Leon Cooperman's Top Stock Picks (QCOM, S)
Omega Advisors Chairman & CEO Leon Cooperman discussed his favorite portfolio picks on CNBC's Squawk Box Tuesday morning, including sharing his bullish market approach and favorites in Europe.
Cooperman talked highly of QUALCOMM, painting a portrait of a juggernaut with a major bang for your buck value.
"Fortress balance sheet, ubiquitous in the smartphone game. Their chip is going into most all the smartphones. We think it'll probably grow, after high growth rate this year, probably 10 percent going forward. Very reasonably valued buying back $5 billion worth of stock," said Cooperman.
Omega is also looking to invest more money into Europe at the margin. According to Cooperman, they favor Michelin in the tire business and Swatch (VTX: UHR) for watches as some medium-sized European companies good for investment.
Omega started buying into Sprint at $2 per share.
"We tended our stock of the company at, I think it was 765. I just made a note - since the end of the tender offer, SoftBank has bought 75 million shares, taking the ownership to a little over 80 percent. If you look at, ah, proper profit margins for this business, the growth in revenues, we think Sprint could probably, in two years, earn over a dollar a share, the stock is $6," said Cooperman.
He referred to himself and his team at Omega as value investors.
"I define a value investor as somebody who is looking to pay less for more. So, you know, if you look at the S&P 500, what's behind that index, it's an index of 500 companies, we think on average grow about five percent a year. The average dividend yield for the index is about 2.1 percent. So it's about two and a half times book value. Gets around 35 percent of capital. Return on equity about 15 percent, which is somewhat elevated versus history, and for those statistics you're paying about 15 times earnings," said Cooperman.
"So what we're looking for is to try to find more growth at a lower evaluation, more yield, more asset value to spend that money. And I would say generally speaking, given the fact that, um, the markets in a zone of fair evaluation, we're finding ourselves going through what I call the 'red chips' not the 'blue chips' going into, you know, not the major companies, but companies that have a good story, a good evaluation, when we have to be patient. We're not traders, we're investors."
At the time of this writing, Jason Cunningham had no position with the mentioned entities. Visit Jason on Twitter @JasonCunningham.
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