Cooperman has held Qualcomm since the third quarter 2011 when the price averaged $53, and most recently added 449,700 shares in the second quarter 2013 when the price averaged $64. After this purchase he owned a total of 3,750,300 shares.

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Year to date Qualcomm shares have climbed almost 12% to $69.09 Wednesday afternoon, near a 10-year high.

Founded in 1985, Qualcomm is a semiconductor company focused on telecommunications which operates in four segments: Qualcomm CDMA Technologies, Qualcomm Technology Licensing, Qualcomm Wireless & Internet and Qualcomm Strategic Initiatives.

Qualcomm has been posting robust revenue growth revenue this year, on both a sequential and annual basis. First quarter revenues were $6.02 billion, up 29% year over year; second quarter revenues were $6.12 billion, up 24% year over year; and third quarter revenues were $6.24 billion, up 35% year over year. Net earnings also increased year over year by 50% to $1.91 billion in the first quarter, by 16% to $1.87 billion in the second quarter, and by 31% to $.158 billion in the third quarter.

Much of the company’s growth has been driven by global smartphone sales growth. Its 3G and 4G devices and Snapdragon 600 and 800 processors are included in many smart devices.

Qualcomm’s revenue and earnings history over 10 years:

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The company still trades at a P/B near a three-year low of 3.12. Its P/E is 18.3 and P/S is 5.2.

Other Gurus who bought Qualcomm in the third quarter include David Dreman and First Pacific Advisors. Gurus making the largest increases to existing holdings were Bill Frels and Ray Dalio. Ron Baron and George Soros, among others, sold out.

SandRidge Energy (SD)

Cooperman bought more than 24 million shares when he started his SandRidge position in the fourth quarter 2012, when the price averaged around $6 per share. In the next two quarters he built the position to 29,258,509 shares. They are trading at $6.47 on Wednesday afternoon after rising 1.4% year to date.

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SandRidge is an oil company with operations in the Mississippian Oil Play of northern Oklahoma and western Kansas that has transitioned from natural gas to oil recently.

In the first two quarters of 2013 SandRidge’s revenues have increased both sequentially and year over year, to $512.99 million. It also returned to earnings of $24.69 million in the second quarter from a net loss of $531.26 million in the first quarter.

At the beginning of the year SandRidge announced it had significantly altered its 2013 business plan after an overview of its operations, increasing its focus on “capital discipline, creating sustainable returns and lowering risk levels,” it said in a statement. It also in the second quarter raised its full-year guidance for oil and lowered its guidance for natural gas production, for a net total increase in production.

SandRidge ended the quarter with cash of $1.09 billion, an increase from $309.77 million at year-end 2012.

The company’s revenue and earnings growth since 2004:

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SandRidge trades with a P/B of 1.7 and P/S of 1.1.

View Leon Cooperman’s portfolio for more of his stock holdings and trades. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Leon Cooperman.

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Rating: 5.0/5 (3 votes)

Comments

vgm
Vgm - 1 year ago
Thanks Holly.

Here's another very recent video where he talks about Sandridge as well as the MLP Atlas:

http://www.dailymotion.com/video/x16gh1x_leon-cooperman-s-energy-picks_news

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